All Forum Posts by: Tom Gimer

Quote from @Stacie Smith:

Equity Assurance, LLC, offers insurance for the due on sale clause.

 LOL

let's see a pro forma policy

1. Buyer (new owner) executes a new mortgage to the seller (original borrower). The existing mortgage is not affected. The new mortgage "wraps" around it, often for a higher rate/amount/longer term... but it is a junior lien.

2. Getting a loan servicing company (such as Evergreen, etc.) involved is a good way to lessen the potential damage. If things go sideways the wrap-around can be foreclosed and the seller can regain title.

Good luck.

@Todd Collins You should have waited for the written counter the agent suggested was forthcoming... instead you submitted another offer which, as stated above, was not accepted. “My clients want to counter” is not a counter, imo.

Regardless of the outcome of that analysis, while the original listing agent may have some trouble ahead because he may have violated one or more articles of the ethics code, that's not going to change things for you or the current owner. Research local law on the concept of “bona fide purchaser for value without notice”.

Were I in this situation I would be concerned about a couple of things...

Is there a record of trying to force the seller to close? If the goal is to obtain the property -- using the courts if necessary -- the buyer needs to have been taking action. You can't just watch the settlement date come and go without demanding settlement or you may allow the seller argue that it was the buyer that failed to close and as a result the contract is void. 

I would review the contract to determine if time was of the essence and if so, and the settlement date has passed, was anything done to preserve the ability to pursue an action for specific performance. These are "local law" questions.

At a minimum if I wanted the property and had the ability to close immediately I would be demanding that the seller do so or expect to defend a lawsuit. Once I had their response (or lack thereof) I would then consider (with counsel) whether to record a memorandum, file suit, or take some other action.

That’s not a wholesale structure… it sounds like brokering without a license and in that context it is really difficult to enforce payment of an illegal commission through the courts, regardless of the existence of an agreement or who prepared it.

Quote from @Danielle Lynch:

Quote from @Tom Gimer:

Quote from @Steve Vaughan:

Don't forget to check to see if your title and hazard insurance policies will be affected.

I'd never do a small / residential property like this.  Maybe @Tom Gimer has a second to assist. 

I highly doubt the grantee meets the definition of "the insured" regardless of policy form. And I would say not a chance on the hazard policy.

I personally would never do this as the transfer serves almost no purpose and certainly not without consulting with the title insurer and obtaining a policy endorsement.

And no, the parent LLC would not be referenced in a deed to a subsidiary.

I'll contact my insurance. Just to clarify, Isn't the point of transferring a property into an LLC to limit your personal liability? What do you mean it serves no purpose? I'm not a lawyer so maybe I'm missing something.

For properties owned free and clear, for sure.

But under the circumstances -- transferring a property that is subject to a mortgage for which the individual borrower is the owner of the LLC grantee (or, in this case, the parent LLC) -- there may be zero liability protection. To answer that unique question would require research into local law on the subject of piercing the corporate veil.

Quote from @Steve Vaughan:

Don't forget to check to see if your title and hazard insurance policies will be affected.

I'd never do a small / residential property like this.  Maybe @Tom Gimer has a second to assist. 

I highly doubt the grantee meets the definition of "the insured" regardless of policy form. And I would say not a chance on the hazard policy.

I personally would never do this as the transfer serves almost no purpose and certainly not without consulting with the title insurer and obtaining a policy endorsement.

And no, the parent LLC would not be referenced in a deed to a subsidiary.

The answer is no, but in reality the correct decision depends upon whether you are going to win or lose. If you lose you may be responsible for costs, including those for service of process… which if difficult to obtain can add up in the hundreds of dollars. 

So they want things to run like on the commercial side. OK.

Watch this create some unintended consequences... such as reducing the typical listing agent potential commission by 50% or more right out of the gate, killing the buyer-only agent business model, and lowering brokerage industry revenue as a whole considerably. Congrats!

Also this settlement is not certainly going to come up at trial of other cases. Apparently that attorney doesn't understand the rules of evidence.

Insurer should be able to verify they were on the settlement statement, confirm that the check is missing or lost, and then place coverage retroactive to the settlement date once the replacement is received. They may seek confirmation from the insured that there is no basis for any intervening claims. 

This sometimes happens with the USPS involved... it's just not possible to send wires or overnight courier for every payee on the settlement statement.