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Author Topic: Question on Assigning Deals  (Read 9863 times)

Offline REI Hustler [Bob]

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Re:Question on Assigning Deals
« Reply #15 on: January 23, 2007, 04:54:41 pm »
An Option is valid if you pay $1-00 in cash for it. You must pay something to buy "the right to purchase the property at a future date". In theory you could pay him my watch, my horse, my car, my donkey, my shoes, but its better to use cash. This sum is called the consideration.

Because the sum of $1 looks a poor deal, you normally add the words Pay the sum of $1-00, [one dollar] and OTHER VAUABLE CONSIDERATION. Meaning the chance to sell the property to the Option buyer- at a future date.

If the agreement says Assigns, or Assignees, this is seen as good and valid notice. As in [by] John Doe, his heirs, assigns, and successors in title.

Offline randyfarber

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Re:Question on Assigning Deals
« Reply #16 on: January 24, 2007, 02:06:37 pm »
Believe me, the law is unclear on how the judge must proceed on that matter.  If you get lucky, he might side with you if you had simple verbiage like "and Assigns" on your option.  

Then again, he could slam you on the floor, they could publicize, they can issue an injunction preventing further REI in their county, lots then can do if they "feel" that the lesser educated are being taken advantage of.  I have personally seen it happen on an option my best friend had.  He was only going to make $1,000 on it for about an hour of work.  The seller was awarded $3,000 in damages, my friend was admonished and 'threatened' never to be seen again for a similar matter in these courts, or the total remedies allowable by law would be assessed.

While the law may not require it, and you'd be safe more times than not, (especially if you bought the house through a real estate agent, or from an experienced investor), a decent lawyer will advise that you not only inform the seller, that your option contain a special provision that the seller must sign his name to, with witness, that he fully understands the assignment.  

You can play it any way you want to, but I will, and I will always advise, that you divulge everything.  This includes Seller's Disclosure and Lead Paint doc's, even if the situation doesn't require it, per se.

Why cause yourself unnecessary problems?  I have never had anything more than a minute objection to anything related to an assignment issue.  They want to sell, they don't want to impede the sale.

Yes, any compensation makes the deal legal.  The term "other valuable consideration" is open for interpretation, and have heard of it being problematic because of it being vague.  I would spell out any and all expected 'valuable consideration'.
« Last Edit: January 24, 2007, 02:09:12 pm by kdhastedt »

Offline REI Hustler [Bob]

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Re:Question on Assigning Deals
« Reply #17 on: January 24, 2007, 04:35:09 pm »
A Judge is there to administer the Law, and not to rewrite contracts. He must decide what was agreed from what was written and stop there. Otherwise chaos would rule.

The Judge you mention is unfit to sit on the Bench.

Offline randyfarber

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Re:Question on Assigning Deals
« Reply #18 on: January 24, 2007, 06:29:37 pm »
Most probably are.  My friend deserved what he got.  I, in fact, told him what was probably going to happen with our liberal judges.  I suggested that he offer to split the difference, $500, out of court, in exchange for a written promise not to trash talk about him later, and chalk it up to a lesson learned.  Cost him alot more than he thought it would.

The UCCC is a Code of Conduct.  Many of it's principles are not written in stone as law, per se.

If you have ever been a member of any Board of Realtors, and read any of the articles that come down the information tree, you'd see that there are hundreds, if not thousands, of lawsuits, the results of which are very much counter to what to are proposing as "law".  Your argument on the semantics of whether or not to divulge pertinent information, is, was, and always will be 'invalid'.  Divulge everything and you won't have 1/10th the worries.

If your lawyer advises to just use those couple of words "and Assigns", do what he says.  He gets paid to represent you, and I'm sure would like to represent you 'many more times'.  Win or lose, he gets paid.   Besides, my name isn't on the contracts, and won't be dragged through the moral mud.  But it's always safer to err on the side of good judgment, decency, and how you would want to be treated by an investor, if you were the seller, or how you would want your grandparents, or child, who knows nothing about contract law or real estate, to be treated.  Albeit, its fairly, with nothing withheld from them.

