Attorney in NY making deal difficult (Wholesaling in NY)

Attorney in NY making deal difficult (Wholesaling in NY)

Flipper/Rehabber · Ridgewood, NJ · Member since 2018 · 27 posts · 7 votes

So I have another deal I am working on, and I need help from experienced wholesalers. I know some people just like coming on to these post to bash on wholesalers, so just want to let you guys know that I am 20 and still learning. So if there is any input or advice, you can kindly let me know and I will be open to hearing. Thanks! 

So I have another deal I am working on in ny, it is a single-family home, and I and the seller agreed on the price. However, since I am wholesaling it, the seller's attorney and my attorney have been going back and forth for a week and it has made the seller very impatient. 

Here is the response from the sellers attorney:

My understanding is the following 

1) Inspection is already done. If not, lets do it before contract

2) If he wants to assign to an LLC he owns etc that would be okay- also, please send proof of funds, as I dont have that in file

3) 45 days is find - Probably better to do 60 B/C of tenant see #4

4) My understanding is that the deal was made with the understanding buyer wants it vacant we may need to add more time to closing in the event a summary proceeding is necessary. I dont believe it will be- but I think my seller and tenant have spoken and tenant wants about 60 days notice- which if we go to contract now would work

5) We need at least 5% down on this. 

First Issue-
We cleared up most of the problem, with the tenant and also the earnest deposit we increased. However, how should I go about sending proof of funds? I don't necessarily have the money, but I have cash buyers at the moment, I am just hesitant to give them full details ( such as the actual address) because before I use to trust buyers before signing and then they would go between me and the seller and take the deal away from me. Any advice?

second issue-

I did go to see the house to do due diligence, so I am assuming that's why they don't want an inspection. But I still want to have an inspection contingency for the buyers who come look at the house. I am confident I can wholesale the house, but the inspection contingency allows me to actually showcase the house.

If they don't want the contingency, should I just take it off, and just ask permission for access at the house. Currently, there is a tenant in there who is willing to move on a 60-day notice, so how would I go about that. Do I talk to the seller and tell him, to tell the tenant that I need to go see the house a certain date just for my "funding partners" to take a look at it. (p.s this is my first deal dealing with an actual tenant inside.)

Thanks for any advice given, and if you want to bash me I understand and I don't mind it, Please any experience wholesalers who have any input, I would appreciate it. Thank You and Happy Holidays.

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Will BarnardPro Member
Moderator
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
6y

Sounds like the seller's attorney is savvy and is properly and appropriately protecting the interests of his client. Does your attorney know your exact intentions? If not, why not? If so, what does your attorney recommend?

You have two options here as I see it. Option 1: walk away.

Option 2: You need to talk to the one cash buyer you have that you are quite sure would want this deal and go to him with the deal specs (less address). Get a verbal commitment then explain once you have said verbal, you intend to open a new entity naming him as your 50% partner on the deal. Take that entity and vest your purchase contract in the name of that entity using your buyers POF to provide to the seller's attorney. At closing, you have a separate agreement to sell your shares of your 50% ownership in the new company for your wholesale fee. This way, you are actually the buyer from the start with a legit money partner and a legit entity already formed (it only takes a few days with a rush service formation). Problems solved and you have now wholesaled legally and ethically.

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  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    6y

    The seller's attorney is asking for a POF, and stating stating that "assigning to an llc he owns" is fine (not assigning to a different party) because he is trying to avoid Exactly what you are wanting to do....which is what he should be doing for his client....avoiding going into contract with someone without the intention or ability to actually buy the property. Seems like you are going to be out on this one, or most where a seller's attorney is involved.

  • Wholesaler · Queens, NY · Member since 2019 · 7 posts · 3 votes
    6y

    (I could only answer what I know)

    Hi, I know sometimes when you do the contract between you and the new Buyer (investor) you should put Zero 0 days for Due diligence with sellers attorney.

    Also, if you don't want the new buyer to go behind your back and take your seller you need to have a memorandum of contract put in place.

    I am still learning myself but always double check the information. Happy Holidays!!

