Attorney General Troubles
My husband and I do "Subject To" deals. We had a "seller" decide that they wanted their original house back. This couple was behind on their payments by 6 months, and we talked with them for over 5 months before we had them deed us the property. Another investor tried to sell the property outright, but didn't get even one call on it. The couple moved out and we paid up the back payments and put new carpeting inside. When we took over the property the house had a mortgage on it equal to or more than what the property was worth.
The couple took our paper work to several attorneys. In one of their emails to us they said, "Our attorney helped us understand that what you did for us was a good thing." Several months later a mortgage broker contacted them and told them that they could refinance again (that is exactly why they were in the trouble that they were in-they had refinanced the house every other year for a few thousand dollars. They told me that they couldn't resist all the phone calls and letters in the mail telling them to refinance. They had been in foreclosure and then bankruptcy in 1995 and were in foreclosure again in 2001. They could not afford the high payments.
Well, they took their paper work to one more attorney. Told him that they didn't get any compensation for the property and that they didn't understand that they were deeding us the property (after all they only had a 6th grade education they explained to him) and then they had attorney write us a letter saying that they were revoking our Power of Attorney and the Assignment of Beneficial Interest In the Land Trust. In talking with this same attorney to let him know what really was going on, we told him that we would be willing to let them have the house back if they paid us the $8200 that we had paid out bringing their payments current as well as carpeting the house. He said that we were being very reasonable and he would relay the information to his clients. (We were even willing to take a car, etc. in place of cash. They told us that their car wasn't in their name.) The couple told their attorney that would be fine, slept on it and the next day emailed us saying that they had prayed about it and they decided they wanted the house back without paying us anything. Their attorney said for them to pursue this case any further they must pay him some money. Of course, they don't have any money. That is when they complained to the Better Business Bureau, the Real Estate Commission and the Attorney General's Office. We handled the BBB, as well as the Real Estate Commission. Then we got a letter from the Attorney General's office. I called and set up an appointment with them to explain the situation. Was I wrong to do that. I was greeted by two women who did not hear a word I said. They told me that what we are doing is immoral and deceitful. They said our website reads like an informercial. Our ad that use to read "We Buy Houses" is misleading they said-because we don't really buy houses. She said that we are scamming people and what is more, we were scammed by the people who taught us to do this. They said that this way of doing business doesn't work. I explained that I was sure that she has seen people in her office who really are taking advantage of people, however, we were doing everything ethically, etc. She would not listen to anything I had to say. (I did tell her that I wish that the moisturizer that I use every morning that promises to erase my wrinkles, would.) Anyway, we parted company, and I was told to not do ANY real estate transactions until I heard back from her. We hired an attorney who also told her that we would comply with her demand that we would not do any business until we heard from her. Well, here it is 2 months later and we finally got a letter from her. Here is just a sample of what she is demanding: she wants a list of all the "sellers" we "bought" houses from "Subject To" so that she can "set things right", she thinks that we have lied to our "sellers" because she doesn't believe that people would ever sign our paper work if they knew the real truth that the mortgage stays in their name yet the property is deeded to us-really a trust. She has not mentioned one thing that she knows we are doing that is illegal-just deceptive. She thinks that there "may be language buried somewhere in our paper work" that isn't fully disclosed to our clients. Well she has had our paper work for over 2 months if she hasn't found it-what am I suppose to do. There isn't any language buried in our paper work.
We feel very stongly that what we do in this business is very helpful and totally legal. We have saved many houses from foreclosure by giving people information so that they can act on their own behalf to save their own property. We help to keep the housing market level. When neighborhoods suffer a few foreclosures, the housing values of the entire area are adversely affected.
I guess I feel that we are being singled out. We tried to help a couple who were in a terrible situation. They are looking to get something for nothing and lying all the while. A couple of weeks ago I had to hire another attorney to stop this same couple from taking our tenants (who are in this house in question) to eviction court. They swore to tell the truth and then proceeded to tell the judge that they had a verbal rental agreement with our tenants so that they could collect the rent for two months, and then move into the property again. The case was dismissed, thankfully.
Does anyone have any suggestions? We feel that "Subject To" deals as far as the state of North Carolina goes is in jeapardy if this insanity with the Attorney General's office continues. Thank you for listening. Diane
wow that is crazy, I don't have anything constructive to tell you except some encouragement to bring these "toothless wonders" to their knees with a good attorney and along the way educate the AG's office in NC. I guess ignorance is bliss after all...
There are those that take advantage and there are those like you that are well intentioned. I would try to join some legal plan for a small monthly fee so you can get some representation and advice. John Locke recommends to have things checked out by an attorney. This is a good example of why we need to do that. Good luck!
Lets put it this way, they signed the paperwork and the deeds were notarized. Did you have them sign anything stating that they knew you were keeping their mortgage in place after they deeded the property to you?
