Wholesaling Co owned property

Member since 2020 · 20 posts · 0 votes

I have been approached by someone who wants to sell their interest in a property. They own 1/4 interest. I would like to purchase and promptly put the property up for sale since I would have equitable interest. Is there any issues anyone sees?

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Tom GimerBusiness Member

DMV · Member since 2017 · 3k+ posts · 3k+ votes

This is the best thing I’ve read during the crisis. So thank you.

This tale includes government corruption, several conflicts of interest, defrauding the elderly, and an NDA that doesn’t seem to fit logically in any place in the fact pattern.

I can’t wait to read the next chapter. Hopefully it spells out the deal between buyer, attorney and 25% owner!

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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
6y
You could only sell your 1/4 interest....not sure how many would be interested.
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OP
Member since 2020 · 20 posts · 0 votes
6y
@Wayne Brooks I don’t understand...I have seen so many discussions that equitable interest would allow me to offer the property for sale. What could happen if I go through with my plan?
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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
6y
@Account Closed Geeze.....
When wholesalers talk about having “equitable interest”, an often misguided concept, they have a purchase contract with the Sole owner. That contract is what they are trying to sell, not one for 1/4 interest. Just like the guy you are dealing can’t sell the Entire ownership of the property, just his 1/4 interest.....you can only sell what you own.
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OP
Member since 2020 · 20 posts · 0 votes
6y
@Wayne Brooks. Ok, what could happen if I offer the entire property for sale? In my state, I read that owners are exempt from state procurement laws.
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Barry Pekin
Specialist · Purcellville, VA · Member since 2015 · 1k+ posts · 841 votes
6y
@Account Closed,
If you have ownership or control of only part of a property, then you can only sell that part. You cannot force everyone with an interest to follow your wishes.
Move on. This is not something to waste your time on, unless you can get everyone else on board.
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OP
Member since 2020 · 20 posts · 0 votes
6y
@Barry Pekin
Well, I can offer the property for sale as long as I can convince the other owners to sell their portion to me while I am negotiating. That would be ok, right?
The other owners are in their 80’s and I know they are not functional, that is how I can buy the 1/4. However, the RFP to put the land for sale is due in a limited time and if I don’t put for a proposal to sell then I will not be considered
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Barry Pekin
Specialist · Purcellville, VA · Member since 2015 · 1k+ posts · 841 votes
6y
@Account Closed,
I don't know what you mean by them not being functional, but you can't get anything without their cooperation. If you can get that, then you can make a deal. If they're not of sufficiently sound mind to make a deal, you will need to talk to whoever has power of attorney for them.
If you can't get this done before your deadline, you will miss your deadline.
Matt, it's simple. You can't force other people to do what you want, and you can't do a deal unless you have control of the property. Just because there's a deadline, it doesn't mean you can cut corners. If you try to sell it or assign it or whatever, and you don't have control of it, you're setting yourself up.
Seriously. Either get the entire property under contract or move on. Of course, if you can't get it now, keep following up. Things can change.
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OP
Member since 2020 · 20 posts · 0 votes
6y
@Barry Pekin
Setting myself up for what? What could possibly happen? If I respond to the RFP with a non disclosure agreement, I should be fine.
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Barry Pekin
Specialist · Purcellville, VA · Member since 2015 · 1k+ posts · 841 votes
6y
@Account Closed,
It's quite simple. You can't sell something you don't have, and you don't own the house.
If you can get the other owners to sell to you, then you own it. If you're not trying to buy it, but rather wholesale it, then you need a valid contract that gives you 100% interest in the property.
What could possibly happen? Let's see... You're negotiating to sell a house that you don't have the rights to sell. I see a lawsuit maybe. Possibly brokering without a license (since you don't have 100% equitable interest). Possibly fraud?
It sounds to me like you're wanting to force a deal because there's a limited time frame for you to make it happen.
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OP
Member since 2020 · 20 posts · 0 votes
6y
@Barry Pekin
Thanks for your insight. I offered the property for sale through thenRFP process. On the questionnaire there was a question on title and encumbrances. I answered “title clear at closing”. That should cover any legal issues.
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Barry Pekin
Specialist · Purcellville, VA · Member since 2015 · 1k+ posts · 841 votes
6y
@Account Closed,
Cool. Keep me posted on how it goes.
Good luck!
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Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
6y
So... ask for advice, get same advice from everyone, ignore advice.
This has all the makings of a train wreck but It should be interesting to hear how it turns out.
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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
6y
@Account Closed To be clear......you have No Idea what you are doing here. Apparently, you have been listening to some guru type talk and you are picking terms that that you don’t understand, confusing bits and pieces of different ideas and are absolutely clueless on the basics of how real estate transactions legally have to work.

It sounds like the property is legitimately being offered for sale (the RFP (which is usually a request for bids when gov’t agencies seek contractors, not offering a property for sale) but one of the owners is trying to do something by their self?
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OP
Member since 2020 · 20 posts · 0 votes
6y

@Wayne Brooks my business partner is the legal counsel for the government agency and we have signed a non-disclosure agreement. All I need to do is work on the other owners to sell their interest to me. The general counsel said he thought they would sell when they never hear from the government agency and get frustrated. I think in talking with the agency they will wait for me to get the complete interest. They delayed the RFP due date for me already.
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Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
6y
This is the best thing I’ve read during the crisis. So thank you.

This tale includes government corruption, several conflicts of interest, defrauding the elderly, and an NDA that doesn’t seem to fit logically in any place in the fact pattern.

I can’t wait to read the next chapter. Hopefully it spells out the deal between buyer, attorney and 25% owner!
Gimer Law516 Reviews
Website View Page
4 Reply
Charlie MacPherson
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
6y
@Account Closed This is atrocious.

