All Forum Posts by: Keith Thompson

@Ned Carey

Revised now that I have Internet connection back...

-Lift Station- I had the same question - what the heck is that...  it pumps sewage from a lower elevation to higher elevation so gravity can then take over. I had to look it up...

@Ryan M.

1) FL court will surely grant you an easement to access the property, via some route, not necessarily through the apt prop.  Even though you may think that is the most obvious path, the Court gets to choose.  The width of the easement will also be in the Court's purview - which may not be sufficient to get a large truck or construction equipment through.  I've seen easements only 10'wide - there's a lot that won't fit through that hole.  I doubt that @Jay Hinrichs meant that Title Insurance plays a role in your rights to access, because it does not, it's an operation of property rights equity.  However, without Title Insurance, you will have to foot the bill. BTW, that may have had to foot the bill anyway even with TI since TI often excludes various types of challenges, including known and unknown easement issues (read the contracts). Call a RE Atty to get assessment of prospects and estimate of the cost.

2) The Apt owner(s) may explore building another lift station (if that is indeed still needed (per septic reference)), but it will be costly. I think the same court might grant reciprocal easement for sewage (if needed), out of equity. Presence of the lift station may indicate a logical path to public sewage pipe (if that.

3) My reco... Assess the value of your property completely separate from the apt bldg use, to determine if the court costs are worth it.  That's your benchmark.

Sometimes initiating the suit lights a fire under othrwise reluctant parties and brings them to the table.

Once initiated, the Apt owners may see the value in owning the parcel vs building another lift station plus counter suing you for easement in their favor. Be ready to deal, don't get greedy. Get in, get out, get paid.

I once bought a Townhouse development parcel containing a culdesac, street, parking, common sidewalk & playground. The HOA refused to deal... until we headed to court. It took three years to get paid; yes, it was worth it.

@loren - get attorney to answer this one. Too many unknowns to rely on free forum responses. 

-Lift Station-  pumps sewage from lower elevation to higher so gravity can then take over. I had to look it up...

1) FL court will grant you an easement, via some route, not necessarily through the apt prop. irrespective of Title Insurance, though you will have to foot the bill. Call RE Atty to get estimate.

2) Apt may choose to build another lift station, but it will be costly. I think the same court would grant reciprocal easement for sewage, out of equity. If the lift station is there, I suspect so is the path to sewage pipe.

3) Assess the value of your property separate from the apt bldg to determine if the court costs are worth it.

Sometimes initiating the suit lights a fire under othrwise reluctant parties and brings them to the table.

Once initiated, the Apt owners may see the value in owning the parcel vs building another lift station plus counter suing you for easement in their favor. Be ready to deal, don't get greedy. Get in, get out, get paid.

I once bought a Townhouse development parcel containing a culdesac, street, parking, common sidewalk & playground. The HOA refused to deal... until we headed to court. It took three years to get paid; yes, it was worth it.

@Adam Zacharski - I doubt I can answer satisfactorily, because I didn't know then and haven't researched further since, the IRS law/policies that lay out their options to buy my end or release the lien.

Someone else with deeper knowledge may be able to enlighten, I can only relate what happened.  I sought counsel upon discovery of the IRS lien (after the auction and with my deposit on the line), followed the advice to contact IRS to see if they'd release the lien or buy my position, and the IRS released the lien against the property.

I could speculate as to why, but it would be only that, speculation.  My point is, with only my limited direct experience, don't let an IRS lien automatically stop your pursuit of the deal.  Conventional wisdom is that IRS lien must be satisfied, and I believe that to be true, but not necessarily by the buyer.  The lien can be released and remain in place against the former owner, and any of their other property.  If I had the problem again, I would consult one (or more) of the RE attorneys that I use.

An unsatisfying answer, I am sure, but that's what happened.

@Katherine S. - so... Walking away from the deal because of the addendum... I get it, that would have been my first response too, and it was as I read through the pages. After only a couple of paragraphs, I saw the one-sided nature of the document and had the exact same reaction, as reflected by @Ned Carey.  Then I checked my ire, took a breath and actually said to myself, what if this were my deal, what would I do... maybe that's why I actually read the rest of the addendum.

LIFE LESSON (for me, you're welcome too)... There's a class I took about 15 or so years ago - literally the most impactful class I ever took - no kidding.  High school, College, Professional Development, RE Investing, etc... - no class in any of these categories nor any other class I have taken holds candle to this one.  Almost instantly after finishing the course and literally, ever since, I began applying and continue to apply lessons from that class to business and home life alike.  The class was called "Crucial Conversations" and it changed my life, the way I look at conflict and my response to it... for the most part... I still have my moments, but they are much fewer and farther between.  I use the techniques in buying, selling and remodeling negotiations.  I use them at home, in the parking lot - heck, pretty much everywhere.

Basically, the nut is, in hard conversations and situations, the type that generally have the potential for high emotion and high impact, when the conversation gets difficult, it's often easier to just let emotions govern and cut to the bottom line - "Frak-Off"!  It's the Easy Response, and the TYPICAL ONE.  But, what does that response accomplish?  Does that move the ball forward in YOUR favor?  Does that approach help ME/YOU reach your goal?  As I read the document, FrO was my first instinct.  But that would not have helped close the deal.

