I am trying to get some good, solid information on cooperative assignments. I am also looking for good forms to do this. If anyone here can help me out, I sure would appreciate it. Thanks.
Tread carefully. In some States, that is very close to what a real estate agent does, especially if you step out of the deal after collecting all or a portion of the option consideration. Attorney Bill Bronchick warns to stay away from them, and I concur; however, in most States I think you could fly under the licensing board radar unless you specifically advertise cooperatives or do lots of them. I hear that Claude Diamond has good cooperative assignment Contracts.
[addsig]
Leaseoptionking,
Thank you for the advice. I would like to see if you may have a sugestion. I have been doing Sub2's and L/O, but I am wanting to get away from those. I mostly want to go to a consulting role where I hook up selers that are willing to do seller financing with people who are looking for a property. What would you suggest?
Have you considered getting your RE License? What you are looking to do sounds pretty much what a normal Agent does except you are wanting to specialize in working with sellers that do owner financing.......
That could be a very nice niche if you have a good client base of owners/sellers that are willing to do owner financing...
I totally agree with your logic, Ichabod; however, it is unfortunate that some State licensing boards do not. Often, the power of government supersedes the right and wrong or correctness of legitimate legal arguments. A consultant fee could work, but the amount you can collect will likely be considerably lower than what you would have colected via an equitable stake. The same goes for regular assignments.
[addsig]
And a few States regulate the use of Options; if doing assignments of Options in these States, one can get into some serious trouble if accused of being a Dealer of Options without a license. Best solution: Be in the chain of title (or have your entity do so) avoiding assignments altogether.
[addsig]
Eventhough you have an option to purchase and then decide to assign your own option, you're telling me that "someone" will have a problem with it and will come after you?
I don't believe so.
So you're saying that assignments altogether should be handled by you or your entity passing through the title somehow?
Then what are all these other investors making $ doing options and wholesale deals going to do? Isn't that the point of implementing these methods (wholesales/assignments/sandwich L/Os) of buying & making $? ...Not using your own $ to buy? Maybe even, not to have to march down to the bank just so you can put your name on the mortgage?
"Dealing in options" (as you say) is no different than dealing with your typical sandwich L/O......or dealing in sub2s....or dealing in rehabs.
But, you're probably using the term "dealing" in a different context.
I understand what you're saying concerning this.
If you're not a licensed agent, and you're doing cooperative assignments and/or wholesale deals, then who's "bad list" are you going to be on?
Like I said in my 1st post, as long as you have an option to purchase a property you have the right to not only buy it (the house), but assign (your contract) it as well. You own it. No one else. Do as you please.
Cooperative assignments aren't really different from sandwich L/Os.
To put it simply, you're just getting out of the middle a whole lot sooner by assigning it to either your T/B or your seller. I'd rather do CAs all day as opposed to sandwich L/Os anyway.
Just wondering, LeaseOptionKing...
You do sandwich L/Os, yes? (or do you only use L/Os to sell?)
Do you ever take title when and if you "buy" using a L/O?
If no, then you are subject to all this "trouble" and "dealing" you refer to in your posts.
I appreciate all of the responses, but I yet have another question. Can someone define a "sandwich" lease to me? Also, what states regulate l/o contracts? My original question should probably asked to an attorney, because in my mind, what I do now isn't a whole lot different than me hooking up buyers and sellers. I also get control of a lot of properties using an L/O with a sub-let clause, but I am wanting to get away from it. I have written an investment program, and am concentrating more on it. I want to stay in the game, but with less responsibility, since I already have many properties.
I did not coin the phrase "dealer of options." That's from State law in a few States. Yes, if you have a Contract or Option to buy, you also have the right to sell that property or assign your interests thereof. You are preaching to the converted. But that still doesn't keep aggressive lawmakers from passing legislation to the contrary. Heck, I was recently told by an attorney that in WI and MI you can only do five real estate transactions per year--unless you are a real estate agent. Welcome to Amerika! State licensing boards are always coming up with ways to overstep their bounds and increase their power and restrictions on creative investors. All you can do is spend the time and money to fight it and eventually have it ruled unconstitutional or changed. And in the meantime, we all suffer. Municipalities are bad about this and often pass legislation that they know won't hold up in court, because they know time is on their side.