All it takes is one pissed off Seller with a few extra bucks, to ruin your name in an area, legally, through an advertisement.  It's not slander, or libel, as long as someone claims that he 'believes' you intended this or that.  It only takes one pissed off son, or friend, of an ill-rubbed seller to knock your door in and stomp you into a coma.  Crooks look over their shoulder wherever they go, as do those perceived as such by others, as well they should because there isn't any justifiable reason to conduct business that way.

This is a business where the goal is to try to make everyone happy.  That means buyer, seller, investor, title company, mortgage company, etc.  You do that and you'll thrive if you put the right effort into it.  No one wants to be associated with the investor who is considered unscrupulous.  Someone might as well throw their address book in the fireplace, move out of town, get one deal, and move again.

Sneaking around and hiding behind little clauses in a contract, hoping no one notices until after you get your check, and hoping no one gets pissed off about it, is NOT GOOD BUSINESS, and you shouldn't advise people to do it.    An Inc., LLC, or a trust, won't protect you from a vendetta.

Done with this argument that shouldn't have occurred.

Offline REI Hustler [Bob]

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Re:Question on Assigning Deals
« Reply #19 on: January 25, 2007, 03:32:49 am »
RandyF: I agree in spirit and actions with eveything you said. What you need to appreciate is that during my negotiations with the property owner I try and mention any "black clouds ahead" issues. But I cover myself by adding no agreement can incorporoate eveything discusssed, its a standard agreement which incorporates all the main terms. Sign it if you want to grant me this Option. No matter how careful you are 1 in 6 will beef about it.

*In Law people are supposed to be able to read, to understand and not to sign anything they have not read or understood. To rule otherwise would be bad-law. Every Tom and Dick could say I didn't read it, understood it, or appreciated what I was doing - so its void. Commercial life would then stop because contracts are the basis for trade. The only get out is the Imbecile clause. Old age does not void a contract, and even minors can sign if its for self-maintenance items like food, bedding, tablets.

Offline REI Hustler [Bob]

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Re:Question on Assigning Deals
« Reply #20 on: January 25, 2007, 03:40:37 am »
Randyf:

What did your friend do wrong, what was the issue. Why did he lose in court.

Offline randyfarber

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Re:Question on Assigning Deals
« Reply #21 on: January 25, 2007, 12:19:37 pm »
The only thing he did wrong was not inform, via plain language, on his option, that he intended, or might, assign his option for a profit.
He had informed that he was a real estate broker, though.

We were limited partners at the time, so I was in court with him.  Believe me, the judge not only ruled in favor of the Seller, he literally yelled at my friend, and told him if he ever saw him in court in this county, for an issue even related to misleading, or failing to inform, he would issue an injunction preventing him from doing real estate business in this county.  I was under the impression that he had been there before for something similar, even though my friend said no.

I don't know the legalities, exactly, but from the judge's demeanor, I think it would be safe to assume that law was on the judge's side.  The judge said that my friend's 'intent' was the issue, that he had acted unprofessionally, and that he was granting the maximum amount of damages he was allowed by law, in this case.

By the way, my friend did raise the issue about "and Assigns" being included, in clear print, being lawfully sufficient.  That's when the judge got irate, and said something about "faulty interpretation" of the law, and suggested that he consult an attorney, and that if he already had, to find another lawyer, because the one he has is going to get him in a lot of trouble.

We stopped doing business together because he refused to consult with a real estate attorney about issues, instead wanting to keep his 'friend' attorney, who was a trial court attorney (and an alcoholic, I must add).  We had ended up in court again over another matter, too, and I wasn't happy with the way he wanted to deal with it.  He wanted to take it to court, I wanted to give up $200, split two ways, to stay out of court and keep good will.  We won in court, but the hassle, and who knows what being said about us, would have well been worth the $100, at least to me.  He's a good friend, but too darned stubborn to take the risks.

