This is my first assignment deal, when we are all set to close the deal, the sellers attorney has an issue with the words AND OR ASSIGNS in the purchase contract and would like to speak with my attorney as she thinks there could be tax ramifications.
I am in New Jersey.
Now the attorney I have hired is only to collect the deposit monies from my end buyer for assignment. Not sure if my attorney will be able to field this question from the sellers attorney.
Is there a way to make this deal happen if the sellers attorney will not let me ASSIGN.
Do you have any transfer tax there? Only thing I can think of.
Sounds to me like the seller's attorney thinks his client sold too low if you can make a profit and is using Tax Code to fog the battle field.
Ask your attorney for a "Hold Harmless and Indemnification Agreement" to cover any tax liability arising for the seller other than the customary gain on the sale arising from or out of any specific assignment. I'm sure there isn't any liability for the seller. That, and/or ask specifically what tax ramification there might be from Joe buying or Bob.
Problem with wholesaling is that you're walking a thin line to begin with, when backed up in confrontation you may be limited as to your ability to play hard ball, do you really want to go to court? Probably not.
This may not be a battle you want to go to.
Who is your buyer, is it a cash buyer? Is there any seasoning requirement to hold title. How motivated is your buyer? There are many ways to skin the cat (I like cats too BTW). Take the assigns out and buy it,
Speak to your attorney! :)
Seller Attorneys are not really ever pleasant to work with. They just SLOOWWWWW things down almost everytime.
I've had no problems so far with assigning a contract in New Jersey, but I'm sure I'll run into your situation at some point. We basically just use the standard Sales contract and use the And or Assigns as well.
Best bet is to either have your attorney handle this or find an attorney who understand assignments better.
I agree with Scott. The best solution is to have your attorney calm the other attorney's concerns. Other solutions include double close and assigning your interest in the entity that holds the contract to the end buyer.
Unfortunately Attorneys and realtors makes wholesaling very difficult. You can do a double close with transactional funding but there will be closing cost and funding fees included. If you can absorb those cost then it can salvage your deal.
Thank You, Bill, scott and Ibrahim. Great piece of information.
Yes we do have transfer tax here in New Jersey.
Yes I will ask my attorney for Hold Harmless and indemnification for any tax liability arising for seller.
Cash Buyer is motivated, he can't wait to close. If I buy means I will have to double close. The buyer still needs to order inspection. If I close when can the order inspection and what if he backs out.
I need to find an attorney who better understand this.
Yes I can double close, if I double close who does the inspection ,my buyer? what if there are issues with inspection.
If you buy, you do your inspection, you can have your buyer inspect and then waive inspections with you.
You might let the end buyer contract with the seller, if the seller is agreeable and have either one pay you a release fee to terminate your contract and walk away. :)
If the standard contract that you use in your state is assignable …then why you even put “and assign to” ? have the seller attorney review the contract as is …have separate contract signed between you and your buyer (assignment) and then proceed to closing
Do you have to disclose to seller attorney that you plan to assign the contract ?
An option you may want to seek is someone to lend you the money for the transaction. If you have 10 or 15K of profit worked in, then you can ask a very wealthy person to lend you the money to purchase the property and you'll pay them back the very same day. My investors LOVE this because they make 1K for literally writing me a check for 4 hours. One of my investors is a physician and recently told me, "Per hour, I make more from this than I do doctoring." Show them that you already have the property sold and it is about as close to risk free as possible. I be you someone on BP that is close to you would even be willing to put up the funds for this.
If there is an end buyer with full funds in escrow, there are transactional lenders out there that will be happy to provide the funds to close.
I spoke to my seller's attorney, I explained to her the situation and she is Ok with me assigning the contract but made me prepare a new contract which will be executed today, I forwarded her the new contract with my signatures.
But she was asking for information of my cash Buyer attorney, and I told her, that I cannot provide you with that information until the revised contract is executed by both parties and I have executed the assignment contract with my end buyer.
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