All Forum Posts by: Jenifer Levini

PS. Another way to get around this it to add a name onto title after the transaction with a non-arms-length transaction such as a gift. There is probably some reasonable time to wait, like a year, before doing this. If youre in California, your local recorders office will have the exemption forms that allow these changes without triggering a taxable event.

@Chris Mason I refuse to answer any questions about who is on drugs since they could be friends of mine. 

Here's the scoop. Banks like to have the same people or person on title as on the mortgage. To take this example to the extreme, imagine that one person took out the mortgage but 20 people were on title. Then imagine that one or more of the people on title decided to sell the house. They put it on the market, a buyer comes along, and the title company doesnt keep track of all the people on title, so the sale closes. Then the person who originally took out the loan says he doesnt have to pay any more because he no longer has the house and he didnt sell it.

The people who did sell it had no relationship with the bank as they never signed a contract with the bank. They didnt know about the "due on sale clause." And the money is gone... all spent on super strong margaritas on a tropical island.

You can say that the bank can track down the original guy they lent the money to, and go after him. But if the money went to a different owner, that guy may have empty pockets and bank accounts. So they'll never get their money back. 

The bank can try other remedies like foreclosure against the bona fied purchaser. But its not clear that they'd recover any monies.

The way people generally get around this is to set up a trust after the sale closes. The buyer puts the property into a trust that then becomes the owner of the property; and, both or all of the other people are beneficiaries of the trust.

I'm thinking of putting my Santa Rosa, CA, house back into the short-term vacation rental pool & letting someone else do the management since I'm a few hours away. Looks like there are a few companies in this space: TurnKey, Vacasa, Evolve...

Can you please let me know about your experiences with these companies, the good, the bad and the ugly? Why would you recommend one over the other? Are there better companies that I havent found?
I am looking for full service management with boots on the ground to do the cleaning, gardening & keeping supplies, in addition to managing the online marketing/listings. Thanks in advance for your ideas!

PS. This house has been a vacation rental in the past.

Before you consider raising rent in Santa Rosa, read and follow up on this; https://caanet.org/gov-extends-bans-on-rent-gougin...

Law in effect on rent gouging after fires.

What I dont understand about @Sandi H.'s suggestion is: if one California LLC is managing multiple LLC's (regardless of where they are located) the entire point of having multiple LLCs to isolate properties from one another in different entities is lost. It would take a smart lawyer about 14 minutes to trace back to ownership of the out-of-state entities to the California LLC and then all of them would be liable for an accident that happened in any of them. This completely defeats the purpose of having individual entities.

Some states have Series LLCs that solve this problem by making it less expensive to have multiple LLCs. All of us California investors should put pressure on our state legislators to allow Series LLCs here so people do not do these wacky schemes like forming out of state LLCs that are manged by a CA LLC as a shady way for evading state taxes.

The state has a significant amount of money to gain by enforcing tax law. If you think youre going to outsmart them by following this sort of advice, youre taking the risk.

Hello @Jonathan Bowen, under the law an entity such as a c-corp, b-corp, LLC, etc. has the same contracting rights as an individual person. If, in your state, a person can sell (or lease) their own real estate holdings, then a formed entity should be able to do the same.

An interesting variation would be whether a DBA formed within an entity, or entities that are nested within entities could sell wholly-owned real estate. In those cases one would look to the Operating Agreement or corporate bylaws to see the power the mother company granted to its subsidiaries.

This home is now available off market.

Here’s an answer from a lawyer's and real estate investor’s perspective. As an investor myself I understand wanting to keep expenses as low as possible to maximize profits. However, as a real estate lawyer, I understand why it makes much more sense to engage a professional’s services.

An LLC is a legal entity used both as a business management tool and a means of limiting liability. Everything about how your business is going to operate is going to be determined when you create your LLC's Operating Agreement. When I work with real estate investors I counsel them on: the roles each person will play, the obligations to each other, how the banking and finances will work, the taxes, the obligations to buy out each other and the spouses of each member when something goes wrong like death or divorce, the roles of investors, partners, employees and managers, setting up DBAs, leases and other contracts, and dozens of other aspects of running their business. In other words, I see my role as a lawyer is to make sure they have thought through and understand the laws about every aspect of their business. Then, that they manage their business along the lines that they decided in the formation process.

When people use a site like Legal Zoom, theyre getting a generic agreement. Frankly, theyre choosing among options that they don’t really understand. And end up with a document that they never look at again, believing that this somehow gives them some protection.

Ive read the law suits that resulted from every word of the Operating Agreements. So when I choose the words in an OA, I understand exactly what can go wrong or right by using that word.

One of the uncertainties of entity formation is that your entity will not protect your other assets. For example, you'll be sued by a tenant and end up losing the home you live in or other assets. This is from a legal attack called "piercing the corporate veil." In California, Legal Zoom has lost several huge class action lawsuits because the entities they formed did not protect the LLC members in the LLCs they formed. If youre using Legal Zoom, you might want to google the lawsuits they've lost in your state to see how severe the problem is.

When you hire a lawyer who works thoughtfully with you to form your entitie(s), you have a team member who will explain things and protect you. Knowledge is power. Having someone who will go to bat for you is invaluable. The wealthy people all have lawyers who create their entitles because they know that having this safety net is worth more than a few thousand dollars. And when something goes wrong, the price of a lawsuit starts at $20,000.

It’s prudent to invest $1500 to potentially save $20,000++ and years of misery if something goes wrong.

If youre always looking for the cheapest ways of running this business, you can safely assume that things will go wrong and you will need the liability protection of your LLC. Real estate investment is a long game.

This is an interesting conversation that seems to occur every few months on this website. One of the reasons there is no concurrence on the legality of "wholesaling" is because wholesaling is a category of many different types of real estate transactions that occur without licensed agents. Some people here are referring to assigning contracts as wholesaling. Whereas others are doing these complicated double closing, alphabet soup transactions... I've seem many variations come over my desk, as a lawyer writing contracts for some of these deals. AS they say, the devil is in the details. There are ways to do it legally, and certain acts that are legal violations.

I disagree with @Jason Palmer that license laws are there to protect the industry. Theyre there to protect the public. And even with those laws there are still unethical agents and brokers.

Right now, the biggest victims are the poor people who are looking for ways to "get rich quick on real estate." They give their meager savings to these real estate "gurus" who claim to be able to teach them ways around the laws, ways to do deals without needing a license. These people have so little money that they cannot even afford a license or to take classes at a real estate training school. They pay these shysters and subscribe to their database services to send out thousands of letters to potential home sellers.  90% of these people who call me, the techniques they are being taught are fraud.

There are legal ways to wholesale. But each step in your process must not break any laws. If you dont know what youre doing, you could be breaking numerous laws. And those people who have gone through the time and money to do it right, the brokers and agents, who are losing deals because someone is skirting the law are extremely likely to report that illegal activity. In California, loss of one deal could be loss of $60,000. Obviously, if anyone knew they were losing that much money they would try to put a stop to it.

The off-market price will be $849K. Contact me directly