All Forum Posts by: Dan Schwartz

@Laura Chevalier about your original post, I would simplify it the arrangement   

1) the business should be capitalized to the extent that neither of you need to contribute additional funds on a monthly basis   Capitalize with adequate reserves and pay monthly expenses out of the cash flow.  Then if you need an extraordinary capital raise, it should probably continue to be contributed 80/20 as in the original capital raise. 

2) absolutely pay your partner wages/salary for the property management services.   This is just good solid business, as addressed above.

3) your partner’s kicker for the expertise and legwork he brought to the table is the 50/50 split of cash flows.  I would not change the equity split from 80/20, but let his bonus be a) fee for property management and b) 50/50 split of cash flow.  If there is $500 net after all expenses ex management fees, then he can take a $200 property management fee and you can split the remaining $300 50/50   He gets $350 and you get $150.  I wouldn’t gift anyone else my capital, which is what you are doing when putting in 80% of the capitalization but only retaining 75%. There are other ways to compensate your partner, as outlined above, and also by paying him out of the partnership capitalization for advance work/setting up the deal.

Good luck!

@Umesh Menon I don't suspect you'll be hearing much more from the title company.  Their investigation is closed and now they have to batten down the hatches.  The person who made the wire is in the process of being terminated.  The company has determined that they will not be able to reverse the wire (which was unlikely in any event, anyway).  They won't take your calls or give you any more information, which is why it's all referred to outside counsel.  They aren't going to touch again this until they are sued, and even then it's not internal people who will handle it.  It will be insurance and outside attorneys.  

The buyer has a claim, which they can send to ALTA (I don't know what happens then), and you have a claim.  Look up real estate attorneys in your area.  Ask them who should be working for you on your behalf.  It could be different in different areas, so you'll need to start making the calls yourself.  So sorry this is happening.  I do feel it will be rectified, but it could take a while.  I'd continue to make the payments if you have the liquidity to do so.  What you pay can be included in the lawsuit, and it may be easier to get that back vs. freezing and rehabilitating your credit and having to try explain that every time you seek credit from now on.  Only you can determine that.  Good luck.

Assuming the mortgage servicer eventually gets the misplaced principal payment, you will have overpaid the principal of the mortgage when you make the supplemental monthly payments, and the mortgage servicer should return that extra principal to you, without question, when they ultimately close the books.

The mortgage servicer will not return the interest portion of your payments, and in fact some additional interest may be due when this is settled, despite your ongoing payments, because the interest is collected in arrears.  

You need to make sure the title company and it's errors & omissions policy, covers your ongoing interest expense.  You may also ask for additional compensation, as not clearing the debt from your books as they were hired to do could be costing you income-producing activities.

All of that said, you need legal representation right away.  You have $400K missing due to a vendor's error.  Don't just wait for them to "investigate it," make sure they have a demand letter from your attorney requiring immediate settlement.  

Impossible to answer because no one but you knows what county the property is in, and what that county’s tax payment deadlines are.

Also, who did you “prepay” your taxes to?  The county or the escrow account?

If your transaction took place where I live, my escrow would have paid the entire 2020 tax bill: the first half in October (which is after the August purchase) and the following April.  

The settlement statement would have shown the seller crediting me for unpaid taxes 1/1/2020 through the close of escrow in August 2020.  

You should have received a detailed escrow analysis with pages of explanations when your monthly payment changed.  It will show exactly what was paid, to whom and when, and explain exactly why the monthly payment is changing (in order to meet the size of the account, as permitted by law).

You can’t ask “who screwed up” without you yourself having a thorough understanding of when and how property taxes are paid  in the county where you own property, and how escrow accounts are funded and adjusted.   If this is “not the first time it’s happened,” then you really need to get a better understanding of how to read your various documents.  Not trying to be harsh, but it’s true. Happy to help if you want to share info over DM instead of on the public forum, too. 

1) People don’t want to say what state they’re in

2) They rarely seem to come back to see the answers they sought.  

#1 has me engaging a lot less lately.  It seems like there are very few states listed in profiles anymore - or at least newer ones - and so much of what is discussed is state specific.

I scrolled down for the sole purpose of sharing @Andrew Postell's great post....which he already did!

@Andrew Taylor @Robert M. it's an old thread, but still a valid answer to your question: You can create an "escrow" or "holdback" or "draw" account using the "bank" account type.  In your settlement journal entry, credit the liability account you create for the loan, and debit the bank account you create for the draw account.  Since the draw account is a bank account in QB, you can simply banking>transfer funds between it and your actual bank (checking) account when you make a draw.  If there is a fee for the draw, put it in the ledger of the account that pays it.  Hope that helps.   

@Catie Lawrence @Simone Johnson @Mike Terry if you are still in need, I am willing to help.

@Kainoa Oneha Education is 100% back, whether in person or online.  Did you pay with a credit card?  These are services bought and not delivered.  It's one thing to postpone for a little bit, but there is no reason for it still not to be offered.  I'm sure Elite has complex T&Cs to protect themselves, but it costs you nothing to dispute the transaction.  Don't worry that it's been so long.  Demand that they chargeback and see what happens.

He wants you to refinance your FHA loan? As in, was this a cold call to offer you something you weren't otherwise looking for?

Based on the few details you've given, I'm assuming your loan was originally for about $210,000.  PI at 3.5% for 30 years on $210K is $943/mo.  After 72 months (6 years), the principal is down to $183,500.  If you refinance that amount (with costs coming out of your pocket or via a higher interest rate), PI at 3.5% for 25 years on $183.5K is $919/mo.

PI decreases $24/mo because you've extended the loan by one year but didn't cash out or raise your rate (in this illustration). With PMI of $148/mo coming off as well, your savings would be $172/mo in this scenario. Taxes, Insurance, and HOA (if applicable) shouldn't change significantly from yesterday's loan to today's loan.

Even if you rolled in $6,500 of refi costs and your new loan were $190K at 3.5% for 25 years, the payment would be $8 higher than it is now. Combined with removing a $148/mo PMI payment, you should still have an overall payment of $140 less than it is now.