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Great News for Real Estate Investors! – click below for details

Federal Court Approves Class Action on Ohio City’s Illegal Home Inspections

Great News for Investors!

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I saw this on the news tonight and I am recommending this to all of my family members, friends, and fellow investors..  in our always getting more dangerous world, this is a must have for all of your loved ones and staff. let me know what you think… stay safe! – Mike
 
 
 
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National REIA Applauds US District Court Ruling Upholding Fourth Amendment that Protects Property Owners from Unnecessary Gov’t Harassment
Cincinnati, Ohio)  The National Real Estate Investors Association (National REIA) issued a statement today applauding the U.S. District Court’s (Southern Ohio) recent decision stating that the city of Portsmouth’s (Ohio) occupational licensing requirements, which are imposed upon landlords violates the Fourth Amendment to the United State Constitution. 
 
Charles Tassell, Chief Operating Officer of National REIA said “Today’s ruling laid bare the excuses used by local governments to steal the freedoms of property owners.”
He further added that “The 4th Amendment is still alive and well, and citizens should NOT be forced to have their homes intrusively ‘inspected’ by warrantless searches.  Every local government should take note that warrantless searches are STILL illegal and unconstitutional.”
 
Regarding the ruling itself, Tassell said “The ruling won by the 1851 Center For Constitutional Law was a victory for freedom against a tyranny with which the Founding Fathers were all too familiar.  Citizens of the United States have an expectation to live without local, state or federal inspection of their home based on flimsy excuses disguised as law.”
 
Judge Susan Dlott, of the Western Division of the Southern District of Ohio, held as follows: “[T]he Court finds that the Portsmouth [Rental Dwelling Code] violates the Fourth Amendment insofar as it authorizes warrantless administrative inspections.  It is undisputed that the [Rental Dwelling Code] affords no warrant procedure or other mechanism for precompliance review . . . the owners and/or tenants of rental properties in Portsmouth are thus faced with the choice of consenting to the warrantless inspection or facing criminal charges, a result the Supreme Court has expressly disavowed under the Fourth Amendment.”
 
For more information and to read a copy of the the Court’s ruling visit www.realestateinvestingtoday.com.

PRIVITY OF CONTRACT:

Who Is Making Repairs For Your Buyer?

The #1 post closing question we get asked is this: “the sellers agreed to repair the (roof, electrical, plumbing, etc.) and now we’ve moved in and the (roof, electrical, plumbing, etc.) isn’t fixed.  Can we go back to the seller and make them do the work properly?”

Under MOST situations, the answer is NO!!!

Huh? You mean it’s ok the seller didn’t have the work properly done as they agreed they would do?  Yep, that’s exactly what we’re saying.  And here’s why.

In Kentucky there’s a legal concept called “privity of contract.” Privity of contract says if I didn’t enter into a contract with a contractor directly, and if the contractor does a crummy job, the contractor is not liable to me.

Therefore, when a buyer requests a seller to make certain repairs after the home inspection, the way most agents handle the situation, there would NOT be privity of contract because the seller picks the contractor, not the buyer.

In addition, when a buyer allows the seller to pick the contractor, we know the seller will likely pick World’s Cheapest Contractor, LLC to do the work.  This only increases the odds the buyer will have an issue after closing.

So, how do we fix this? 

We’d love to say “insist on your buyer picking the contractor,” but we don’t think that’s realistic.  Instead, as a selling agent, we’d suggest when you’re dealing with Big Ticket Items (roof, HVAC, basement, structural issues, electric, plumbing), you reach out to the listing agent BEFORE making a repair request and ask them who they are likely to use for this work. If you are comfortable the person doing the work is qualified, in the repair request specifically state the seller shall use [insert name of qualified contractor listing agent suggested] and state specifically “buyer’s name shall appear along side the seller’s name on the invoice.”  If you are NOT comfortable with the contractor they suggest, you need to write in the repair request the contractor your buyer would like to use for the work.  In this case, you will still need to add “buyer’s name shall appear along side the seller’s name on the invoice.”

When the buyer’s name appears on the invoice, we now have privity of contract.

If an issue pops up after closing, the buyer can now go back to the contractor to insist the contractor take care of the problem. And at the same time, we’re now using a contractor we feel good about.

Another alternative would be to have the seller give the money for all repairs directly to buyer, but this should NEVER happen without the buyer’s lender’s consent.  Of course, in a cash closing, it’s fine to give money directly to the buyer, but not if there’s a lender involved.