  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    6y

    Sounds like the seller's attorney is savvy and is properly and appropriately protecting the interests of his client. Does your attorney know your exact intentions? If not, why not? If so, what does your attorney recommend?

    You have two options here as I see it. Option 1: walk away.

    Option 2: You need to talk to the one cash buyer you have that you are quite sure would want this deal and go to him with the deal specs (less address). Get a verbal commitment then explain once you have said verbal, you intend to open a new entity naming him as your 50% partner on the deal. Take that entity and vest your purchase contract in the name of that entity using your buyers POF to provide to the seller's attorney. At closing, you have a separate agreement to sell your shares of your 50% ownership in the new company for your wholesale fee. This way, you are actually the buyer from the start with a legit money partner and a legit entity already formed (it only takes a few days with a rush service formation). Problems solved and you have now wholesaled legally and ethically.

  • Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    6y

    It sounds like the attorney is protecting the seller from being scammed. 

  • Attorney · Raleigh, NC · Member since 2008 · 4k+ posts · 1k+ votes
    6y

    If you're worried about bona fide purchasers getting between you, as what appears to be a non bona fide purchaser, and a deal to take it away....become a realtor.  Transfers to a non bona fide purchasers create complications for sellers.

  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    6y

    @Richard Lema

    You’re WAY ahead of most new real estate participants in your knowledge. Keep plugging away. The advice about the partnership entity should net you this deal, if followed.

    Private Mortgage Financing Partners, LLC
  • Flipper/Rehabber · Ridgewood, NJ · Member since 2018 · 27 posts · 7 votes
    6y

    @Will Barnard

    Thanks! Can you explain and go more into depth about the new entity. I’m still a bit confused? How would it work and what are the steps to get it?

  • Macon, GA · Member since 2014 · 4 posts · 2 votes
    6y

    @Richard Lema

    Not really hard. Look up starting an LLC. You would have your "Cash Buyer" as a 50% Partner.

    Check out legalzoom or just google it.

    Cost to file are going to vary state to state, also look up drafting articles of operation, or just have your attorney do it. This will explain the role of the partners in this newly formed LLC.

    You can rush the paperwork back for an extra $250 or so on some sites, depending on your state.

    Now submit the POF from your Cash Buyer, who is now also a Partner in the LLC "that you now OWN" and get it to closing.

    Your Cash Buyer shouldn't have an issue with you wanting to operate your real estate investing business ethically and with integrity.

    And you've done everything the seller's attorney has asked of you to move the deal along to closing.

    Then, as he said, have an agreement in place to sell your 50% in this LLC to him for what would have been your assignment fee.

  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    6y
    Originally posted by @Richard L.:

    @Will Barnard

    Thanks! Can you explain and go more into depth about the new entity. I’m still a bit confused? How would it work and what are the steps to get it?

    Get your real estate attorney or any third party service provider that offers entity formation services and file for a new entity. You name you and your cash buyer as 50% share holders. Check with your attorney if an LLC, S-Copr, or LLC with S Corp tax election is bets for you and you "partner" with this wholesale deal.

    Once you have the entity name finalized and it is available, you simply execute the purchase contract with the name of that entity on the deal, no need for any "assignment" clauses or verbiage. You get the POF form your buyer and explain to the seller that the POF is in the name of your money partner (who is listed on the articles of incorporation of your new entity). You show the seller's attorney the entity formation docs which should include the new EIN, the articles of incorporation and the by laws or operating agreement. You have any document which will spell out and stipulate that upon recording of the grant deed from seller to your new entity, you will sell your 50% shares to your partner for X dollars (your wholesale fee). Its really that simple.

  • Real Estate Broker · Auburn, WA · Member since 2015 · 151 posts · 106 votes
    6y

    HOW<<<<SOLID<<<<IS<<<<THE<<<<<BUYER? If you have a buyer in mind or an investor, then just have them do a VERIFICATION OF DEPOSITS and show that the assignment will take place like tomorrow or the next day or even a week from today. ALL investors buying an assignment MUST SHOW ME A VOD with bank or FUND letterhead. Bull crap on copies that don't look legit!

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