All Forum Posts by: Peter Walther
Peter Walther has started 32 posts and replied 1658 times.
Post: Should I file the Deed, or wait, for some reason..?
- Specialist
- Winter Springs, FL
- Posts 1,691
- Votes 733
Quote from @Account Closed:
@Peter Walther - thank you Peter. I appreciate you taking the time to help me out. ☺️
I will incorporate your thoughts with the other helpful tips I've gotten from other posters here.
Sure thing.
Post: Should I file the Deed, or wait, for some reason..?
- Specialist
- Winter Springs, FL
- Posts 1,691
- Votes 733
Quote from @Ken M.:
Quote from @Account Closed:
@Ken M. thank you for clarifying, and for time you've put in to answering my post.
state: Colorado
deed type: warranty deed
verification: Yes I verified the seller. I assume you meant check their ID, and do my own research on the title that shows the person I met with was indeed the owner.
distressed status: I didn't say it was 'distressed.' However, it is in default, wth a sale date in 3 months.
title status: title search and report is in progress. I'm planning to file it as soon as I see clear title, get an inspection, and get some additional paperwork signed with the seller.
should I file the deed?: people have commented on this post very strongly both directions on this question - some say I definitely should and some say I shouldn't. Sounds like you're more hesitant, and that I shouldn't. Your quote from above sounds like good advice, and makes me want to proceed more cautiously: "If he files, he assumes the risk of anything attached to title. Usually a foreclosure title has other issues."
Thank you again.
(federal issues)
In Washington, Oregon, California "for sure" it's a very big deal. I'm not current on Colorado foreclosure law.
there are federal laws involved
I personally, would not rely on self review of title obligations
Warranty deeds have to meet state specific requirements, usually have to be notarized and when done outside of escrow create a "credibility" problem with future title companies and definitely with the court in a lawsuit
Regardless of what you have been told or have read, you can not simply "Quit Claim Back" a property.
and other issues
I would not admit anything further because these sites are monitored
pay for a local attorney for a proper solution He will need to see all paperwork to figure out best options
or simply hope your seller doesn't come back later
Ken, I believe an unnotarized deed can still pass title. Notarization does two things; first it provides prima facia evidence the Grantor acknowledged signing the deed and appeared to understand the nature of the act, second, it's generally a prerequisite for recording in the public records. However, if one is the Grantee of the deed, I think a declaratory judgment action could be filed and upon sufficient evidence the court could find the deed valid and order the Clerk to record it. An unwieldy way to go about it, but possible, I think.
Post: Should I file the Deed, or wait, for some reason..?
- Specialist
- Winter Springs, FL
- Posts 1,691
- Votes 733
Quote from @Account Closed:
Quote from @Peter Walther:
I don't mean to be condescending here, but based on your question I think you're probably not ready to be purchasing property. It appears you don't have a basic understanding of the laws regarding conveyancing and how the priority of interests is established. You don't mention what state the property is in, but generally, if your deed is not properly recorded, your interest, whatever it may be, may be subject to being subordinated to any interest which is created after your deed. I'm not referring to the existing mortgage you took subject to, but one made by your seller after he gave you your deed or subject to any deed he gave to another buyer after yours. It might also be subject to any suit involving the property or any judgment against your seller. Also, I hope you're not holding your breath waiting for a payoff, generally a lender will only deal with the borrower or his legal representative.
Oh I'm ready. And I'm buyin it.
Thank you @Peter Walther!
Sorry Mark I'm not following your response. I asked why you think it's a good idea to hold the deed off record. The concern I have is that it appears you already own the property if you paid consideration and received a deed and I hope you have an insurance policy in your name. Whatever other documents you're waiting for from the seller may not have any effect on your possible liabilities as owner of the property. Recording a deed does not perfect title in your name; it merely puts the world on notice of your interest and generally the onus for recording the deed is on the Grantee, not the Grantor. I believe a properly executed though unrecorded deed passes title and liability. You really need to talk with an CO attorney about your situation and get some actionable advice. I think that if someone gets injured on the property and sues the record owner, your seller, he (your seller) very well might defend by showing he doesn't own the property, you do and possibly bring a third-party complaint against you defend him and indemnify him against loss he suffers because of the plaintiff's claim. At the very least the plaintiff would probably file an Amended Complaint adding you as a defendant to figure out what your interest is and by extension, what your liability is.
Post: Should I file the Deed, or wait, for some reason..?
