All Forum Posts by: Jerel Ehlert

"Specialized" for lawyers means they are licensed by the State Broad of Legal Specialization by meeting additional requirements set out by that board, in addition to being licensed by the State Bar of Texas.  I am not licensed by the State Broad of Legal Specialization, but started as an investor in 2000 and became an attorney after the crash.

Breach of contract covers a lot of ground. Can you narrow it down a bit?

I'm only licensed in TX and not representing anyone here, but why would a CA resident need a CA LLC if doing business in other states? That's not typical, unless there's a CA requirement I may be not aware of.

Next, the hardest part about REI is transitioning from a consumer mindset to business mindset. A good advisor (tax, legal, financial, etc.) will help you avoid hazards or reveal opportunities which pay for their services many times over. If you decide to work in TX, most of my flat-rate services are posted on my website. I'm a big believer in transparency. To utilize any lawyer most efficiently, you need to do your groundwork and educate yourself on the law of the jurisdiction where you invest. That way you can frame better questions and understand our answers better. This is where investment groups where you invest come in handy.

A master lease is probably what you are looking for. Lease should be at least 10-15% below market rents for multi-year leases because there is no vacancy loss to the owner, and no leasing commissions (except maybe the lease to you). I would push further, because you are responsible for the maintenance. If you go NNN (for taxes and insurance), 25%+ below market would be expected. I would also negotiate an option to buy during the lease. Most of the L-O restrictions only apply to consumer tenant/buyers. You, however, will never be able to give a L-O. You will also want to record a memorandum of leasehold.

 No.  When there is a consumer, the lender must comply with federal law (Dodd-Frank and CFPB) and with Texas S.A.F.E. Act.  Lender still required to send Notice of Default and wait the required period.  AND there is a 4-month work out period under CFPB.  From 1st missed payment to auction is ~6-months.

PoA should work to reform the note/lien before trying to sell (and understand what they have).  An unsigned note but a signed and notarized (because it was recorded) deed of trust isn't great, but it's not nothing.  Was there an additional lien retained in the deed?  If Nephew is unwilling to sign the note, cure the default, the only recourse is to sue for breach of contract and reformation, under the theory of quantum meruit.  That means Nephew is getting the benefit of the contract that was not signed and would be unjust to allow him to get a free house.

As the investor, not something you will probably want to take up, but if you do, a significant discount to the current value of the "note" would be in order.  Don is a significant resource for note valuation, but like all of us, can get snippy.  His comments hold value.  The original post already had an opinion from an attorney and coming to BP seemed redundant.  Maybe a better question: "Anyone have a better idea?" could have yielded better results.

There are many.  You will want to attend the networking events and meet ups.  My firm drafts closing docs for private lenders.  Because of the competition for funding, private lenders can be choosy about the projects they fund.

 When I was working lists and marketing in the mid-2000s, before law school, I compiled my own probate list and targeted out of state administrators/executors with decedents who owned properties in the counties in which I wanted to buy.  

I sent a letter, hand addressed with pre-printed return label.  One-page letter, 3-color, solid copy.  

My typical response rate on first touch was 4-5%.  Compare that with 1.5-2.5% for an average mail marketing campaign.

Your mileage will vary.

What does probate order say about ownership of house?  Was an administrator appointed?  And given power of sale? Was Mortgagee given permissive notice to submit claims?

What was the relationship between Owner and Seller at time of death? Was a guardian appointed?

Sec. 1351.001 only applies to parent or person with managing conservatorship.  All funds that would go to the minors would be deposited in the registry of the court.  Kids can apply to withdraw their money when they turn 18.

Possible to file a Temporary Restraining Order to stop the foreclosure in this case to get the details worked out through the courts.  One of the rare instances where a TRO might be issued by the court.  The court will requir a bond to be posted to cover the mortgagee's cost to go through the foreclosure again.  A TRO lasts 14-days, but because the foreclosure can only happen on the 1st Tuesday of the month, that is usually good enough to get the last parts of a sale wrapped up.  Here, there are other issues to satisfy, so 14-days from the TRO issuing, a Temporary Injunction hearing will take place to set the terms until all the other matters can be finally resolved by the court.

Most have already identified the key issues: does the PPM comply with federal and/or state securities requirements, what level of investor due diligence are you looking for on the PPM issuer/syndication, what level of due diligence do you want on the underlying real property?

I've put together PPMs for real estate and small business, and they can get complex quickly even for the simplest capital raise.  There are a number of exemptions and exceptions to securities registration the issuer can qualify for based on what the offering is, who will be accepted, and the target raise this round.  Most offerings are covered by federal regulation which preempts state regulation, so most issuers merely have to do an information filing with any particular state.  Jurisdiction will probably fall to the state where the issuer-entity is domesticated.  Supplemental jurisdiction over the offering may cover other states, but you run into federal preemption again.

When examining the issuer, background checks are a minimum.  Verification of claims of prior success are the next easiest.  Reference checks will tell you who their supporters are because no one will give bad references.  In the internet age, you can get a feel for who you are dealing with unless they curate their online presence.  

Checking the real estate deal may be easiest of the three issues, to the extent that historical and current market data is available the data can be verified.  Analyzing the feasibility of the issuer's pro forma is where experience comes into play.  People with advanced degrees disagree on the future value of a project because there are different methods to arrive at value.  Valuating real estate has fewer variations than business because analysis is limited to similar projects within the region (as opposed to the same businesses running across the country and overseas) and fewer variable inputs (wages, supply chains, distribution chains, marketing campaigns, etc.), but still presents challenges because the analyst needs to know what data to include and how much weight is given, and what presumptions to make.  Even with well managed real estate projects, management fees and payout structures can greatly impact returns to the investors.

Hope this helps.

So long as you stay away from consumer loans, Texas is pretty friendly when it comes to letting businesses and sophisticated parties do what they want.  There are commercial financing regulations (found in the Texas Finance Code) to keep in mind, and you will want to familiarize yourself with the Texas Property Code.

Depending on how you are structured, you will want to domesticate your entity in Texas.  While you can buy and sell real estate among other activities, you will not be able to sue or raise claims in a suit if you are not registered as a foreign entity doing business in Texas.  Good new: there is only a one-time filing fee and free annual reporting.  

Usury in Texas is 18%.

There are a handful of us who work closely with the real estate investing community and know how to draft what you are asking for.

I don't think any lawyer will do case assessment on a public forum like this.  There's certainly more to the situation than what can really be conveyed here anyway.  But let me ask a question: If you sue and win, what are the chances of getting paid a judgement?