So, some of my other posts show I bought a few units from a guy that offered owner finance. His SFH are all in a land trust and the way the attorney wrote the note is we are both beneficial interests of the trust (not sure if I'm using right terms for explaining this) and I gain more and more interest as I make my payments to him. After last payment, he drops off. He offered to PM for me for a discounted rate because, after all, he has interest in the properties. However he is worried because he doesn't have a RE license. The way I've looked at it was we are both owners for now. He's worried about legal ramifications that I or maybe a tenants could bring. If something could go wrong.
My question isâ¦ the way we have this deal set up, is he protected from being fined for not having a license? And if he is, how? If he is not, what can we add or change to make this work without getting a RE license (waiver, ownership in my LLC, etc). Please advise.
In my state, a person can manage their own properties without having a license. It is when they start managing for others in exchange for compensation that they run afoul of the law.
Since he owns a portion of the property, he should be fine. It is when he drops off the notes and you own 100% of the property that he will be in violation. At least this would be the case if you were located in CO.
The 'legal' argument sounds bogus to me. He's trying to skirt the work and responsibility. I would negotiate where 10% more of my payment buys principle/ownership. Now you will have to do it yourself or hire it out. You probably don't want a PM that's negative and angry @Chad Hurin even if they have an interest in the property!
Thanks for the responses.
Yes @Mindy Jensen , I think It is very similar in NC. He at least mentioned that exact scenario. I feel like after he talks with his attorney itll be know that it is ok.
@Steve Vaughan , He is very willing to do it and actually prefers to do it but very careful and doesn’t want to get in trouble.
Not an atty, but if the property is owned by a trust, then neither of you are the owners, the trust is. As such, the trust documents determine who may do what but I pretty sure that as a legal entity, the trust would need to hire a third party manager if the role is not defined as a function of the trust managers. Very round about way of saying talk to an atty.
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!