Sound like the AG is trying to make you the gunea pigs. However the AG like any attorney needs evidence. In your case, you did nothing illegal. You put your money forth to take care of the matter. How is this different from someone with a 6th grade eduaction that puts their house for sale and sells it? Are they able to come back and say the sale was valid, that they didnt understand? Obviously thats not the case here. Matter of fact, contact some of your other clients that you did subject to properties and get notarized statements from them stating how you helped them with their problem etc etc. That way to the AG this will sound like an isolated incident.
There will always be one rotten egg in the dozen. And they will get what they are owed. Its not for nothing they were dealt a bad card in life. If anything talk to those people and explain how they are ruining things for the people that really need help. Maybe kick them back a few $1000 to write a letter to the AG recanting what they said. In other words bribe them. This is an unfortunate thing to read. Its more unfortunate that you are in this mess. better to mitigate your damages. Ive had to shell out $1000''s of dollars to get rid of people like this. In the grand scheme of things, it was worth it though
Diane,
Sorry to hear about your troubles.
Seems to me, you might want to make sure your attorney is on board a little more.
Do they understand what you are doing, and agree with the legality of it?
Because for them to agree that you will shut your business down until further notice from the AG's office, with no formal charges, is just plain crazy.
Might be time to get to the local REIA and find an attorney who practices real estate law and understands sub2 deals.
Also, to help any attorney along, perhaps hop on over to ****Must Reach Senior Investor status before posting URL's*** and print out Bill's articles about beating the due on sale clause.
He mentions some things in there, and references some case law, and bar association ethics opinions.
I've used this to help educate new attorney's.
Sounds to me like the Ag is playing politics.......save the poor homeowner losing their house, from the big bad investor, who is obviously scamming somehow, since the poor low paid governmental attorney, with probably no experience in the real world, does not understand the transaction.
As long as you disclosed everything, in writing, and fullfilled your obligations, I'd tell the sellers, and the AG to "go pound sand", and maybe even sick a lawyer on them, with a lawsuit in two, for tortorius interference, since the sellers are messing with your tenants.
At the same time, move your tenants toward buying, or look for a refi if you can.
Don't allow the other party to control the situation when you are right, and NEVER volunteer any information.
The burden is on them, not you, remember that.
Get that attny involved, and do not let them nail you for being honest and doing things right.
That would be a very bad precedent.
Maybe find Bill Bronchicks contact info, and hire him as a consult for your attny to talk to, or let your attny contact him if they are willing.
Bottom line, don't just roll over.
It could hurt us all, in the long run.
Besides, as others have pointed out recently, buying houses subject to the existing financing has been in practice for years.
This assistant AG is a moron, and someone needs to slap them with reality, quick before they witch-hunt you and others.
Good luck, and please, even if painful, keep us posted,......we are all rooting for you,
Jim FL
I'd give the AG what she is asking for ...
AND MORE !!!
Give her a list of clients that you have given information to (you may not have done the deal) but have helped them to save their home.
Add one or two subject tos of people that totally understand and appreciate what you've done.
Only give her just ONE person A WEEK ... starting with the most favorable. DRAG IT OUT! Say that it is taking time for you to get the list together. Act helpful!
Slowly, she will see that you are helping people, over time ... It will take time to sink in.
Call her EVERY DAY asking if she has contacted the latest person on your list.
She will get sick of you bothering her all the time, you're not her only case.
I once did this with a city home inspector. Called him EVERY day when one new little thing was fixed on the property. After a month, he cleared the property because he was sick of me bothering him and sick of going to my property every few days.
Hope This Helps!
Mrs. Meltzer
For the benefit of all, just remember that whenever anybody gets a call or letter from a cop or prosecutor, wanting to invite them over for a chat, the invitee may feel honored (right!) but does NOT have to go, or respond in person, or even talk to the cop or prosecutor.
And it's just flat insanity to do so, thinking you're going to ecucate them with your side of the story.
VERY dangerous!
This being the US of A, we all have the same basic constitutional rights to remain silent, making any accuser come forth with his/her complaint and charges, and we NEVER have to say a word ourselves.
The State has to prove, Beyond A R D, (c'mon, every TV watcher knows what that means!) that we're guilty! We don't have to prove anything! Or help the persecuters in any way!
Taking "the 5th" may have a ring of the movies, but it's our absolute right, NOT to talk to any potential prosecutor or cop, NOT to voluntarily give ANY statement of any kind to anybody concerning what we've done, been accused of doing, etc.
If I were you, I'd see if I couldn't find a lawyer with some guts who's willing to tell the AG bullies that they either put up, charge you with some specific wrong-doing or statutory violation, or shut up and quit prosecuting innocent citizens.