- Specialist
- Winter Springs, FL
- Posts 1,691
- Votes 733
Quote from @Account Closed:
Quote from @Joe S.:
Quote from @Account Closed:
I purchase a property recently subject-to, and got the deed to the property. I'm planning to hold it long term.
Though I have the deed, I'm wondering if I should go ahead and 'file it' with the county. I haven't cured the default on the mortgage yet (it was 6 months behind, and in default).
I have considered just wholesaling the property as well.
Are there reasons I would NOT want to file the deed? My thought is that having too many properties in my name could be a problem. And/or that having the property change hands too rapidly (I file the deed in my name, then sell it soon after) could create various kinds of problems.
Also if I file the deed, then need to Quit Claim the property back to the seller, could that create weird title issues that creates a liability for myself and/or the original seller?
Thank you very much for your help!
This is not easy to explain in a site that is primarily dominated by anti-Sub2 posters to start with. Read the audience. You're not going to get much help unless you pay for training and I suppose that is an option.
Also your original post was contradicting. You’re saying you’re going to keep it long-term and then you’re talking about whole selling the property. You left a lot of details out so some of the posters are assuming you didn’t even get the proper paperwork to ask for a payoff from the lender. Maybe you can comment on that.
It appears Ken M offers sub2 training. Maybe you should talk to him about it. I’m not familiar with what he has to offer, but if it’s one on one, it’s probably better than getting into some overcrowded Facebook group that’s dominated by newbies.
Thank you for your kind post Joe. I haven't gotten hazed like this since I was in college. 🤣
Yes I did leave out details and was contradictory. Some of the comments are helpful. Plenty of sarcasm too. I'm just trying to figure it out here...
I've bought many dozens of houses. But it's been a long time though, and I'm very rusty. I'll sort through it, and find the gems.
Thank you again. ☺️
Could you mention why you thought keeping your deed off record was a good idea?
Post: Should I file the Deed, or wait, for some reason..?
- Specialist
- Winter Springs, FL
- Posts 1,691
- Votes 733
I don't mean to be condescending here, but based on your question I think you're probably not ready to be purchasing property. It appears you don't have a basic understanding of the laws regarding conveyancing and how the priority of interests is established. You don't mention what state the property is in, but generally, if your deed is not properly recorded, your interest, whatever it may be, may be subject to being subordinated to any interest which is created after your deed. I'm not referring to the existing mortgage you took subject to, but one made by your seller after he gave you your deed or subject to any deed he gave to another buyer after yours. It might also be subject to any suit involving the property or any judgment against your seller. Also, I hope you're not holding your breath waiting for a payoff, generally a lender will only deal with the borrower or his legal representative.
Post: Creative Deal Structure: Upfront Payment, Second Lien, and Permit-Contingent Payout
- Specialist
- Winter Springs, FL
- Posts 1,691
- Votes 733
It sounds like you're trying to buy the property, not lend the owner money, so I think you wouldn't ever have a lien to foreclose, second or otherwise. Therefore, the money you're tendering would be an earnest money deposit, and I can't think of a situation where I'd consider giving a seller the EMD, particularly when it's $200k. It generally goes into an escrow account held by an agent. An agent for all parties to the escrow agreement by the way so no one party will receive the funds without the consent of all parties, which can be a fight. Purchase contracts are often written with contingencies for things like obtaining zoning changes or permitting so why wouldn't you proceed that way? Are you confident you can obtain permits within the 45-day window? I suspect you'll need to provide surveys and engineering plans with your application and may need board approval (county or city) if the application is outside the bounds of what is currently allowed.
Post: Why Novation Are Better Than Wholesaling
- Specialist
- Winter Springs, FL
- Posts 1,691
- Votes 733
Quote from @Ken M.:
Quote from @Peter Walther:
Quote from @Stephen Morales:
Quote from @Ken M.:
Quote from @Stephen Morales:
Quote from @Ken M.:
Quote from @Stephen Morales:
Quote from @Ken M.:
Quote from @Stephen Morales:
Quote from @Dawson Brewer:
Quote from @Stephen Morales:
We do both net listings (in FL) and novation agreements. They are both very similar but they are not the same.
The true use of a novation agreement is to improve a property for the Seller without taking ownership. A great example of this is when we work with land owners and offer to develop the property further to resell paper lots or sometimes we go vertical with either a new home or a small multifamily building. In the easiest sense of doing a novation, you would just be doing a moderate rehab to get the property to ARV to sell.