We hope your summer has been fun and productive and we hope to see you soon at a closing table!

Harry Borders

Borders & Borders Attorneys:
Borders & Sons
 
 
 
 
John, David, and Harry

Since the early 1970s, our firm has practiced primarily in the field of real estate law. We represent banks and mortgage companies, real estate investors, builders and individual buyers and sellers in a variety of transactions related to residential and commercial real estate in Kentucky and Indiana. Our primary area of practice is real estate closings.   However, our attorneys also practice in other areas of law as well.

DODD FRANK FOR TODAY’s INVESTOR

by attorney Harry Borders

PART TWO- RESTRICTIONS ON OWNER FINANCING!!!

 

           

Here’s the GOOD NEWS… Investor buyers can STILL get financing from any source they want.

 

Here’s the TERRIBLE news… Owner occupant buyers now have lots of restrictions place on who they can get a loan from.

 

These new rules impact “contract for deeds” and “Land Contracts” as well as seller retained mortgages (and, of course, the ever present contract for deed in disguise as a lease-option) and private financing. 

So, assuming an owner occupant wants to obtain a loan from a source other than  a bank or mortgage company, here are the new rules.

If the lender only lends once in a 12 month period, the lender:

a) MUST be a “natural” person (i.e. not an LLC or corporation);

b) MUST have owned the property (i.e. no private financing, only owner financing);

c) MUST NOT have built the home in the ordinary course of his/her business;

d) MUST NOT have a negative amortization;

e) MUST be for at least 5 years, and if longer and adjustable, must be tied to an index rate, such as Libor   

 

If the lender lends 2 to 3 times in a 12 month period, the lender MAY be an LLC or corporation.  But the lender also:

a) MUST have owned the property (i.e. no private financing, only owner financing);

b) MUST NOT have built the home in the ordinary course of his/her business;

c) MUST NOT have a negative amortization;

d) MUST be FULLY AMORTIZED;

e) if the rate is adjustable, it must be fixed for at least 5 years, and it must be tied to an index rate, such as Libor; and

f) MUST determine in good faith that the consumer has a reasonable ability to repay the loan (similar to what a loan officer would do).

 

If the lender lends more than 3 times in a 12 month period,

all of the above requirements for a lender lending 2 to 3 times in a 12 month period apply and

IN ADDITION, the lender MUST BE A LICENSED LOAN OFFICER.

           

As you can see, navigating the waters of seller financing has again become tricky.

Please check with your real estate attorney before embarking on a seller financing transaction for a dwelling.

 

Until next time, peace,

hCapture

Harry Borders

Harry@HarryBorders.com

502.894.9200

P.S. Your simple solution to stay out of trouble is to never offer seller financing to any tenant / buyer or owner occupant. You can use Seller Financing to sell to other Investors, not owner occupants.

FHFA Streamlines Short Sale Standards for Fannie Mae and Freddie Mac

The program attempts to remove barriers created by some subordinate lien holders by limiting subordinate-lien payments to $6,000. This maneuver essentially cuts off any attempts by second-lien holders to negotiate for larger payoff amounts.

New short sale requirements for servicers proposed by the Federal Housing Finance Agency are giving financial firms a battle strategy for dealing with reluctant subordinate-lien holders who attempt to delay short sales on points of negotiation.

Some parties in short sales are able to delay the process by Click Here for Full Video/Article (Members Only)

Ignorance of the Law is not Your Get Out of Jail Free Card!

An Everett, Washington landlord has been ordered to pay a $21,800 fine after failing to include a lead disclosure in his lease.
 
The landlord, who manages 26 units located in Bellingham, Washington, repeatedly leased properties to tenants over the course of several years without including the federally-mandated lead disclosures. The EPA brought the charges against him.

“People have the right to know about lead hazards prior to renting or buying a place to live,” said Rick Albright, Director of EPA’s Office of Air, Waste and Toxics in Seattle. “Sellers, landlords and property managers who do not properly notify the people who will live in these homes can face stiff penalties.”

The Disclosure Rule requires landlords, property management companies, real estate agencies, and sellers to inform potential lessees and purchasers of the presence of lead-based paint and lead-based paint hazards in pre-1978 housing. They must also provide the purchaser or lessee with a copy of the Lead Hazard Information Pamphlet, “Protect Your Family from Lead in Your Home” before entering into any lease or sales agreement, and keep records showing they have met the federal requirements.

This 6 minute is an excerpt from the the 3 day “How To Buy without Banks!… money, credit, or private lenders”

 

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