So here is my situation. A year ago or so I decieded I would like to build houses as a contractor. My stepfather, a developer and former homebuilder, says “Find the lots and we will build some houses.” Well I do, lots adjoining my house. These are some beautiful lots, Live Oak canopies, sewer and water, in one of the last yet to be built out areas of my beautiful and historic city. So I tracked down the owner through tax records and internet searches. of these inherited lots that had been in the family for 65 years;5 of them; got to know the owner over the phone who was living in another state and basicly hounded this deal for a full year before I got the contract. I was one of a handful of bidders since it never had a sign up. In my town, lots are the limiting factor in housebuilding. So I was ready.
At this point I want to point out that my stepfather is a big developer guy turning out hundreds of lots per year, and I am poor slep of a overeducated under employed contractor. Moving on… Stepdaddy sets up a deal where his buddy developer, henceforth known as Mofo, is going to use part of the 600k line of credit Stepdaddy has unused to cover the 20% the bank won’t cover until we get the construction loans. THen the deal changes, and Mofo is just going to buy them through one of his pension funds and hold them until I can take them down. This way the fund is secure and I can pay the interest at time of closing. Brilliant, right? What a munificent stepdaddy and mofo.
Stepdaddy says the bank will only front for 3 houses at first, that is 600k. Lot of money, huh. After we sell some they can do the other two. My first indication that this was anything other than the finest workings of the good ol boy network were the day before closing. Stepdaddy says because we can only get immediate financing for three that Mofo is going to sell two of these lots to his boy’s constuction company. Oh, shiznits. Augie (me)hits the roof. At this point I have a buy sell agreement with the absentee landowner and I can stop the transaction but have no backup financing. So I let it ride. Deal closes, and nobody will even tell me when and where it is going down. Oh, no!
Wow! I JUST LOST 40% OF MY DEAL. Oh well, these guys are doing me a favor , right? I am trying to parlay nothing into something: Its just business.
There are some hurtles afterward; Surveys with confusing markers, resubdividing the lots because they had been unified 2o years ago for tax reasons, getting
new PINs etc.
At this point our hero (me) is working on permits and subs, Stepdaddy is updating some old plans from the last time he was building to the new specs, and, I don’t know, Mofo is up to his customary deals with the devil. Well Stepdaddy now realizes why three years ago he left the business in the first place. It is obvious from his every move that he doesn’t want to do this, but he has the track record and the credit and the company and the contacts. He tries to push me into partnership with someone else. That fails because the third party doesn’t want to do it. At this stepdaddy decieds that he doesnt want this company with his name building these houses. So he says that he will still back me. The bank he puts me on already has 1.5 million on him. Well, I don’t know if you knew it but there are caps to how much one bank can lend one person, then the banks have to “participate out” to other banks. I didn’t know it, but I bet stepdaddy did.
At this point the guarantee of three construction loans becomes a “We will have to send this out to committee.” I have since learned that in banking parlance “maybe” and “no” are virtually synonomous. That answer is NO.
And Mofo is now saying that if I don’t close soon he is selling the whole kit and kiboodle to his boy. I now realize that chances are looking slim for my houses. But I decide to look on the bright side of life and sell my right to buy the lots. Recently I took the real estate lic. course and test and learned about contracts being assignable and marketable.
I put a sign out on them for 13 grand more than I paid for each and the phone just kept on ringing with builders ready to go. Great, I’ll make thirty grand anyhow. Now comes the stinker. I call up my man Mofo with a closing date telling him I found private money to do the job. I WANT MY LOTS!!! He says he heard that I wouldn’t be able to close and says that he is going to sell all the lots to his kid and I can have a real estate commission. Strange that the man knows about this denial of credit before anyone else beside me and the bank coming off the New Years Holidays. This Mofo is omniscient. Stepdaddy is yet to chime in, but I am beginning to figure out that he is not going to stand up his moneybuddy Mofo for the likes of me.
I haven’t had a written contract since the land closed, and let me tell you that Mofo dries his feet on the amount of money were talking about. It is simply against this mans religion to let slip a dime he doesn’t have to. And his adherence to the golden rule is strict: He has the gold and he is making the rules.
Statute of Frauds says an oral real estate contract is unenforceable. I want to give him ten grand plus the 40% percent he already took. Just let me have my profit. So I guess my question is does any one have any suggestions on how to deal with 800 pound gorillas with bad table manners?