I never assign anything, even though Georgia is not aggressive about assignments. I make sure I am in the chain of title, and I also record my interest, so no one can say I don't plan on doing this as an investment (and not just acting like an agent) . Like the NC attorney general said, a true investor will record his interest. In most States, cooperatives are not at all a problem--not in the least. But I am just making observations of what some licensing boards are getting passed as legislation. I never said I agreed with it. Georgia has a different problem. The Dept. of Banking and Finance is going after note brokers. Their stringent interpretation of the law is that private individuals can't be a middleman unless they have a mortgage broker's license. You can buy notes for your own investment portfolio, but you can't refer it to another purchaser. I can do it with a house, but not a note. It's crazy!
A sandwich lease is just where you lease from the Seller with the right to sublease. A sandwich L/O is where you find a Seller who is marginally motivated (who is perhaps making payments on two houses and needs some debt relief) and sell them on the idea that you will make their payments, as well as perform all minor maintenance and repairs. You have a L/O and a Lease (which I personally feel should be in one Contract) with the Seller for two or three or more years and find a T/B who usually (but not always) has strained credit. The T/B will pay upfront nonrefundable option consideration and higher-than-market rent in exchange for the future right to buy the property. I only give the T/B one year, because if they are serious, there are lenders who will finance them after they make a year's worth of on-time rent payments. Presumably (if all is done correctly), we have three paydays: front-end, monthly spread, and back-end if/when the T/B closes.
[addsig]
Ok, so the term "sandwich lease" is actually something that I am already doing, and have been doing for some time. I appreciate all of the help!!!!
MiracleHomes
Wanna start off by letting you know that my posts didn't have any bitterness in them.
As I read over them, they seem as if they do. Sorry if they appear that way.
On the other hand, I'll still not worry about some RE Commission coming after me.
I'm just concentrating on doing deals.
And if someone decides they have a problem with what I do, then I'll take care of it then. (Not saying that I do not take precautions. Just that you make no $ and can't help anyone by worrying about red-tape issues)
I actually have a friend who does a TON of these CAs that lives in Michigan.
He has most likely encountered some jealous realtors (because he produce$ more than they do), but I don't believe it's gotten to the point of an attorney telling him he has to get his license because of the "5 deal/year rule" in his state.
He has done anywhere from 5-10/month at times.
So if Iwe record our interest should we be ok?
Or do you recomend everyone go out and get a license?
JB
Quote:
On 2004-11-01 00:04, LeaseOptionKing wrote:
I did not coin the phrase "dealer of options." That's from State law in a few States. Yes, if you have a Contract or Option to buy, you also have the right to sell that property or assign your interests thereof. You are preaching to the converted. But that still doesn't keep aggressive lawmakers from passing legislation to the contrary. Heck, I was recently told by an attorney that in WI and MI you can only do five real estate transactions per year--unless you are a real estate agent. Welcome to Amerika! State licensing boards are always coming up with ways to overstep their bounds and increase their power and restrictions on creative investors. All you can do is spend the time and money to fight it and eventually have it ruled unconstitutional or changed. And in the meantime, we all suffer. Municipalities are bad about this and often pass legislation that they know won't hold up in court, because they know time is on their side.
I never assign anything, even though Georgia is not aggressive about assignments. I make sure I am in the chain of title, and I also record my interest, so no one can say I don't plan on doing this as an investment (and not just acting like an agent) . Like the NC attorney general said, a true investor will record his interest. In most States, cooperatives are not at all a problem--not in the least. But I am just making observations of what some licensing boards are getting passed as legislation. I never said I agreed with it. Georgia has a different problem. The Dept. of Banking and Finance is going after note brokers. Their stringent interpretation of the law is that private individuals can't be a middleman unless they have a mortgage broker's license. You can buy notes for your own investment portfolio, but you can't refer it to another purchaser. I can do it with a house, but not a note. It's crazy!