See, you admit that 1 in 6 will be problematic.  I avoid all trouble by always disclosing everything possible.  It is also helpful, because instead of possibly upsetting someone, I disclose everything, how I make my money, and even offer them a referral fee for bringing any deals my way.  (I do 'exaggerate on how much work I have to do to get this stuff worked out, as a way of subtly discouraging competition, and how I deserve the my profits.)  It has brought me several referral deals, and some of my sellers have become buyers, both as investors, and as buyers that I earn real estate commissions off of.

Offline REI Hustler [Bob]

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Re:Question on Assigning Deals
« Reply #22 on: January 25, 2007, 01:05:16 pm »
RandyF:

Are you sure the Judge is licensed to practice. 1st, its common practice to assign options and bills of exchange. Your friend could plead that its a traditional right he and many others enjoy, he could have also argued that the Judge needs to abide by traditional Real Estate practices and not seek to overturn them, thats not his job or function. This business about don't appear before me again or else, is highly illegal, vindictive and unethical. You then have free-trade issues, you are not here to keep Judges happy, but to observe the law in your dealings.

In any event what was wrong with assigning YOUR RIGHTS, they are yours, you bought them, and you can assign any commercial contract unless the words clearly prohibit assignment/s. In your area it might be best to add a page 2, for signing which spells out all the Options side-issues and sub-clauses. E,g. innocuous paragraphs that say : The property OWNER AND VENDOR is aware, and was made clearly aware by the broker that he may / or may not, at a future date choose to assign the Option to another party or parties. And this option may be resold for an higher / or lower sum of money than that sum 1st agreed upon with the vendor / optionor.

You'll notice I took out the heat-seeking-missile-words by adding the adidtional wordshigher / or lower.   You can spell it all out for them if you wish by carrying  this 2nd sheet with you, and get them to sign for a copy.

*In life no matter how Saintly or Good you are, someone, somewhere hates you. I wear shirts and ties and lace up shoes and cufflinks, they cause amusement and mild irritation to some, but who cares, be yourself, with clients I can play many roles and they all come round to my point of view eventually. And if they don't who cares. Walk out.  

* Why on earth do you bother with $1000, $500, splitting $200. Don't do any deal less than $250 000, and always let them know you are prepared to walk, to leave. I have left houses without even going inside. If I do not like a client - I'm off, good-byeeeeeeee.

« Last Edit: January 25, 2007, 01:11:02 pm by RE HUSTLER »

Offline Jaffman

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Re:Question on Assigning Deals
« Reply #23 on: January 25, 2007, 11:24:04 pm »
Hello everyone,
Its late at night and I havent read every word of every response but I take the view that you should only deal with sellers who have no choice but to sell. That way they probably wouldnt care what or how the contract is worded. Why do I say this? Because I know people who have been in desperate situations.  They were extremely motivated and could care less what the contract said or how much the buyer or assigns make. They just wanted to get rid of the properties.

Offline REI Hustler [Bob]

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Re:Question on Assigning Deals
« Reply #24 on: January 26, 2007, 03:38:36 am »
RanyF

Its took me all night to figure out the Judges reasoning Have youperhaps omitted to mention that your friend was a licensed broker acting as a dummy purchaser, this is not allowed.

A broker must act at all time for his client, he must not act for an undisclosed buyer or principal or do anything underhand. It sounds as if the Judge ruled the intent / intention was to obtain the deal based on non-disclosure and deceit.

Offline GenerateCashflow

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Re:Question on Assigning Deals
« Reply #25 on: January 27, 2007, 01:19:53 pm »
I agree with the previous post.  Randy F.  from your experience, in your opinion, do you think the judge would have acted the same way if neither of you held an agent or brokers lic.?

Offline REI Hustler [Bob]

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Re:Question on Assigning Deals
« Reply #26 on: January 27, 2007, 02:58:24 pm »
Its a question of ethics, licensed in some ways your tied, you see if your Licensed you have what they call a FIDUCIARY RESPONSIBILTY. Which means your clients come first, nothing underhand is allowed, and you can be disciplined by removal of your license.

If your not licensed then maybe you could use a dummy purchaser, you can call the dummy your Agent, your sub-purchaser, or you can incorporate. Theres 100 ways to eat the pudding?

 




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