Heck, give your new lawyer all the profit from this deal if he/she's willing to stand up for you,
For those who haven't yet had this kind of harrassment happen, it sure shows the value of total & full written disclosure, signed off by the seller, kept in our files, so as to later be able to show that those poor, put-upon folk understood very well, when they needed to, before the greed set in & they conveniently forget certain details.
Best wishes in your ordeal.
John
Excellent post, thank you for telling it like it should be done.
John Merchant is one of the reasons you should have your paperwork reviewed by an attorney and have one who is knowledgeable in real estate investing.
He knows how to get the job done.
John $Cash$ Locke
I was talking to my property law professor about sub2s and the legality of the transaction. He told me that he sees them all the time in his practice. He did say the main area of concern is full disclosure. If you offered the information to them in a legal transaction how can you be held responsible for their failure to read or have the documents reviewed?
It seems what you have on your hands is a con. They are trying to get something for nothing. You paid their mortgage for X number of months. You put new carpet in the place. You saved them from having their credit destroyed due to a foreclosure. The couple is playing the AG like a fiddle.
Question. Did you have any attorney fee cluase in the contract that they signed? If so you should try to recoup every penny you paid in legal defense for this bogus suit.
Call the AG everyday and demand an answer. They are interferring with your ability to conduct LEGAL business.
My god father is a federal judge in Phila and he used to tell me about AG and DAs trying to make a name for themselves by bringing BS cases that had no case law behind them in hopes of getting some recognition.
Good luck and don't back down.
If it’s Forsyth County, it doesn’t surprise me.
Don't pay them 1,000, it can be later seen and used as a form of admission of guilt.
6th grade education apparently their mortgage companies, one of MANY, all found that they are competent to write each mortgage. If they are good enough for major lending institutions, they're good enough for you.
Sometimes just being "deceptive" can be enough within some States to be a civil crime. Such as "theft by deception". Not that you were deceptive, I'm just pointing out for the hell of it.
I'm confused on whether or not you provided the AG's office with their request for that list of former clients. If you did, and if it was ME, I'd of done nothing without my attorney saying it was a good idea. As far as I'm personally concerned, all that does is like saying; "Hey, we don't know exactly what you did that we can charge you with anything, can you please provide further information such as a list of past clients, so we can look further into your past to find a crime that we currently aren't able to do?"
One point is though, they don't need a list from you. Anything you've recorded is at their finger-tips already via their recorder of deeds office in that county. So it's not like they can't investigate if they wanted to without your help. If it was me, I'd decline to provide anything that might add fuel to the fire. They're the AG's office, with a virtually unlimited budget behind them, let them spend the time and money figuring out what you may of done wrong in the past, you're under no obligation to aid them in digging up dirt, your only obligation is to respond to valid inquires for this matter ONLY. Anything further should be sent to your attorney to handle any future correspondence.
And any mail should be followed by a letter stating that, unfortunately, you cannot review and comply with any correspondence requesting documentation on anything without first getting approval of council, therefore you're forwarding the letter to your attorney. And would appreciate it if they'd correspond with your attorney more directly to expedite future correspondence.
By the way, I hope you didn't just get some lawyer from a Penny-Saver freebie magazine ad. A good real-estate attorney is worth the money always. You get what you pay for. And don't believe that there are no incompetent lawyers. Their are TONS of them. Go to your local law library and look up an attorney in Who's Who in American Law, look under "Real-estate". Pick from the top five, but not the top of the list, since they'll be the most expensive.
Sometimes if someone, even the AG's office notices your lawyer isn't the everyday tom dick and harry off the block, they know whatever they do to you will cost them and the court, and the State a LOT of money just in the paperwork you both throw back and forth, that they usually drop an inquiry just because they rather go for easier pickings.
And establish a long term relationship with the same lawyer or firm, so you aren't reinventing a relationship with your lawyer over time every time a problem happens, and so that attorney already knows how you operate and can handle your business affairs easier as time goes on.
Also, have that attorney review everything you are doing, based on this situation, so they can iron out any problems and provide suggestions in-case they feel there is a few touch-ups you might make to any documents or how you have a client agree to any agreements or contracts.
If you have a relationship with a real-estate agent, ask them who is considered a top lawyer in real-estate for your area. Don't go cheap to save a buck, when the problem might cause you tons in BS penalties that might otherwise be avoided later had you had a good and respected real-estate attorney.
I NEVER answer any correspondence, other than to say I'm forwarding it to my attorney for review. Putting things in writing lasts forever, and saying the wrong thing, or writing something that can later be used as an omission of guilt if twisted, is easy to do unintentionally. Lawyers spend years writing beautiful letters of correspondence that ultimately say virtually nothing and give nothing away. So use them for what they're there for, legal matters.
