Problems With Real Estate Lawyers In My Area.
This morning i met with a real estate lawyer to set up my LLC. unfortunatly when i asked him about sub.2 investing he was dumbfounded. he told me that using a land trust in my area(Connecticut) was not really applicable or some legal mumbo jumbo about how i shouldnt use a land trust. i think that he just didnt know anything about them. so when i got home i called about ten real estate lawyers using the yellow pages. only one of them knew what i was talking about, she sounded extremly smart, and allthough she to didnt know about using land trusts she said she was willing to research them. but then she told me she was not willing to help me if i was doing deals without the banks consent. kinda pissed me off. she refered me to another lawyer who also suprisingly knew what i was talking about and had dealt with only a few deals. he seemed more concearned with the sellers needs and whats going to happen to the seller if i cant sell the house. he told me that i can not get good title to the house buying subject 2. and he also said that most sellers would rather try their chances at a forclousure auction wher they will be able to get some of their equity back, i didnt know that they would get their equity back at an auction. all in all he said i had a good idea, but i need a better exit strategy and call him when i find a seller willing to go through with it. he to has never done a land trust, he mentioned a warranteed deed instead, but im not trying to trigger the DOS. my question is should i deal with this guy who seemes to be the only one willing to deal with me. or should i say screw the whole attorney thing? why is it so hard to find an attorney who knows what im doing? This is going to be my first deal and i want it to go smoothly. any help or insight into my situation would be appreciated thanx.
luka:
If you think you need a land trust to minimize DOS and you think you need a lawyer to help you set one up, then your experience is not that uncommon. I had a similar situation; however, when I decided I would do my first deals without a land trust, and talked to some lawyers, their concerns were more with the wording of my purchase and sale contract, etc.
Try to keep it simple and remember that the land trust may help MINIMIZE the chances of DOS being invoked, it won't eliminate it. Add to that the fact that most lenders won't call a performing loan and you're probably better off without the land trust, at least at first.
The lawyer who told you that you can't get a good title was wrong: if you do your own due diligence and do a title search (or pay to have one done and have title insurance issued), there should be no problem with taking title and then passing it on to your buyer when you sell it. Ask John Locke about the 500 houses he took title to Sub2...
Remember this too: most lawyers are not investors and don't understand what you're trying to do. Also, if they DO understand (at least a little), their business is managing risk--usually on the side of more cautious than less. It is YOUR decision on how much risk you want to take on, not theirs. You can listen to their advice, heed the warnings and still go out and make money.
You are paying them for advice, maybe contract review, maybe title searches, NOT to make investing decisions, or to walk you through your deals. If they don't understand what your strategy is, they certainly won't admit it to your face--they're more likely to tell you it won't work, rather than look like they don't know what they're talking about (Big Head Syndrome).
Andy[ Edited by arytkatz on Date 06/15/2004 ]
Though it's helpful if he/she's on the same page, you need not help your lawyer to understand the intricacies of your strategy or tactics. You're paying him/her to fill out forms and make sure you're legal and covered. Lawyers all have anxieties about the unknown as well as horror stories, basically because they mostly see the problems. Few people call their lawyer to say "hey, my deals are going great, no problems at all, just wanted you to know!"
Your last lawyer seems to understand the best. His ref to the seller getting equity back at the auction refers to the fact that if it sells for more than they owe, they're entitled to the overage. But most foreclosures don't have much equity, or the owner would sell it themselves to capture it without losing all the legal fees involved. If you insist on explaining Sub2 to the lawyer, tell him that you will probably be dealing with sellers for whom other options don't exist.
It's also good karma to help sellers who want to keep their home to do that, and explain some of their options for avoiding foreclosure. If you don't know them, then read more posts and study up, because it is useful info. If they still can't keep it and decide to sell, they'll probably call you first, since you tried to help them and seem the least like a circling vulture...Remember, your goal is to help people, and if you sincerely try to do that, your problems will be minimal.
It is the Lawyers job to protect you and point out all of the potential problems. Lawyers do this by researching case law on how the courts have treated similar situations. Outside of Illinois there is liitle if any case law on Land Trusts. As for title insurance, who do you think underwrites title insurance policies, Lawyers. I have heard more than one title underwriter saying they would not insure transfers with a land trust in the chain.
Land Trusts may have some good points, but they are in the infancy stage in most of the Country.