We like offering an additional split to the Seller when we get higher returns than expected. Let's say a property is worth $250k and the seller is happy with $150k. It needs $30k in rehab and we pay all closing cost. We end up selling for $260k or $10k more than what we thought the property was worth. Any of those additional funds above our target mark would be split 50/50 with the Seller or sometimes we offer a more favorable share to the Seller to get the deal done.
Let’s say you build a house on a lot. How would you prevent a seller from changing their mind and not going through with the sale?
If they still refuse, you sue them for specific performance. You record a lis pendens during the lawsuit. They have a contractual right to go through with the sale if the other party of the contract (being us) has fulfilled their obligations.
Haven't had this be a problem yet though. It's also a good idea to do your homework on who you end up doing novations with as well.
Your comment: "To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest."
That could get you into a heck of a lot of legal trouble.
Heck of a lot of legal trouble... or simply unenforceable depending on how the contract is structured.
If drafted correctly, it is my understanding that you're well within your rights to pursue damages for a seller's breach, which may extend beyond just reimbursing direct investment costs. If there is a valid contact executed, title can file a memo on your behalf. A memo has saved several deals for us in the past and damages were paid by the Seller.
As always, agreements should be structured with a qualified real estate attorney familiar with the laws of your operating state and anything I have described is something we do but is not to be taken as legal advice.
It has little to do with how it's written (okay, it matters a lot to be sure, about who drafts the document) but to me the concern isn't how it is drafted. It's using a memorandum at all.
When you record a memorandum against the title, you are clouding the title. That is a very serious problem if not done by an attorney. Because, there are plenty of situations an attorney would not even consider using that approach but an inexperienced investor might because they don't have a clue what they're doing and they were told "it's the way to do things". Very bad advice.
Appreciate the concern, and you're right, improperly recording a memo without following proper channels can lead to legal issues. But let's not confuse misuse with the tool itself being "very bad advice."
Recording a memorandum based on a valid, fully executed contract is 100% legal in Florida and widely used to protect Buyer's interests. I have been doing this for almost 10 years and I have never once had an issue with title or their RE attorney filing one for me.
Let's be honest here, the idea that inexperienced investors are out there recklessly clouding title on their own without a contract or legal counsel is a stretch. Heck, most don't even know what a memorandum is, let alone how to file one or even find one.
As with anything, this should be done with legal guidance.
Your comment: "Let's be honest here, the idea that inexperienced investors are out there recklessly clouding title on their own without a contract or legal counsel is a stretch."
Please reference Pace Morby and his SubTo Community of 173,000 on Facebook. That is what they teach. Now, it's one thing to say you do or don't do a certain thing, it's quite something else to say it is NOT widely done.
In addition, but not related to Pace Morby and his SubTo Community, I invite you to read the following:
Click To See Complaint
People who play football in traffic should expect to get hit by a car once in a while.
Oh! this was a great read, I remember seeing it earlier this month. In this case, this was essentially organized fraud/crime that was taking place. They were creating fictitious entities and sometimes assigning contracts that didn't exist because they were using forged signatures. The victims were literally being lied to about what they were signing in some cases.
The Arizona case isn't about using memos, it's literally about abusing them through fraud, extortion, forgery and coordinated deception.
Filing a memo with an actual, valid purchase agreement is completely legal and again, commonly done to protect equitable interest. Especially in the case where you have an agreement with the Seller to improve their property and have invested time and capital with the clear intent to complete the sale.
This is a perfect example that legal tools should be used properly, not an argument against the suggestion of using the tool itself.
As for Pace Morby's group, sure he's got reach. And yes, if he's over here teaching people to file their own memos without legal counsel that is VERY BAD advice indeed. Some new investors listening to him might misuse the memo, but that doesn't change the fact that when used correctly, its a legitimate and valuable tool to protect contractual rights.
Anyone getting into this space should seek legal counsel especially when it comes to contracts, agreements and recording of said instruments.
Anyway, it seems like your set on being right and that's fine. Let's just agree to disagree and leave it at that.
I think what Ken is trying to get you to understand, is that filing a memo regarding an unrecorded agreement could be construed to be a slander of the title to the property, particularly if both parties to the agreement do not agree to the recording of the memo. If a property owner disagrees with what the agreement means and the rights and obligations created by the agreement, and later is unable to sell or borrow against his property because the title is clouded by the memo, the other party might be found to have slandered the title and be liable for damages.
Sure thing.