Remember, you're not spending $200 or more bucks to handle the AG's office, you're investing in prevention, preventing an official office from using you as a poster child to justify them being in office that year, and for another year to follow.
Your sellers (assuming you have a contract with your tenants, which I'm certain you must) are more than likely guilty of tortuous interference with a contractual relationship, and need a cease and desist order from your new lawyer also by the way. That will probably also shut them up.
And are possibly also guilty of breech of contract with their deal with you, perhaps, but I haven't seen the contract you and them signed together. If your lawyer agrees, a letter to them also is needed from your lawyer. But only if your lawyer agrees. Otherwise it might be seen as trying to influence them from assisting further the AG's office.
I would never judge a stranger, so I'll say everything you've said is honest, and based on that, even when contracts sound like you have good intentions, wording is important. Because you need to make sure it can't be twisted later. Have a GOOD lawyer review ALL your contracts you commonly use. So if this happens again, you can always tell yourself an attorney reviewed everything, and practically signed off on it all being above board.
Reading all the posts, there is something that nobody has pointed out yet:
There is a sentence on the Buy Offer and Acceptance and Deposit receipt that says:
FINANCING: Buyer's monthly payment is: $_____ for ____ months with an interest rate of _____% per annum.
SELLER agrees that the Buyer is purchasing SUBJECT TO THE EXISTING DEED OF TRUST (in Oklahoma: Mortgage)
That is signed by the Seller and the buyer.
In my opinion the AG is one of those "political correct" idiots that has a bleeding heart mentality.
If you had your sellers (conartists in my opinion) sign this paper you should be OK.
When I buy a property and when I sell I tell the people to READ all the paperwork, BEFORE signing, that I want them to know what they sign, if they have questions, ask me before signing NOT afterwards. They all do, just take the time, and make sure they do. After they have read it, I ask, do you understand all that is in the paperwork? Any questions? No? OK, now, you can sign.
Maybe because I translate in Court and hear the Judges ask these questions when somebody pleabargains, I am doing the same, just to make sure.
Ladybug
Quote:
On 2003-08-25 22:18, DianeBarberio wrote:
ate Commission. Then we got a letter from the Attorney General's office. I called and set up an appointment with them to explain the situation. Was I wrong to do that. I was greeted by two women who did not hear a word I said. They told me that what we are doing is immoral and deceitful.
I could go along with the "deceitful" part, *IF* there was anyting deceitful on your web site or in any of your paper work, but "immoral"?
Are you sure it wasn't the Priest General's office, and not the Attorney General's office? The AG's office has no business even DECIDINGwhether what you did was immoral, let alone coming down on you for it. If they can't find a law you violated they were harrassing you.[ Edited by AKlein on Date 08/27/2003 ]
RE: The AG call and interview. Be very careful they have more police power than a uniform cop. Never talk to them without your lawyer present and or have your lawyer hamdle this for you. Do not give them any info without your lawyers involve. The AG Can and will use a very real threat of criminal prosecution to get you to do as they say. Perhaps your lawyer can file civil suit against the sellers and have it kept in civil court. Once more do not ever trust any form of AG they live to prosecute and win scalps.
No matter how much good you have done it will not matter if the full power of the state is used against you for the benifit of the AG.
Best of luck sorry about your situation.
I spoke with my godfather last night (the federal judge) he said it is hard to get an AG brought up for abuse of process. He again told me that he sees it day in and day out. AGs looking to make a name for themselves but "breaking new ground" and attaching there name to a case.
He did say that you need to hire a lawyer that is aggressive and experienced with the AGs office. Unfortunatley this is all going to come out of your pocket because you can't recoup fees from the AG.
As far as the original owners go he also suggested the aggressive attorney approach. If they can't afford to pay a bill on time no attorney is going to take their case. Unfortunately you are backed into a corner and have no choice but to be the aggressor.
Please keep us updated on the situation, I think everyone here is behind you on this one.
Diane send me a private message on my profile so I can give you a web site that may help or at least may get tyou some info for finding a referral. It may or may not help but it is worth a try.
You definately need representation of some kind instead dealing directly with the barracudas. Not all people with an attorney generals office are like this.
Hello Diane,
I would attempt to cooperate with the AG's office to the fullest. They will keep up hog-tied for longer than you hope. They have more time to kill than you are willing to be tied up in legal matters dealing with this issue. Look at the attention that you have already spent with this matter. You could have found several real estate deals in this short period of time. How can one expect to have the full force of their creative juices flowing, when one is bogged down with dead weight.
Make a deal with the AG. It has to be a resonable solution that the AG wants to accomplish. I don't know what type of profits you made off this one deal or how much money you have tied up in this deal. However, if I were to lose it all I would not like it, but I would be free to go on to the next deal. If you lose on this deal, then you will have a good tax write-off.
