All Forum Posts by: Tom Gimer

I watched the video.

The guest spent 30 seconds dismissing the following BRAND NEW language in SC law:

The advertising and marketing of real property is to be distinguished from the advertising and marketing of a contractual position in a sales agreement to purchase real estate. An advertisement that markets a contractual position to acquire real property from a person with either equitable or legal title and does not imply, suggest, or purport to sell, advertise, or market the underlying real property is permissible under this section.

Interesting... why would he do that? Perhaps because he's a closing attorney who has come up with his own work-around (presumably for a tidy fee) which is to set up the deal as a short term land installment contract. So he claims the only way to meet the equitable interest/equitable title/equitable conversion element under the new SC law is through an installment sale. How convenient!

But alas that's just not true. Does the high bidder at a foreclosure auction obtain an equitable interest? What about a purchaser who expressly includes the right to specific performance in the sales contract? What about a purchaser with a non-contingent cash contract? Or one who assumes the risk of loss prior to settlement? What makes an installment sale the only means to obtain equitable title? Nothing. That is actually an inquiry to be determined by SC courts, not a podcast.

I am an attorney and I disagree with your analysis. You didn't read my next post where I included language in the new legislation that specifically addresses how marketing a contractual position does not run afoul of the law. Why did they include that language? To enable investors who buy and sell on their own accounts to continue to earn a living... otherwise the law gets challenged immediately on constitutional grounds.

Pretty simple, just be transparent in your marketing. I have a contract. I'm assigning my contract rights.

I'm not licensed to practice law in SC so I'm probably not the best candidate to duke it out on this topic... but I am very surprised at the knee-jerk reaction of some attorneys. I mean read the damn statute before killing deals in your pipeline.

If they were trying to ban wholesaling they did a terrible job, IMO. It actually sounds like they were trying to address how a recent wave of inexperienced investors are trying to do novations.

Wrong.

I confirmed this today with our SC counsel. 

PM me if interested. 

From elsewhere in the new law:

The advertising and marketing of real property is to be distinguished from the advertising and marketing of a contractual position in a sales agreement to purchase real estate. An advertisement that markets a contractual position to acquire real property from a person with either equitable or legal title and does not imply, suggest, or purport to sell, advertise, or market the underlying real property is permissible under this section.

People need to read closer.

OK then I will. The definition of wholesaling (a new term under SC brokerage laws) reads as follows:

"Wholesaling" means having a contractual interest in purchasing residential real estate from a property owner, then marketing the property for sale to a different buyer prior to taking legal ownership of the property. Advertising or marketing real estate owned by another individual or entity with the expectation of compensation falls under the definition of "broker" and requires licensure. "Wholesaling" does not refer to the assigning or offering to assign a contractual right to purchase residential real estate.

Since every word of a statute has to be given meaning, the last sentence is a clear carve out for investors who assign contracts and offer that interest to the end buyer. Sounds like more business is coming for local attorneys who understand the new law.

@John Underwood  I read what I believe to be the new SC legislation. Please provide the full new definition of “wholesaling” and reconcile the conclusion of your post with the last sentence in the definition.

Sounds like that's the law only if a OH real estate broker holds the earnest money... although many title companies follow the same policy, which is basically just CYA.

This is a great example of why REALTOR contract forms often suck. They are drafted in such a neutral way that parties have to go to court (or mediation) even when one party has no legal ground to stand on.

The contract language here essentially requires either (a) joint instructions, (b) court order, or (c) 2 years of inactivity with neither of the above occurring. 

Imagine agreeing to have a large EMD sit for 2 years in an interest-free account just because the other party is an a**hole and consider that everything is negotiable. Cross out language like this and replace it with negotiated terms such as automatic forfeitures and releases, penalties for failure to sign, loser pays attorneys fees, etc.

@Peter Walther Thanks for providing some of the law. Florida's scheme essentially "creates" privity between property owners and vendors through the required notices. 

But the question was how did the closing occur even with the "lien". The likely answer, if there is actually a lien filed, is that the lien was recorded in the gap. Perhaps title didn't do a bring-to-date before recording. Less likely is that title outright missed the lien.

I would not be particularly worried about a vendor threatening to lien the new owner. What's the point of that? Either there is already a lien or there isn't. That vendor couldn't possibly (uh oh -- I said it) satisfy the FL lien statute requirements at this point as concerns the new owner.

I assume one issue here is nobody is concerned enough about a $600 issue to prioritize it.