Pace Morby being sued for Sub to?

Question

Hi,

I spoke with a multifamily seller recently, and he told me that he was involved in a class action lawsuit with Pace Morby with the nature of it seemingly around the Sub-to deals he structures. I wonder if anyone else has heard about this lawsuit. are Sub To creative finance deals highly illegal or litigable in the multifamily space?

Chris Seveney · Answer

@Jerry Zhang

Recommend speaking with them and getting the case number and information about the case and post it. As mentioned anyone can sue anyone for anything and curious what he would be sued for.

Gino Barbaro · Answer

@Jerry Zhang

I have seen nowhere Pace Morby being sued. It would be rather easy for the multifamily seller to share with you the lawsuit. It may some disgruntled students who joined, but realized real estate was not for them, and sued to get their money back.

Dave McEvoy · Answer

Yes it's true it has been confirmed by several high level sources that I won't divulge. If you're doing deals the way he teaches.... Change your ways now. The Feds are looking into him too.

Wendy Patton · Answer

Also, Pace does a TON of deals...there is likely someone who isn't happy.  There is always someone who wants to sue for something.  Check it out and see what it's about before it gets too out of control on here.  Innocent until proven guilty :-)

Keith Jablonowski · Answer

Anyone can sue someone for any reason or no reason at all.   There is nothing illegal about Subject To, Seller financing, etc in general.    Would be curious to know what the exact details of this lawsuit are?

Jack Pasmore · Answer

@Jerry Zhang

I haven't worked directly with Pace Morby, but I do have some contacts who are friends with him or have worked with him. They have consistently described him as a great, transparent guy who's made a big impact in the creative finance space. From what I've seen, he's always been crystal clear about how he structures his deals.

That said, I did hear about an alleged lawsuit tied to his Sub-To deals around four years ago, but not sure that anything came out of it publicly. Sub-To deals can definitely be more complex in the multifamily space, especially with the due-on-sale clause and lender preferences, but from everything I've gathered, they're not inherently illegal if structured properly. Like any creative finance strategy, the risk usually comes from how the deal is executed, not the method itself.

Would love to hear if you've come across any more information on this. Definitely an interesting topic, and I know a lot of investors are paying attention to how these strategies are playing out.

Looking forward to hearing your thoughts!

Best,Jack

Wendy Patton · Answer

@Jerry Zhang.As big as Pace is ... he likely will be sued multiple times.  Its the nature of our business.  I have been sued multiple times by tenants and never did a thing wrong and never lost a case. There are always 2 sides to a story.  I am not saying he didn't do something wrong but I am pretty sure he is very careful to do things right.  people will sue for anything these days.

James Wise · Answer

Not surprising. Sub 2 is a strategy for criminals and con artists.

Stephen Morales · Answer

No there is absolutely nothing illegal with Sub-to deals. Sounds like somebody had Seller's remorse or a disgruntled student or someone who had equity in a deal that went south. Guy has many assets he owns via Sub-to so you're gonna have bad deals.

Pace Morby being sued for Sub to?

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