Make the deal with the AG and move on. <IMG SRC="images/forum/smilies/icon_eek.gif"> <IMG SRC="images/forum/smilies/icon_wink.gif"> [ Edited by Vern on Date 08/27/2003 ]
$(&#*@$! the AG....
Listen to what the others are saying, get yourself a good lawyer.
As far as a list of names ask them a few questions first...
Are there charges agianst you??? Thats just something you and your lawyer need to know.
Do you have to give them that list if they ask for it??? If they say no then don't give it, let them figure it out.
If they say yes then ask them if any information from that list can be used agianst you in the court of law (civil or criminal) there is only one answer to this and that is yes, they may try to beat around the bush but don't let them you want a yes or a no answer... the answer will be yes. How do I know that'll be yes... look at whats going on right now they're trying to set up a case....
Seeing as the answer is yes... use the 5th amendment (ie. you can't be forced to self incriminate, ie they can't make you had over your list of sellers)
The best way of getting out of handing over something like that is to ask those two questions.
Another idea on my part (don't know if it'll work) is to get some sort of documentation (recording is best) on if the AG says that you have to hand over the list and then the question about being used agianst you in the court of law.
talk to your lawyer about it first, what you're doing is catching the AG in a lie. If things get ugly pull it up in court that the AG was willing to lie to you and violate your rights agianst self incrimination, if he/she is willing to do that what else are they willing to lie about and what other rights/laws are they willing to break???
It's up to them to prove that you've done something wrong....
Quick disclaimer: I'm not a lawyer, the above is not legal advice, just ideas that if you decide to follow up on you should check with your lawer first.
Hmmm, maybe now-a-days we should also have a tape recorder on hand for transactions, stating that it is intended for training purposes. Can't argue successfully against that if you disclose. Why not? It could happen.
DianeBarberio - this is nuts, but not surprising given our society today. John Merchant and dhaas got it right. I would immediateky hand this whole thing off to your attorney to handle. I would refer ALL contacts, particularly verbal ones, from the AG to your attorney. You should not have ANY direct contact with the AG w/o your attorney present. If I had an attorney who allowed the AG to bully me into stopping by business for 2 business, with no end in sight, I would quickly come to the conclusion that I needed a new attorney...and fast. If you can find someone with experience dealing with the AG's office that is best, however finding that might be hard and expensive. This will cost you find a top attorney, but it will cost you a lot more if you don't get the best resource and spend the money. Might be a good time to make sure have the right corporate structure in place as well. A close relative of mine is an Asst. DA in Philly and I bet even he thinks this is crazy (I will check with him).
I still can't believe they have told you to stop doing business for two months and your attorney has not pushed that issue.
Good luck, you have our support, and be sure to keep us posted.
MidWest
Dear Joel,
Well, I don't know if you read my reply to Mr. Merchant's article or not. But here is an update. The Attorney General wants us to never do another Subject To deal ever. She wants us to give back all the properties that we have taken Subject To. She wants us to give her all of our paperwork from every deal we've done. And there doesn't seem to be any way to convince her that this is NOT what our "sellers" want. We have contacted most of them and they say that they will speak on our behalf, etc. These people do not want their houses back. I got a copy of a newsletter from an attorney in Winston Salem faxed to me. The newsletter goes to all the lawyers in NC. It was telling the attorneys to be on the look out for people advertising "We Buy Houses". The article stated that this is bordering on mortgage fraud. There is a trend afoot to stamp out Subject To all together-at least in the state of NC. I have been in touch with National REIA and they want to nip this in the bud.
I was able to find a great attorney to help fight this problem. He has been doing land trusts for over 20 years. (By the way, this attorney was recommended by one of your readers who lives in Raleigh. He contacted us as a result of our posting on your site. Thank you again.) The only problem is, I am waiting to see if he is willing to help us fight this battle. I have already been turned down by another large firm who was recommended by another investor. Not too many attorneys are willing to stick their necks out on something like this. My feelings are that if some major support doesn't come forth to help fight this battle, Subject To deals and the use of land trusts will be a thing of the past for NC investors. I am also trying to impress on Lou Brown, Randy and Charlie France and Ron Legrand that they need to see that their empires could be impacted by this trend. It won't end here in NC. What I haven't told these other groups is that when I visited the AG's office, the assistant said, "Not only are you scamming people, but, you were scammed by the people who taught you how to do this." I believe that the Attorney General may be after the gurus and we are the vehicle that they are using to "get" to them. I do NOT think that I was scammed. I believe that what we do preserves property values, helps people with homes that they must get rid of and helps families get into homes that they will purchase in a year of two. This is what I call a win-win situation.
Do you have any suggestions on where to go from here? Please call me or email me back if you think of something. Thank you for allowing me to use your forum to get the support that we have received so far.
Diane
The actions of this AG in NC really gets my blood boiling!
