I have a deal I am working on that has a motivated group selling their parents house. The trustee (responsible child) has payed the equity line while the other 2 children just want the equity for the past year. They have a credit line on the house of 6% of ARV and are asking about 80%. I am looking to construct an offer for Sub2 and a note for a total of 60%. The house needs cosmetic fixes to be liveable
What are the hurdles when dealing with heirs?
Hurdle #1 - Get the terms and facts straight. Either your seller is an executor of the will of a probate estate or trustee/successor trustee of a trust.
Hurdle #2 - Slim chance your sellers will be able to access the line of credit as they're typically written in such a way as to terminate or be frozen upon death of the borrower.
Hurdle #3 - If the sellers are able to tap the credit line, I'd say there's a higher than average chance the due on sale clause will be triggered. About a 100% chance if the heloc is a reverse mortgage HECM.
It might be possible to buy using an AITD drafted in such a way as the sellers' equitable portion is jeopardized if the loan called, as long as you are financially prepared to pay off the underlying LOC if needed.
Agreed with Rick.
Just to add a bit, not only must the terminology be used correctly, it must also be spelled correctly in any written communication with prospects. Notice that Rick correctly wrote "executor," not "executer." If I'm a prospect and you send me anything saying "executer," my skeptical antennae are immediately raised to such a degree that any further errors - since an error has already been made on such a basic point - will cause me to run from you.
Another basic error might be calling someone an executor when one is actually an administrator, or vice-versa. The former title applies to those in charge of a testate estate, the latter applies to those in charge of an intestate estate.
It may be that a prospect is unaware of such distinctions, but of course for the sake of your credibility it's good to err on the side of caution. Your prospect may well be a fastidious bastard like me.
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