This REO is assignable?

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This REO is assignable?

Teri B.
South Bend, IN · Member since 2016 · 69 posts · 22 votes

Hello,

I couldn't decide how to take title of a REO we just got under contract. In case we wanted to BRRR, I put the contract in name of my spouse and I to make delayed financing easier. One day later, I regret that and wish I would have put in the name off the LLC because it is probably going to be a flip. And, I want this to be a clean trail for tax/liability purposes.

The contract has been sent along to the bank to sign, and I don't want to screw anything up. I downloaded the Purchase agreement and found all instances of the word 'assign' or 'assignable' and don't see anything that would prevent me from assigning to LLC at closing.

Or, maybe I missed the wording.  Can you tell me what to look for, please?

Thanks for your time.

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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
8y
It’s in the bank addendum, not your state mls contract, somewhere.
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  • Teri B.
    OP
    South Bend, IN · Member since 2016 · 69 posts · 22 votes
    8y

    Also, not seeing anything that prevents resale in any time range.

    If indeed it is assignable and the title company is ok with it (they seem rather cautious in general - probably won't use them again - I picked them, closing all my cost on both sides), will it potentially make the bank upset if I do it (don't want to mar changes for any future transactions)?

    Thank you.

    0Reply
  • Teri B.
    OP
    South Bend, IN · Member since 2016 · 69 posts · 22 votes
    8y

    One more thing. I already dropped the EMD check off at the Title Company. Bank required that before they would sign off on the contract. EMD check is in our personal names. Thanks.

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    8y
    It’s in the bank addendum, not your state mls contract, somewhere.
    1Reply
  • Teri B.
    OP
    South Bend, IN · Member since 2016 · 69 posts · 22 votes
    8y

    @Wayne Brooks

    Thanks for the reply. I've not used any local MLS forms. The Purchase Agreement is theirs,not mine. And, I looked at the addendums,too. It's so weird because I can't find anything. For what it's worth, the auction contact said these are not homes that have not been 'turned into HUD' or similar -don't recall exact wording. She said the bank is trying to sell-off the homes themselves. I'm going to print out and really eyeball it again. The Seller in the contract is a mortgage company who is DBA as an LLC. I googled the LLC name and it pulls up a page where it looks like I can apply for a mortgage. I can see in the history that it went to foreclosure auction locally a month or so ago.

    If indeed there is nothing, do you see any consequences from trying to assign to our LLC? I'm not even sure what form to use.

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  • Teri B.
    OP
    South Bend, IN · Member since 2016 · 69 posts · 22 votes
    8y

    So, I went back and read all 15 pages, again, line by line.

    No mention of not being able to assign the contract nor time restriction on disposing of the property after purchase. The home is currently owned by a mortgage company by way of foreclosure. On the contract the middle-man (company) that I've been working with is acting as attorney and agent for the mortgage company which is DBA as another company.

    Maybe they don't care? Anyway, I'd still be the owner via the LLC. Not my spouse, though. Single member.

    I'll call the middle company tomorrow and see if I can talk to anyone about this.  But, I hate to muck this up and maybe I'll just have to take title in our personal names and count this as lesson learned. It's not been signed off on by 'bank', yet. 

    Does anyone know if I can still run expenses through my newly formed LLC (as a flip) for the purpose of keeping expenses separate for this property if we hold in our personal names? The personal name thing was only to make BRRRR easier. It's a better location that we can normally get at our price point. But, it would only be a 1.3 or 1.4% rental and my goal is 2% or better.

    I could double close by that's another $1500 that will chomp into profits.  

    Thanks for any input.  

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    8y
    Okay, this doesn’t sound like a normal large bank owned property, Matabele more like some hedge fund/secondary mtg guys. Sounds like it wasn’t on the mls which would confirm this. So, if there is no restriction on assigning, the no problem.......just let them know you’ll be taking g title in your llc, do the assignment, send it to the title co.
    1Reply
  • Jason D.
    Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
    8y
    You can amend the purchase contract to change the buyers name, you don't need an assignment. Speak with your agent, they can write up an amendment
    1Reply
  • Teri B.
    OP
    South Bend, IN · Member since 2016 · 69 posts · 22 votes
    8y

    Awesome. No, it wasn't on the MLS, so yes, thanks for clarifying. How do I let them know? Just notify the closing agent for the middle company via email? I see varying assignment forms online. Some require seller sign-off and some don't. In this instance, is their sign-off needed?

    Hopefully that's all the questions.  Appreciate the help.  

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    8y

    Agrre that a simple amendment changing the buyer name is the simplest.  This "middle man" co concerns me a bit though, but hard to say without knowing the exact structure,

    1Reply
  • Teri B.
    OP
    South Bend, IN · Member since 2016 · 69 posts · 22 votes
    8y

    @Jason D.

    Sorry, I overlooked your post.  I'm an agent so I can do that.  Easier.   I'll call tomorrow and talk with them so I can get a better idea of options, as I get what Wayne means - hard to know exactly depending on their structure.  I'm guessing they act on behalf of the seller because there is no seller sign-off line on contract, only the auction company.

    Thanks for the help, Gentlemen.  

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  • Teri B.
    OP
    South Bend, IN · Member since 2016 · 69 posts · 22 votes
    8y

    So....the Middle man doesn't sign any forms that are not their own, so it's a no.  I know this because the title company is requiring their own internal form to be signed and I'm now switching title companies because we can't proceed otherwise as the seller won't comply.  

    I asked if I could get the buyer named switched (explained it's our LLC) while we were at it but that triggers it to be resubmitted to the real seller ... aka mortgage company.... again, which will invalidate my accepted offer.

    Newbie lessons are the pits!  

    So, back to my original question. What is the cheapest way to get it into LLC name? I don't want to Quit Claim for title chain reasons.

    I guess we could just flip in our personal names. Does that mean I can still run expenses through LLC name?

    Thanks, again.

    0Reply
  • Teri B.
    OP
    South Bend, IN · Member since 2016 · 69 posts · 22 votes
    8y

    Solved. Found an awesome title company and they will just do a new warranty deed to the LLC for $100, at closing. Insurance will 'transfer over' since done at the same time. Whew!

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  • Teri B.
    OP
    South Bend, IN · Member since 2016 · 69 posts · 22 votes
    8y

    False.  I was told today that the info was incorrect.  The title insurance will not transfer over.  I'd have to pay for that again.  So, $100 plus cost of policy.

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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    8y

    Who are the members of the LLC? If the buyers own the LLC in equal membership percentages they would meet the definition of "the Insured" under the standard ALTA owners policy and would NOT have to purchase another policy.

    If not, they could decline owners title insurance on the acquisition and purchase it for the LLC transfer. Title would just need to run judgments on the LLC.

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