Real Estate Wholesaling Questions & Answers

User Stats

98
Posts
65
Votes
Nadia White
  • Wholesaler
  • Monroe, NC
65
Votes |
98
Posts

Memorandum of Affidavit - A must to protect yourself

Nadia White
  • Wholesaler
  • Monroe, NC
Posted Apr 24 2015, 13:01

If there is a lesson I have learned in REI it is that you cannot trust all the people you are working with. I used to be a very trusting person and went by "gut feeling" that people wouldn't pull a fast on me.

That has changed over time. 

One example (true life, happened to us): we sign a contract with a seller to buy their house of $X. Those people are in their 70's, nice, well established people. They are happy to get rid of the house because it belonged to Mom who has been in a nursing home for 12 years and passed away a few months ago. For all those 12 years, they took are of the house and it was a burden. They make that abundantly clear to us.

We flip the contract to a real estate investor (who is known in the county and owns 15 houses). After negotiation, we agree on a price and on a closing date. We also agree that, since he doesn't care who does the closing, we would use our attorney, who can close in less than 5 days. We get proof of funds and start the process.

The very next day, we get a phone call from his attorney telling us that he takes care of the closing. First hiccup, but we didn't think too much of it, eager to please him and get to business.

Th day before the closing has to take place, we get informed by the attorneys that the closing is postponed because our buyer (to whom we had assigned the contract) contacted the sellers and tried to negotiate with them, behind our back.

Fortunately, we had filed a Memorandum of Affidavit and in doing so we clouded the title. 

My point in telling you this story is that, no matter how you trust people, how good your gut feeling is, never deviate from your business principles. Make it a policy to protect your business in any way you can. It's worth it. You are working for it!

I wish you good business out there! :)

Loading replies...