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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Re: Unconscionable Advantage & EPA Posted by DustyOC on September 07, 2006 at 6:56 PM In Reply to: Re: Unconscionable Advantage & EPA posted by Jerry - Ca. on September 07, 2006 at 1:50 PM : : Ward : : As a subscribing member of County Records Research, thanks for this Discussion Board-also will be attending more of your meetings with CRR. : : To my point, as a real estate licensee in Lending and new Investor, I am concerned with just a few points and hope that you will answer my post. Finally, I have poured through posts on this issue, as well as, Civil Codes 1695 and 2945. : : Specifically, with the spiraling downward and very slow market we are experiencing here in CA, how can we protect ourselves as investors ( I've read several of your responces on the 50/ 50 rule after expenses ) : : First, provided that we can get the seller to agree, can we effectively get the seller to agree to a lower equity price since in this market we may have to discount 10-20% just to unload in this market? Here is what I am thinking- agree to a 50/50 split after expenses, but protect ourselves because of the downward market. : : Second, in the EPA, on page 1 it has a section for Present Market Value, and next under Consideration the Sellers Equity. : : Under Consideration, can we make a reference to see the Addendum where we Clearly spell out the 50/ 50 Split after Expenses, And Reference uncertainty as to todays market, but make this all predecated on whatever final sales price we can Obtain? : : Please excuse the lengh and wordiness- I'm just trying to make myself clear on this. : : Best Regards : +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ : Hello Wayne: : You cannot get the seller to agree to agree to lower percentage of equity (10-20%) because : of a slow selling market! The unconscionability law of 1695 basically says you got to give : the seller approximately 50% or more to be fair! : However, you can lower the net amount of actual equity to be paid by lowering the " Projected : Sales Price of Property" on Ward's "Projected Net Equity Worksheet". On the E.P.A. form ... : the "Present Fair Market Value" is just that ...what the property is worth right now. The : F.M.V. is required by CC 1695... Why I don't know because it actually relates to none of the : amounts used in the equity computations! The E.P.A. Form F.M.V. and and the Worksheet Projected : Sale Price are two different things! : You must establish a F.M.V. at the time of signing the E.P.A. Form and you must also determine : the agreed upon purchase amount for the 50%+ of equity! at that same time of signing! It cannot : be based on some future happening ... You're buying the equity NOW! : The refence to the addendum in the CONSIDERATION clause is where you spell out how you are going : to pay the money for the equity. For Example... $2,000. on signing the E.P.A. Form; $3,000. on : move-out day and executing a unsecured note and trust deed for the balance! : Jerry Jerry, Sorry, it's been a long time since I looked at the code. Where does it say you have to split the equity 50/50? Dustin Follow Ups: Re: Unconscionable Advantage & EPA Jerry - Ca. 9:35 AM, 09/08/06 (1) Re: Unconscionable Advantage & EPA Jerry - Ca. 10:33 AM, 09/09/06 (0) Post a Followup: Name : E-Mail : Subject : Comments: : : : Ward : : : As a subscribing member of County Records Research, thanks for this Discussion Board-also will be attending more of your meetings with CRR. : : : To my point, as a real estate licensee in Lending and new Investor, I am concerned with just a few points and hope that you will answer my post. Finally, I have poured through posts on this issue, as well as, Civil Codes 1695 and 2945. : : : Specifically, with the spiraling downward and very slow market we are experiencing here in CA, how can we protect ourselves as investors ( I've read several of your responces on the 50/ 50 rule after expenses ) : : : First, provided that we can get the seller to agree, can we effectively get the seller to agree to a lower equity price since in this market we may have to discount 10-20% just to unload in this market? Here is what I am thinking- agree to a 50/50 split after expenses, but protect ourselves because of the downward market. : : : Second, in the EPA, on page 1 it has a section for Present Market Value, and next under Consideration the Sellers Equity. : : : Under Consideration, can we make a reference to see the Addendum where we Clearly spell out the 50/ 50 Split after Expenses, And Reference uncertainty as to todays market, but make this all predecated on whatever final sales price we can Obtain? : : : Please excuse the lengh and wordiness- I'm just trying to make myself clear on this. : : : Best Regards : : +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ : : Hello Wayne: : : You cannot get the seller to agree to agree to lower percentage of equity (10-20%) because : : of a slow selling market! The unconscionability law of 1695 basically says you got to give : : the seller approximately 50% or more to be fair! : : However, you can lower the net amount of actual equity to be paid by lowering the " Projected : : Sales Price of Property" on Ward's "Projected Net Equity Worksheet". On the E.P.A. form ... : : the "Present Fair Market Value" is just that ...what the property is worth right now. The : : F.M.V. is required by CC 1695... Why I don't know because it actually relates to none of the : : amounts used in the equity computations! The E.P.A. Form F.M.V. and and the Worksheet Projected : : Sale Price are two different things! : : You must establish a F.M.V. at the time of signing the E.P.A. Form and you must also determine : : the agreed upon purchase amount for the 50%+ of equity! at that same time of signing! It cannot : : be based on some future happening ... You're buying the equity NOW! : : The refence to the addendum in the CONSIDERATION clause is where you spell out how you are going : : to pay the money for the equity. For Example... $2,000. on signing the E.P.A. Form; $3,000. on : : move-out day and executing a unsecured note and trust deed for the balance! : : Jerry : Jerry, : Sorry, it's been a long time since I looked at the code. Where does it say you have to split the equity 50/50? : : Dustin Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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