NC House Bill 725 is confusing at best. There are many opinions on what it is actually saying, and, if made into, how it will be enforced.
Here is an important line from it as it’s currently written:
Under Definitions;Exemptions, number 4
Real estate resale transaction. – Any agreement however denominated or structured with right of possession in the buyer through which a person who is a buyer contracts with a person who is the owner and seller of residential real property to transfer real or equitable title to the residential real property to the person or the person’s agent, representative, or designee or into a trust for which the person or the person’s agent, representative, or designee serves as either trustee, beneficiary, or both and that remains subject to an existing deed of trust or mortgage.
By this definition, a sale only becomes a “resale transaction” if it is made subject to the existing mortgage.
As it’s written, if you are currently NOT taking titles sub2 when you buy investment properties, it seems that it would not apply to you.
What this bill is trying to do is eliminate sub2 transactions within NC.
I’ll give you an update on what I do know is happening with this bill.
It did not get passed this past week before the Senate went home. That’s good.
The Senate will be back in session this coming Monday. If it does not get passed that week, then the Senate does not meet again until next May.
The bill has been hit with very strong opposition. Several REIAs have formed a coalition to fight this bill as proposed and have hired their own lobbyists. John Hyre, Cash (above) and some other prominent investors/attorneys have donated their time and effort to the cause as well. As it’s written, the bill violates several constitutional rights which has angered some that would otherwise not really care either way about the bill. Some state level judges have voiced the concerns over this bill, which may mean that even if passed, it may quickly be “redrafted” within the courts as being unconstitutional.
Hopefully, this is enough opposition so the Senate will at least strongly consider the proposed changes to the bill offered by the opposition to make it fair and legal.
BTW, if you’re interested, the bill was first proposed by House Reps that were an appraiser, a real estate agent, and a general contractor. Strangly, not one investor in the bunch, and all in a profession that is negatively affected by sub2 deals.