Can "assign to" clause be avoided using a corporation???
Hello investors,
I believe that a lot of good offers dealing with banks and mls homes can go to trash can for one main reason. The "assign to" that goes right infront of my name. I know I have read before that if I purchase under corporation name, then I do not need the "assign to" if I am flipping the contract. Is this true?
if true, how do I assign the contract over to another investor without causing issues with the bank or listing agent?
thanks, hrash
I think you assign your interest to the investor buyer. But I am unsure of how that is done in detail.
I know you can also form a LLC and assign that to the buyer as well.
I read in a post by Taxjunkie that"If you do not have "[your name or entity] and/or assigns" in the real
estate agreement or the agreement prohibits an assignment, then you will
have to probably do a double closing" .
This being the case, I should be able to get rid off the "and/or assigns" in the purchase agreement when dealing with banks and some mls and simply do double-closing.
At least this is what I read from postings ...
You can "avoid" the cost of double closing by taking the property in the name of a corp (LLC most likely) and selling your interest in the company. That way the contract remains the same i.e. that the bank is selling to the same entity but you slide out and the other person slides in. It is often not that clean since the bank expects to deal with you as the contact person so you may have to temporarily become partners with the buyer until the transaction is completed. When your co. takes title to the property then your"partner" buys you out. It is important to realize that all these moves have to be in contract form and that they need to be done so as to not misrepresent yourself to the bank or to the end buyer.
The basic technique is that while the property is titled in the name of the co. the owners of the company can change without the title changing hands. You can make the above example simpler by actually buying the property first then just selling the LLC to the end buyer with the property as an asset of the co. The reason I don't like that scenario is that then you would actually have to buy the property. I much prefer to let others do the buying, financing, and risk-taking while I just control the property and minimize my risk.
[addsig]