All Forum Posts by: William Morgan

I'm looking at a property for a potential Short Sale.

The property was inherited via a trust by two daughters. The property is a worn rental that is under water so the daughters do not have an interest in it. They also worry about any liability they may have as the new owners of the property so are anxious to get rid of it. As I understand it, Daughter "A" has already Quit Claimed (QC) to Daughter "B". Daughter B now wants to Deed the property to Mom (the ex-wife of the deceased). Mom just wants to get the whole issue resolved and out of their hair, thus allowing me to Short Sale it for her. I asked Mom to wait on having Daughter B QC the property to her.

The property is currently in Default.

Question: Will any of these transfers hamper my ability to negotiate a Short Sale with the bank? For example if mom is Deeded the property, unbeknownst to the bank, and despite the Daughters being the actual heirs, will this complicate my ability to negotiate a Short Sale with the (two) lenders?

Question: Do I also need the spouses of the daughters to fill out a QC?

Question: Whose Authorization (if any) am I going to need to speak with the Lender about the loans? The Borrower has deceased.

Thanks in advance!

I tried to PM but couldn't. Is the property near Margarita?

Remember too RESPA pertains to "Settlement Services". Good point regarding a Licensed person's involvement as that adds a new wrinkle.

Those issues aside, the mailman referring to an (unlicensed) wholesaler is apparently acceptable, state law notwithstanding.

Not illegal in CA. I can't see how its any different from paying a database service for leads based on predefined criteria. In your case that criteria is physical condition, appearance or the fact that it's vacant.

It's my understanding the lease survives the sale in every state (please correct if someone has other info). You can offer a lease buyout to the tenant, but a purchase does not nullify the lease.

If you do end up buying the property, make sure you get the tenants deposit transferred to you from the Seller at closing.

In California an unlicensed individual can be paid a referral fee for simply introducing a buyer - but that is it. If the unlicensed individual performs any activity aside from a simple introduction, such as negotiating of price/terms of the sale, marketing property etc., then that Individual is performing "licensed activity".

The California Department of Real Estate issued a bulletin (page 3&4) addressing this topic including the 1995 legal opinion issued regarding finders fee for unlicensed individuals. This is the pertinent text:

"One question that is often asked is if a broker can pay a referral fee to an unlicensed person. The answer is yes if that person has not performed any licensed acts in connection with the transaction for which
the fee is being paid.

In 1995, the California Attorney General issued an opinion (78OPS CAL ATTY GEN 71) that stated a real estate broker can pay a commission to an unlicensed person for providing the name, telephone number and address of a prospective borrower provided that the unlicensed person did not obtain the information in the course of soliciting borrowers or lenders on behalf of another or others. The opinion also stated that the finder's exemption can only apply if the activity is limited to arranging an introduction between the parties and the unlicensed person cannot be involved in any role in the negotiation of the loan, no matter how slight.

Also:

The California Assoc. of Realtors there has a "Legal Memorandum regarding referrals, rebates and related arrangements under State and Federal law."
On page 7:

Question: "Can a licensee provide a finders fee to a non-licensee for referral of business?"

State law : " YES a licensee may pay such a fee if the non-licensee merely provides an introduction of a principal to the licensee. If the non-licensee is involved in more than the mere introduction of the parties and actually participates in the negotiation of the transaction, then such a fee would constitute an unlawful payment of commission to a non-licensee."

Federal Law: NO, if the transaction fall within RESPA." (RESPA involves settlement services)

"RESPA generally prohibits anyone from giving a fee, kickback or thing of value pursuant to an agreement for referral of settlement services in a sale of one-to-four residential units involving a federally related mortgage loan."
"settlement services" is later defined in the memorandum as "Title searches, Insurance, Broker services, preparation of documents, escrow and pest control activities".

See also this excellent treatment of the topic. http://www.brewerfirm.com/articles/article-splits-kickbacks-fees.html

The issue of Options and "Equitable interest" is not covered in the above. It's not necessarily a free pass in every state. (http://realestatecounsel.net/tag/equitable-interest/) At least in California according to this case, Equitable interest is not automatically conferred by an Option to purchase. In fact the particular case discussed casts at least some doubt on it. The mere fact that someone is not on title marketing a property is likely to eventually draw unwanted scrutiny and legal hassles.

@Melissa Lapinski "I appreciate the offer to call for me, Will, but I can do it."

That's the spirit.

Actually I wasn't going to call for you, I have access to this information. If you need to deal with property related information on a regular basis i recommend you cultivate a relationship with a Title company. You could plug in basic property information and within 5 minutes have owner information, mailing address, prior sale info, zoning, rudimentary comps, etc.

If you do regular business with a Title company they can give you access to their database upon request. Regardless you can always call them and they will almost certainly email you with it.

You can call a Title company, ask for customer service and ask them.

If you PM me with the street address and county I can pull it for you.

Will, I understand exactly what you are saying. But please recall where I 3x previously communicated the details of this transaction:

Despite this the accusation has persisted. It's quite clear that J made a hasty and FALSE accusation with scant little information. I find it rude and exceedingly unprofessional that someone in business would make such off the cuff presumptions of someone who entered this forum respectfully and thankful to contributors. That he is trying to persist, hoping to find a way he could be right rather than apologize and admit his error and move on is immature.

It will be up to J to articulate his claim:

Please clarify exactly when you suspect this fraud occurred?

What actions in the transaction in question constituted fraud?

Jon,

It appears you are talking about the prior sale I described where I sold a Primary residence within a few months of the purchase. I do not have the DOT in front of me, but yes I recall some indication of occupancy like you describe.

I indicated the borrower DOES intend to occupy the property. And I in fact did (which I mention earlier).

The scenario you mention where I would not move into a primary residence during the rehab refers to a theoretical future sale that would come from an accepted offer (the original topic of this thread). I just wanted to clarify that.

I prefer to hold off on further discussion regarding J's fraud allegation until he articulates his claim.

Namely:

Please clarify exactly when you suspect this fraud occurred?

What actions in the transaction in question constituted fraud?