This is outrageous!
I would suggest that you hire a detective of sorts to snoop covertly into the life of that AG. I am not kidding! There is a major reason behind this kind of behaviour, since what she wants has nothing to do with the plaintiffs. She is making you, and all other Sub-2 investors pay for something that must have happened to her: either she lost a lot of money in a disgraceful way, or she lacks the capability of earning good money herself (an AG doesn't make that much money) or she lusts after Power, yes with a capital P. I suspect that the latter is the main reason, and the previous two are minor reasons. She seeks to make a name for herself and to have power. Beware of people like that, you are not helpless if you decide not to be helpless.
Also, besides getting a brave and very intelligent attorney, go to the law library yourself and look for those articles in the law pertaining to RE, and scan all laws that have to do with mortgages, purchasing RE, etc. Sometimes we have to do the legwork ourselves, the attorneys don't do it themselves anyway, that is why they have paralegals or student lawyers, to do this for them.
It is frightening to see that the freedom is slowly being eroded by all these power-hungry people, mainly leftists. These things happen all the time in Europe, where every country is socialist, and they want the people to be dependent upon the government so they can exercise power over them. There is a movement going on in this great country to get the people dependent on the government, and to regulate every kind of business, and kill the motivation in hard working people. We must watch who is being elected to the important offices in every State and in the government.
This AG may well be a puppet in that movement, and one of her actions is to stop you from exercising your right to do your business, and to stop others from doing the same, and through trying to attack the teacher, she may try to stop everybody in the country from doing this business.
I read a book, about 30 years ago, about a clandestine group of very powerful and wealthy people, who have a great influence on who gets elected in whichever country. This book, after being published in small numbers, was prohibited in most countries, the writer of it, who used to be a member of this group, was assassinated, and another one finished the book, while remaining anonimous. The book was stolen from my houses, after I discussed it with some friends (I was too young and too naive at the time, to know better). Later I found it again, in another country, and there it was also stolen.
If you would read "Captains and the Kings" by Taylor Caldwell, who read the book also, you would understand what I am talking about. Just be careful.
I am aware that a lot of people will read this post, and some may laugh, and disimiss this, other will take it seriously.
I am deadly serious about this, and the only reason for mentioning it, is because it will affect all CREI's business, it only started with Subject to.
Don't forget to research the law in your State yourself and start building your defense with your attorney. Don't get mad anymore, smash them down legally! and win.
God bless you and help you find what you need!
Ladybug
P.S.: another thing, keep a log book an all that has happened, dated, how much money spent on what, etc. When all is done, and you win (I have no doubt that you will win) you should sue all the parties involved for all the money you have spent, and have lost not being able to do business, based on the average income you have had before this happened. This is, in my opinion, an unlwaful prohibition of your right to run a legal business. Contact also other Sub-2 investors in your State, forming a group in defense of y'alls right to do your business (they are affected also).[ Edited by Ladybug on Date 09/25/2003 ]
Hi Diane,
I have been following your posts since the beginning and now want to give you my views. Of course, I am not an attorney so this is only my opinion, however, I do know how to do research.
The Department of Housing and Urban Development (HUD), I’m sure you know, is an agency under the United States Government and they recognize ‘Subject to’ investing. If you go to Appendix A of Section 4 of RESPA and Regulation X of (24 CFR part 3500) otherwise known as the HUD-1 form you will notice on line 503 “Existing loan (s) taken subject to”. Also, if you go to “Final regulations Appendix A to part 3500 – instructions for completing HUD – 1 Settlement Statements”, you will notice “Line 503 is used if the Borrower is assuming or taking title subject to existing liens which are to be deducted from sales price.”
Your Standard Form 2-T, Offer to Purchase and Contract, which is jointly approved by North Carolina Bar Association and North Carolina Association of Realtors states on paragraph 4 (c) and (d) about assumptions and seller financing in accordance with the attached Seller Financing Addendum.
Your Standard Form 2A5-T Seller Financing Addendum, which is jointly approved by North Carolina Bar Association and North Carolina Association of Realtors states on paragraph 5. “Unless otherwise provided herein, the loan may not be transferred or assumed without Lender’s prior written consent.” Paragraph 6. “Additional loan terms (if any)” provides space to adjust the terms such as in paragraph 5.
A couple of questions, and I’m sure your attorney is also asking them. What specific statutes have you violated? What charges have been brought to you in writing? When is your court date scheduled so you can tell your side of the story to a judge? Has your attorney told you to make no further statements to the AG?
When I find more, I’ll post it.
Best of luck
John (LV)
You can do subject tos but you are violating the intent of the loan agreement. When I started investing - 1960 - most loans allowed you to assume. Lenders found that didnt work because interest rates started to go up. To allow them to make loans at reasonable rates they decided to take advantage of the fact thet average family sells after 5 years
and so all they had to gamble on was fixed rate for 5 years. Around 1980 - 1990 they
all switched to loans that very clearly state that they are to be paid back when the property sells.