Tread carefully. In some States, that is very close to what a real estate agent does, especially if you step out of the deal after collecting all or a portion of the option consideration. Attorney Bill Bronchick warns to stay away from them, and I concur; however, in most States I think you could fly under the licensing board radar unless you specifically advertise cooperatives or do lots of them. I hear that Claude Diamond has good cooperative assignment Contracts.
[addsig]
Leaseoptionking,
Thank you for the advice. I would like to see if you may have a sugestion. I have been doing Sub2's and L/O, but I am wanting to get away from those. I mostly want to go to a consulting role where I hook up selers that are willing to do seller financing with people who are looking for a property. What would you suggest?
Have you considered getting your RE License? What you are looking to do sounds pretty much what a normal Agent does except you are wanting to specialize in working with sellers that do owner financing.......
That could be a very nice niche if you have a good client base of owners/sellers that are willing to do owner financing...
-FrankSoprano
I totally agree with your logic, Ichabod; however, it is unfortunate that some State licensing boards do not. Often, the power of government supersedes the right and wrong or correctness of legitimate legal arguments. A consultant fee could work, but the amount you can collect will likely be considerably lower than what you would have colected via an equitable stake. The same goes for regular assignments.
[addsig]
And a few States regulate the use of Options; if doing assignments of Options in these States, one can get into some serious trouble if accused of being a Dealer of Options without a license. Best solution: Be in the chain of title (or have your entity do so) avoiding assignments altogether.
[addsig]
Eventhough you have an option to purchase and then decide to assign your own option, you're telling me that "someone" will have a problem with it and will come after you?
I don't believe so.
So you're saying that assignments altogether should be handled by you or your entity passing through the title somehow?
Then what are all these other investors making $ doing options and wholesale deals going to do? Isn't that the point of implementing these methods (wholesales/assignments/sandwich L/Os) of buying & making $? ...Not using your own $ to buy? Maybe even, not to have to march down to the bank just so you can put your name on the mortgage?
"Dealing in options" (as you say) is no different than dealing with your typical sandwich L/O......or dealing in sub2s....or dealing in rehabs.
But, you're probably using the term "dealing" in a different context.
I understand what you're saying concerning this.
If you're not a licensed agent, and you're doing cooperative assignments and/or wholesale deals, then who's "bad list" are you going to be on?
Like I said in my 1st post, as long as you have an option to purchase a property you have the right to not only buy it (the house), but assign (your contract) it as well. You own it. No one else. Do as you please.
Cooperative assignments aren't really different from sandwich L/Os.
To put it simply, you're just getting out of the middle a whole lot sooner by assigning it to either your T/B or your seller. I'd rather do CAs all day as opposed to sandwich L/Os anyway.
Just wondering, LeaseOptionKing...
You do sandwich L/Os, yes? (or do you only use L/Os to sell?)
Do you ever take title when and if you "buy" using a L/O?
If no, then you are subject to all this "trouble" and "dealing" you refer to in your posts.
Take care.
[addsig]
I appreciate all of the responses, but I yet have another question. Can someone define a "sandwich" lease to me? Also, what states regulate l/o contracts? My original question should probably asked to an attorney, because in my mind, what I do now isn't a whole lot different than me hooking up buyers and sellers. I also get control of a lot of properties using an L/O with a sub-let clause, but I am wanting to get away from it. I have written an investment program, and am concentrating more on it. I want to stay in the game, but with less responsibility, since I already have many properties.
I did not coin the phrase "dealer of options." That's from State law in a few States. Yes, if you have a Contract or Option to buy, you also have the right to sell that property or assign your interests thereof. You are preaching to the converted. But that still doesn't keep aggressive lawmakers from passing legislation to the contrary. Heck, I was recently told by an attorney that in WI and MI you can only do five real estate transactions per year--unless you are a real estate agent. Welcome to Amerika! State licensing boards are always coming up with ways to overstep their bounds and increase their power and restrictions on creative investors. All you can do is spend the time and money to fight it and eventually have it ruled unconstitutional or changed. And in the meantime, we all suffer. Municipalities are bad about this and often pass legislation that they know won't hold up in court, because they know time is on their side.
