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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Re: Unconscionable Advantage & EPA Posted by Dave on September 08, 2006 at 10:03 AM In Reply to: Re: Unconscionable Advantage & EPA posted by Jerry - Ca. on September 07, 2006 at 1:50 PM Jerry, I always thought FMV was on the EPA to help counter the unconscionable advantage argument should it every get to court. That is, seller can't argue he was taken advantage of because he didn't know what the property was worth. Dave : : 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 Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : Jerry, : I always thought FMV was on the EPA to help counter the unconscionable advantage argument should it every get to court. That is, seller can't argue he was taken advantage of because he didn't know what the property was worth. : Dave : : : 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 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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