There are people who sell real estate books and classes that pretend these changes didnt take place - in my opinion to take advantage of eager starting investors who dont know better. They give you gimmicks to get around them. You may note many people here expressing frustration that they cant get an atty to go with these approaches. For a reason.
I believe you have been caught in the middle.
In fact - if the lenders wanted to go after you - and they probably wont because of the legal costs to them - they could charge that you induced their customers to cheat them, called "tortious interference with contract".
The AG is probably trying to make an example of you since the promoters of these books and schemes talk so loud
people seem not to understand that they are inducing the original owner to cheat his lender.
There is a very real risk in ignorig the intent of the original loan agreement. And you dont need to do stuff like this to make money in RE.
Suggestion - get a lawyer and work hard to get on the good side of the AG because they can cause major pain if they choose. If you did this based on some book or course - show them the book, plead ignorance and a desire to do what's right - again following the advice of your atty.
Good luck - I am so sorry to see you caught in this. It sounds like you are basiocally honest law abiding folk who took bad advice.
dickknox,
Glad to meet you.
I notiiced that your posts are anti-Guru anti course writters and anti anything creative.
You make assumptions as a laymen many times with out substance to back up your claims. William Bronchick is an attorney and investor so I would say that he would not give out information without knowledge as he has a lot at stake. Here is his answer to the DOS clause with legal citations and learned opinons.
http://www.legalwiz.com/dueonsale.htm
If you have other information I'm sure we would like to see it.
Let's look at another post you made and I will para phrase here, "Get rich quick Gurus have "shills" who post." My question to you is please show me some documented proof without rhetoric who these Guru's are. Since you posted this under a post that some of my students made comment on, one would almost think you were referring to me. However you do not really know me as you have not been on this board long enough.
You are an admitted Realtor, all Realtors would like to see any kind of creative real estate investing go away, this is a known fact. Are you losing to many deals to investors, just what is your negative position about creative real estate investing based on.
While I understand the problems of the poster who is asking for help, I still do not know "all" the facts, so if you are judging all creative investing by this post then you are sadly mistaken what this industry is all about.
When I first started doing Subject To deals I had the calls from Realtors with your attitude, you are going to jail, you are illegal in your methods, then after they realized the power of my method they started doing the same thing I was doing.
So substantiate some of your accusations.
John $Cash$ Locke
It seems Dick Knox and I have something is common. We are both "admitted" realtors, we both have many years expericence in investing, and we booth think that going around Due On Sale Clauses violates the intent of the original loan documents.
I have no doubt that investors in "Subject tos" help the folks that are in trouble, I also don't have a problem with others doing it, particularly with full disclosure like is discussed above.
As I have said before, there are many creative ways to buy real estate and to make money. Certainly after reading the experience above I will stay with the methods I have been using.
Hope things work out for you.
[addsig]
To GFous,
I truly appreciate your gentlemanly way of disagreeing. It is refreshing from the hate posts of late. However, I feel that you really don't understand the due-on-sale clause of a loan document at all to make the above statement.
To DianeBarberio,
I really don't know your situation, just what you've told. However, I believe that you're being way to helpful to the AG's office. If they're not charging you with a crime, don't talk to them at all. PERIOD.
As John(LV) pointed out, the Federal government fully reconizes loans taken 'subject to', so the great state of NC will too. For some reason, this AG has pegged you to make a big case, possibly hoping to get some reputation from taking down the 'big, bad RE investor."
It's been stated before, she obviously doesn't have anything illegal that you've done, and she looking for you to help supply her with the information she needs.
Simply put, don't talk to them again. Have your attorney tell them "charge you with a crime, or leave you alone." The AG's office can be hit with a harrassment suit, too.
I know that's easier said when sitting on the sidelines, but if you've not broken any laws, you really don't have anything to worry about.
Since I'm from NC, I know full well that it is very conservative where real estate is concerned. You're right in getting every major RE group to try to help fight this. I personally wouldn't stop with NC groups, because if this continues, it will spread.
Roger
My God, all that advice and all of it very good. Seems to me that on this one site you have received the benefit of a full O'Melveney and Myers legal team.
I do what you do and I do it as a Licensed Real Estate Broker, which puts me even deeper into harms way.
The Human Condition is such that people fighting for their lives, no money, no education, no future no "Great Expectations" will respond to any stimulae. Accordingly when dealing in such circumstances certain defenses must be established at the very very beginning of Transaction. I always give money, no matter how little and document it all the way. I always use a full Escrow with masses of continuing duplicating boring documentation. On Settlement Day ie: Close of Escrow, they get a fist full of documents and the check.