As I indicated, I looked at this question as though I was facing the problem myself - FrO would not have moved the ball forward in MY favor, so I persisted in reading and assessing.  This may have bee a salvageable deal, addendum and all.  Yes, it's one sided, and extremely so.  I get their intent, save their bacon, toss yours in the fire, get an angle etc.

What I presented were SOME options in response to the addendum that Might have allowed you all to get to -YES.  There are many variations and options that could have changed the mind of the seller, while still preserving the buyers goals.

Aaagh - too many words... There may have been a way, but it can't happen when one or both of you walk away from the table.  Sometimes a different approach to the difficult conversation is exactly what's needed, an learned approach.  Though, sometimes walking away exactly right too.

@Katherine S.

I'm no attorney, if you have legal concerns over the addendum, you should consult a lawyer.

Here's my quick layman's take as If I were faced with the situation... 

The document looks kludged together; a  whole bunch of neat concepts gathered from multiple sources covering many things that could have and should have been covered in the main contract.  I think that only the Lead Paint warrants separate addendum, which would be a release.

Para:

A - no problem (NP), remains on the market until contract is ratified

B - NP, lays out dollars and dates

C - NP, though oddly worded, the concept should have been applied to the entire contract vs just A

D - NP, buyer cannot assign, forfeits deposit

E - NP, ...AS IS, buyer beware...

F - I'd strike all of this and refer to the contract itself for performance dates and remedies.

G - I hate "without limitation" language.  I'd strike that and limit your exposure to only those stated potential expenses and then limit that with a "Not To Exceed... $X".

H - I'd strike this and put inspection dates and expectations in E.

I - Seller can bail for any reason and simply return the deposit... just realize that any inspection or financing expenses are sunk and gone if the seller bails. Be prepared to move quickly.

J - NP, any needed repairs are on you.

K - I'd strike everything after the first sentence.  The Deposit becomes the Liquidated damages - period.  If the seller wants to be able to go after the buyer for legal fees, the same should be available to the buyer.  Indemnification?  That's a big word, with big implications, strike all of that.

L - NP, commission demands on the seller.  I'd put NA in the other blanks (this applies throughout the document).

M - Hmmm, release from all possible liens - looks like, of any type post closing.  I think I'd strike that one as it can obligate you to unknown obligations of unknown costs.  Alternatively, seller will correct any discovered liens within x period (use mechanics lien period).  Seller won't go for it, but... see if they will indemnify buyer from post-settlement lien costs and obligations (sharp stick comment below will shed light on this one.)

N - NP, title agent, I'd put a line in there and ask them to declare this up front in order to give you the opportunity to object in case you want to.

O - NP, seller's insurance

P - I'd modify by adding , (iii) Or other remedy as may be agreed by Buyer and Seller in separate addendum. And, I'd strike the balance of that para.

Q - NP, Lead warnings

R - Aargh, penalties for delayed closing... I get it, but as a Buyer, I'd strike this, as a Seller, I'd want it. Hmm, is the Selling Broker a party to the contract? Part of the clause impacts their commission, which means they might have to agree to this Addendum as well.

S - I'd modify this to exempt incidental (damage?) that might occur in the course of inspections.

T - NP, though it's redundant, already covered under (I).

U - NP

V - Again... Indemnify... Strike this one as it applies harmless and indemnifications to all paragraphs except B, G, L, O, R & S. Unknown impact with unknown limitation.  You could limit the Buyer obligations under this paragraph to $100 within 48hrs after closing, and leave it intact.

When I see language such as this, I tend to sharpen a stick and poke at it.

Personally, I'd probably scrap the contract approach entirely because of the addendum, see if you can get by with a letter of intent that specifies purchase price, closing expectations and includes access for inspections.  Then I'd organize the financing and inspections, chop, chop or skip both, adjust my price and present a one or two page contract offer.

I can't believe I read that whole thing... well, I skimmed through some of it...

@Cathleen Ohannigan - I also have an SDIRA/LLC with checkbook control. I LOVE THIS VEHICLE!

I do everything out of the same account. Ability for additional funding should have been addressed in your LLC Operating Agreement. It's my understanding that, unless the OA permits additional funding, it isn't allowed, though amendment of the OA would solve that. My OA specifically permits it.

If you don't already have this book, I suggest consider getting it: "The Self Directed IRA Handbook". It's an incredible reference book on SDIRA/LLCs. I consult with the author when I am uncertain of moving forward. I thought I blew up my SDIRA in one simple LLC action, there was an easy remedy. These are powerful, but delicate beasts that can save us from taxes, or trigger immediate massive tax liabilities.

@Frank B. & @Adam Zacharski - re: IRS Liens...

I've purchased at foreclosure auction (courthouse steps in VA) with IRS in place and did not have to satisfy the lien. It's several years back, but my recollection is that I had to give IRS the option of paying me back or releasing the lien from the property. The timeline for accomplishing it was quick, about 60 days if memory serves. IRS declined to pay me the purchase price and released against my purchased house. The lien remained against the individual(s) and/or clouded other property, but the property I bought was cleared.

@Peter Halliday - You're exactly right, "not a large amount" but with high collateral value will be very attractive to a lot of people and even affordable to those new to the field.

@Frank B. - You're talking about Low as it pertains to the Interest Rate

 @Ned Carey - is talking about price. i.e. Low = Taxes owed, or something more than that but still low relative to the value of the property.