Listen to what you said:

"The other owners are in their 80s and I know they are not functional, that is how I can buy the 1/4."

You're actually planning to screw elderly people who by your own admission are not in any position to enter into such a contract.

You, my despicable, unethical friend, need to be taken to the woodshed.

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OP
Member since 2020 · 20 posts · 0 votes
6y
@Charlie MacPherson. What I meant by not functional is that they are a family that do not get along. I was told by the person who I bought from that they tried to put the property up for sale but couldn’t get everyone on the same page and wouldn’t sign the listing agreement.
My plan is to file a partition suit if they don’t want to sell to me.
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Charlie MacPherson
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
6y
@Account Closed Then you need to be much more precise in your use of the language.
In that case, you are wasting your time. They've already said that the other parties cannot agree to sell and you bought 25% of that deal?
You have an impending deadline for an RFP and you want to file a petition to partition. Those two things are like oil and water. The petition will take time and the RFP deadline won't allow it. Not to mention the expense of filing in court.
The person who convinced you to buy their 25% share suckered you into a bad deal.
They turned their headache into your headache. You're now on the hook for 25% of the property taxes, insurance and utilities if any.
The best course of action is either to meet with the other owners and convince them to sell, or to sell your 25% interest to one or more of the remaining owners at whatever discount you need to take and get this turkey off your hands.
BTW - the RFP process (and I've been directly involved in many) is by nature a competitive bidding process. That means unless there's something truly unique about the property, you're unlikely to get top dollar for it, even if you can convince the others to sell.

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OP
Member since 2020 · 20 posts · 0 votes
6y
@Tom Gimer
If I went and changed the property deed that would be fraud, but I am offering the property for sale as an owner of the property. I just need to get the other tenants in common to sell to me now so that I can close.
I was told you can sell anything as long as you get title before closing.
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OP
Member since 2020 · 20 posts · 0 votes
6y
@Charlie MacPherson
I told the realtor that I worked with on the 1/4 that I am going to file a partition suit. It was the same realtor that one of the parties used when try to cobble the group together to sell. I think that threat scares them that they wouldn’t get much out of the deal that way...so they would cut their losses and sell to me.
I know the government wants to put a road through the property, and have applied for a grant from the state...I know that will go to my bottom line from them. I got the go ahead from the agency to do core drilling on the property for geological surveys as they already have said that I am almost assured the site will be chosen. I think this will speed up the process of the other owners thinking I want to develop the land and get them more in a tizzy to just get out before getting run over through the partition route.
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Charlie MacPherson
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
6y
@Account Closed So there's a LOT more to the story than was first presented.
If the government wants to run a road through the property, you're at risk of them taking it via eminent domain. In theory, the owners will be paid fair market value if that happens. In theory.
Still, unless site work is a requirement of the RFP, I wouldn't be spending money on it until you're absolutely certain that the government is buying it. Doing that to scare the other owners into selling doesn't make a lot of sense to me, but it's your money.
As far as selling without the consent of the other owners, you cannot sell what you do not own. Representing to the buyers that you have a marketable property when you don't is fraud, plain and simple. You can sell your 25% ownership and nothing more.
At this point, I'd get a real estate attorney involved. One that you pay and who is representing your interests.

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Bill F.
Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
6y
This has to be a troll account meant to stir the pot and get a RE investor to say something embarrassing so it can then add flavor to an anti-landlord hit piece. "Matt's" only other thread is about getting a TIC and then selling the whole asset.

That's the best case.

Worst case, this guy is, like @Tom Gimer said, trying to default the elderly, shady backroom deals, people signing NDAs randomly.

Glass half full, Tom, @Charlie MacPherson, and @Wayne Brooks could end up on an episode of American Greed.
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OP
Member since 2020 · 20 posts · 0 votes
6y
@Bill F.
I am the president of a real estate brokerage firm...we have never done a deal like this. Per state law, I am an owner and exempt from state licensing laws.
My other partner is licensed. He suggested we do this under a different LLc so that we stay clear of any issues with him. There are four of us as members of the firm(one I said before is a lawyer and represents the government agency advertising the RFP). I just wanted to see what everyone thought.
We do a lot of work with local government and I think with their help we can pull this off. They really want to work with us and see us succeed. The NDA is so that no one at the government discloses that we are contemplating entering a real estate deal.
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Bill F.
Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
6y
@Account Closed

Sure, I'll bite.

It was one thing if you were some rando who had listened to a few podcast or read Rich dad, Poor Dad asking these questions, but you run a brokerage!

Seriously? This story keeps getting better.

You are telling us you, who run a brokerage that presumably helps facilitate the sale a real estate, and your partner, who is licensed by some state to help facilitate the sale of aforementioned real estate, don't know that you can't sell a property that you only own 1/4 of without the folks who own the other 3/4's consent?

Furthermore, you two think it is ok to represent to a buyer that you own the entire property when in reality you don't.
I honestly don't believe you own a brokerage.

What happens when you can't get the other owners to sell and the gov agency wants to buy the property? ~~The gov agent you are colluding with~~ Your business partner who works for the government going to sweep things under the rug for you? Or are you relying on the NDA to keep your fraud under wraps?
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OP
Member since 2020 · 20 posts · 0 votes
6y
@Bill F.
I am working on my own behalf. My broker has nothing to do with this. His suggestion was to use a separate LLc.
I am only proposing the land to convey. Anyone could see that I am an owner given my 25%. When a government entity puts an RFP out for computer equipment, does the government entity assume you already own the computer equipment needed? No, it is assume that they award the business and then you buy the equipment to complete the job...no different here.
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