All designed to defend any future attack against title or possession.
In any conflict one must attack. In the present instant law suits must flow from you to them. Also the primary rule of Real Estate. if you are the Transactor, never never never go into title as the Buyer, always another entity. A real one.
Dealing with Atty Gen's etc. never after initial contact speak with them. Always your Attorney, you want one well checked out in Real Estate. In California you need one that is a member of The Old Boys Club in good standing. Stanford, USC. Member of the DownTown Club, has lunch at the Dining Car. etc. etc.
Two ladies handling the first meeting of the investigation. Yip Two ladies together means they have been rejected from the insiders team. Possibly for deviations in sexual preference, or their noses are so hard it is no fun to team up with them. Your attorney from past association will know who to talk to who will expose the file and the push behind it if any. Right now there is a popular move to push against this type of preforeclosure activity and I suggest it might be better during the next few months to let the Lenders lead the charge and take the flak and come in behind and concentrate on REO buys. The market is almost ready to attempt REO buys using the REO's in house financing. Now won't that be fun again. Just like old times. Litton S&L I bought 30 plus units from their REO, they were so scared of the tenants they gave me the financing about 90% used the earned commission and the tenants deposits as the downpayment. I see it coming. Happy days again.
Good luck, keep a really good image, wrap yourself in the flag and if possible your long line of Puritain forefathers. If at some time you are called to court portray the do gooder savaged by the havenots.
Mouth shut, stiff upper lip and please, let your attorney speak.
Lucius
once the ag has it in their mind that you have done something wrong you are a target. i have had to deal with them twice both are long stories. the first {short version} wife had cancer filed b/k needed to sale home at later date, listed with realtor. recieved help from relatives withdrew listing. another agent had buyer after withdrawn listing. went to ag and said i would not sell ag said i had commited fruad called in f.b.i. i was investigated by f.b.i. they found no wrong doing told me i could not be forced to sell but the ag had already ok'd the sell the f.b.i. told me to fight the ag that they would testifiy to their findings of no wrong doing. my wife passed. i told f.b.i. i could no longer fight. that i didn't have any fight left in me. this was a long process, 2 years. they knew my wife was dieing of cancer they didn't care. end result my home was sold out from under me. don't under estimate them. they are power hungry snakes. they will step on anyone that gets in their way or can help them by doing so. i'm sure there are some with morals but i have yet to meet one. get a lawyer with "TEETH" { one that plays golf with him} you going to need him. its' is unfair, unfortunate, but as i was you have become, in their eyes anyway, an easy target...........goood luck kenmax
Unfortunately, I doin't really have much constructive advice regarding your case since I am just starting out myself.
I have been wondering if one MUST record a warranty deed when doing a subject-to. From this experience, I now realize how important it is that the warranty deed MUST be recorded.
I am sorry to hear about your troubles, but thank you for sharing them with the rest of us in order that we can learn.
Good Luck with everything.
JS.
They told me that what we are doing is immoral and deceitful.
Reminds me of what an old wise man said once:
Opinions are like a!#!s, everyone has one.
A quick search on Westlaw for NC revealed a few cases involving DOS and looks like nothing criminal about it. The AG is probably just fishing and has no legal leg to stand on. Use a good lawyer to smack some sense into them. - IMHO. [ Edited by am87 on Date 07/23/2004 ]
What ever happened to this unfortunate lady? She never posted the outcome. Does anyone know?
Experiences like her's are a perfect example people should never bear false wittness. What comes around goes around, and what you send out always comes back in due time.
I think this is horrible that the AG is harassing her like this. We should come together as a team and fight this b#@*%.
This is just outright bullying. She help these people and look what she gets. :-x
It appears to me that she replied in a different message here is a link.
http://www.thecreativeinvestor.com/ViewTopic31297-34-0.html
David
Quote:
On 2004-07-23 20:53, arborlis wrote:
What ever happened to this unfortunate lady? She never posted the outcome. Does anyone know?
Experiences like her's are a perfect example people should never bear false wittness. What comes around goes around, and what you send out always comes back in due time.
I had a couple of things come to mind on this. First you said that you took the property without paying the sellers anything. In legal theory this is wrong, you should hav at least had the token $10 (or other good and valuable consideration) to make the contract legal. That way you bought something that they sold.
I notice in $cash's$ course there is a disclosure statement there about due on sale clause.
I also read awhile ago about an investor that records their closings to make sure that nothing ever comes up as to the seller or buyer being unclear about the paperwork, I think this is a good idea and I will start using it.
[addsig]
Stockpro99
Wrote,
"I also read awhile ago about an investor that records their closings to make sure that nothing ever comes up as to the seller or buyer being unclear about the paperwork"
SP99, are you talking about recording all documents that are involved with the closing or have a verbal tape recording at closing.
Marv