Post: Why Novation Are Better Than Wholesaling
- Specialist
- Winter Springs, FL
- Posts 1,691
- Votes 733
Quote from @Dawson Brewer:
essentially, the sellers are giving you, the investor, permission to list the property on the market through a realtor or flat free brokerage to find an end buyer. The novator is typically in charge of making repairs to the house, covering the seller closing costs, and paying the agent’s commissions.
Quote from @Rob K.:
Quote from @Dawson Brewer:
Here’s why I’ve started using novations over wholesaling.
1. Sellers Get More Money
With wholesaling, sellers often need to take a low cash offer. With novations, I can offer closer to market value by selling to retail buyers, making it easier to get deals accepted.
2. Bigger Assignment Fees
Instead of selling to investors looking for steep discounts, I market to end buyers willing to pay market price. This means I make more per deal than a typical wholesale assignment.
3. No Double Closings or Hard Money
Since the seller stays on title, I don’t have to use hard money or worry about double closing fees. I just facilitate the sale and collect my fee at closing.
4. More Buyers, Less Competition
Wholesaling relies on a limited pool of cash buyers. Novations open up the MLS and conventional financing, bringing in a larger pool of buyers and reducing competition from other wholesalers.
5. Easier to Scale
With less reliance on deep-discount deals and cash buyers, I can scale novations faster than traditional wholesaling.
Final Thoughts
I’m not saying wholesaling is dead, but novations have helped me close deals I would’ve lost before. Anyone else using novations? What’s been your experience?
I'm not understanding the use of the term Novation as used by the poster and why it is different from just an assignment of an existing contract. In legal terms a Novation is generally a new agreement with different terms or different parties that is a substitute for an earlier agreement that is then extinguished with the consent of all parties.
If someone could explain the structure of a novation as used in the OP's original post, it might make this discussion clearer. FYI, I do not watch you tube videos or guru stuff, so maybe I am missing some context here.
If you don't own the property, why wouldn't you need to be a broker or agent to do this?
Post: Why Novation Are Better Than Wholesaling
- Specialist
- Winter Springs, FL
- Posts 1,691
- Votes 733
Quote from @Rob K.:
Quote from @Dawson Brewer:
Here’s why I’ve started using novations over wholesaling.
1. Sellers Get More Money
With wholesaling, sellers often need to take a low cash offer. With novations, I can offer closer to market value by selling to retail buyers, making it easier to get deals accepted.
2. Bigger Assignment Fees
Instead of selling to investors looking for steep discounts, I market to end buyers willing to pay market price. This means I make more per deal than a typical wholesale assignment.
3. No Double Closings or Hard Money
Since the seller stays on title, I don’t have to use hard money or worry about double closing fees. I just facilitate the sale and collect my fee at closing.
4. More Buyers, Less Competition
Wholesaling relies on a limited pool of cash buyers. Novations open up the MLS and conventional financing, bringing in a larger pool of buyers and reducing competition from other wholesalers.
5. Easier to Scale
With less reliance on deep-discount deals and cash buyers, I can scale novations faster than traditional wholesaling.
Final Thoughts
I’m not saying wholesaling is dead, but novations have helped me close deals I would’ve lost before. Anyone else using novations? What’s been your experience?
I'm not understanding the use of the term Novation as used by the poster and why it is different from just an assignment of an existing contract. In legal terms a Novation is generally a new agreement with different terms or different parties that is a substitute for an earlier agreement that is then extinguished with the consent of all parties.
If someone could explain the structure of a novation as used in the OP's original post, it might make this discussion clearer. FYI, I do not watch you tube videos or guru stuff, so maybe I am missing some context here.
I think you're correct, using the word in this context is a misuse of the term.
Post: Why Novation Are Better Than Wholesaling
- Specialist
- Winter Springs, FL
- Posts 1,691
- Votes 733
Quote from @Stephen Morales:
Quote from @Ken M.:
Quote from @Stephen Morales:
Quote from @Ken M.:
Quote from @Stephen Morales:
Quote from @Ken M.:
Quote from @Stephen Morales:
Quote from @Dawson Brewer:
Quote from @Stephen Morales:
We do both net listings (in FL) and novation agreements. They are both very similar but they are not the same.
The true use of a novation agreement is to improve a property for the Seller without taking ownership. A great example of this is when we work with land owners and offer to develop the property further to resell paper lots or sometimes we go vertical with either a new home or a small multifamily building. In the easiest sense of doing a novation, you would just be doing a moderate rehab to get the property to ARV to sell.