I never assign anything, even though Georgia is not aggressive about assignments. I make sure I am in the chain of title, and I also record my interest, so no one can say I don't plan on doing this as an investment (and not just acting like an agent) . Like the NC attorney general said, a true investor will record his interest. In most States, cooperatives are not at all a problem--not in the least. But I am just making observations of what some licensing boards are getting passed as legislation. I never said I agreed with it. Georgia has a different problem. The Dept. of Banking and Finance is going after note brokers. Their stringent interpretation of the law is that private individuals can't be a middleman unless they have a mortgage broker's license. You can buy notes for your own investment portfolio, but you can't refer it to another purchaser. I can do it with a house, but not a note. It's crazy!
[addsig]
A sandwich lease is just where you lease from the Seller with the right to sublease. A sandwich L/O is where you find a Seller who is marginally motivated (who is perhaps making payments on two houses and needs some debt relief) and sell them on the idea that you will make their payments, as well as perform all minor maintenance and repairs. You have a L/O and a Lease (which I personally feel should be in one Contract) with the Seller for two or three or more years and find a T/B who usually (but not always) has strained credit. The T/B will pay upfront nonrefundable option consideration and higher-than-market rent in exchange for the future right to buy the property. I only give the T/B one year, because if they are serious, there are lenders who will finance them after they make a year's worth of on-time rent payments. Presumably (if all is done correctly), we have three paydays: front-end, monthly spread, and back-end if/when the T/B closes.
[addsig]
Ok, so the term "sandwich lease" is actually something that I am already doing, and have been doing for some time. I appreciate all of the help!!!!
MiracleHomes
"LeaseOptionKing",
Wanna start off by letting you know that my posts didn't have any bitterness in them.
As I read over them, they seem as if they do. Sorry if they appear that way.
On the other hand, I'll still not worry about some RE Commission coming after me.
I'm just concentrating on doing deals.
And if someone decides they have a problem with what I do, then I'll take care of it then. (Not saying that I do not take precautions. Just that you make no $ and can't help anyone by worrying about red-tape issues)
I actually have a friend who does a TON of these CAs that lives in Michigan.
He has most likely encountered some jealous realtors (because he produce$ more than they do), but I don't believe it's gotten to the point of an attorney telling him he has to get his license because of the "5 deal/year rule" in his state.
He has done anywhere from 5-10/month at times.
Nice chattin with ya.
Take care.
[addsig]
So if Iwe record our interest should we be ok?
Or do you recomend everyone go out and get a license?
JB
Quote:
On 2004-11-01 00:04, LeaseOptionKing wrote:
I did not coin the phrase "dealer of options." That's from State law in a few States. Yes, if you have a Contract or Option to buy, you also have the right to sell that property or assign your interests thereof. You are preaching to the converted. But that still doesn't keep aggressive lawmakers from passing legislation to the contrary. Heck, I was recently told by an attorney that in WI and MI you can only do five real estate transactions per year--unless you are a real estate agent. Welcome to Amerika! State licensing boards are always coming up with ways to overstep their bounds and increase their power and restrictions on creative investors. All you can do is spend the time and money to fight it and eventually have it ruled unconstitutional or changed. And in the meantime, we all suffer. Municipalities are bad about this and often pass legislation that they know won't hold up in court, because they know time is on their side.
I never assign anything, even though Georgia is not aggressive about assignments. I make sure I am in the chain of title, and I also record my interest, so no one can say I don't plan on doing this as an investment (and not just acting like an agent) . Like the NC attorney general said, a true investor will record his interest. In most States, cooperatives are not at all a problem--not in the least. But I am just making observations of what some licensing boards are getting passed as legislation. I never said I agreed with it. Georgia has a different problem. The Dept. of Banking and Finance is going after note brokers. Their stringent interpretation of the law is that private individuals can't be a middleman unless they have a mortgage broker's license. You can buy notes for your own investment portfolio, but you can't refer it to another purchaser. I can do it with a house, but not a note. It's crazy!
[addsig]
anyone?
Recording your interest is a very good indicator that you are an investor--plus it helps to protect you from unscrupulous Sellers.
[addsig]