We like offering an additional split to the Seller when we get higher returns than expected. Let's say a property is worth $250k and the seller is happy with $150k. It needs $30k in rehab and we pay all closing cost. We end up selling for $260k or $10k more than what we thought the property was worth. Any of those additional funds above our target mark would be split 50/50 with the Seller or sometimes we offer a more favorable share to the Seller to get the deal done.
Let’s say you build a house on a lot. How would you prevent a seller from changing their mind and not going through with the sale?
If they still refuse, you sue them for specific performance. You record a lis pendens during the lawsuit. They have a contractual right to go through with the sale if the other party of the contract (being us) has fulfilled their obligations.
Haven't had this be a problem yet though. It's also a good idea to do your homework on who you end up doing novations with as well.
Your comment: "To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest."
That could get you into a heck of a lot of legal trouble.
Heck of a lot of legal trouble... or simply unenforceable depending on how the contract is structured.
If drafted correctly, it is my understanding that you're well within your rights to pursue damages for a seller's breach, which may extend beyond just reimbursing direct investment costs. If there is a valid contact executed, title can file a memo on your behalf. A memo has saved several deals for us in the past and damages were paid by the Seller.
As always, agreements should be structured with a qualified real estate attorney familiar with the laws of your operating state and anything I have described is something we do but is not to be taken as legal advice.
It has little to do with how it's written (okay, it matters a lot to be sure, about who drafts the document) but to me the concern isn't how it is drafted. It's using a memorandum at all.
When you record a memorandum against the title, you are clouding the title. That is a very serious problem if not done by an attorney. Because, there are plenty of situations an attorney would not even consider using that approach but an inexperienced investor might because they don't have a clue what they're doing and they were told "it's the way to do things". Very bad advice.
Appreciate the concern, and you're right, improperly recording a memo without following proper channels can lead to legal issues. But let's not confuse misuse with the tool itself being "very bad advice."
Recording a memorandum based on a valid, fully executed contract is 100% legal in Florida and widely used to protect Buyer's interests. I have been doing this for almost 10 years and I have never once had an issue with title or their RE attorney filing one for me.
Let's be honest here, the idea that inexperienced investors are out there recklessly clouding title on their own without a contract or legal counsel is a stretch. Heck, most don't even know what a memorandum is, let alone how to file one or even find one.
As with anything, this should be done with legal guidance.
Your comment: "Let's be honest here, the idea that inexperienced investors are out there recklessly clouding title on their own without a contract or legal counsel is a stretch."
Please reference Pace Morby and his SubTo Community of 173,000 on Facebook. That is what they teach. Now, it's one thing to say you do or don't do a certain thing, it's quite something else to say it is NOT widely done.
In addition, but not related to Pace Morby and his SubTo Community, I invite you to read the following:
Click To See Complaint
People who play football in traffic should expect to get hit by a car once in a while.
Oh! this was a great read, I remember seeing it earlier this month. In this case, this was essentially organized fraud/crime that was taking place. They were creating fictitious entities and sometimes assigning contracts that didn't exist because they were using forged signatures. The victims were literally being lied to about what they were signing in some cases.
The Arizona case isn't about using memos, it's literally about abusing them through fraud, extortion, forgery and coordinated deception.
Filing a memo with an actual, valid purchase agreement is completely legal and again, commonly done to protect equitable interest. Especially in the case where you have an agreement with the Seller to improve their property and have invested time and capital with the clear intent to complete the sale.
This is a perfect example that legal tools should be used properly, not an argument against the suggestion of using the tool itself.
As for Pace Morby's group, sure he's got reach. And yes, if he's over here teaching people to file their own memos without legal counsel that is VERY BAD advice indeed. Some new investors listening to him might misuse the memo, but that doesn't change the fact that when used correctly, its a legitimate and valuable tool to protect contractual rights.
Anyone getting into this space should seek legal counsel especially when it comes to contracts, agreements and recording of said instruments.
Anyway, it seems like your set on being right and that's fine. Let's just agree to disagree and leave it at that.
I think what Ken is trying to get you to understand, is that filing a memo regarding an unrecorded agreement could be construed to be a slander of the title to the property, particularly if both parties to the agreement do not agree to the recording of the memo. If a property owner disagrees with what the agreement means and the rights and obligations created by the agreement, and later is unable to sell or borrow against his property because the title is clouded by the memo, the other party might be found to have slandered the title and be liable for damages.