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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Closing the deal... Posted by Ward-CA- on May 12, 2003 at 10:16 PM In Reply to: Deal questions posted by matt on May 11, 2003 at 11:22 PM : Hi Ward, : Here's the scenario: : Trustee Sale date of June 4 : Property in Northern Calif. : EPA signed May 6. : Lots of net equity (about $100K) : $10K to bring loan current, $93K owed. One loan only. : Title company is backed up and can't deliver prelim until Wed/Thurs of this week which is 2 or 3 days after waiting period expires. : Seller agrees to move June 11. He gets some money upon move out, but most after resale. I offered to advance him a bit more to move early. : Questions: : How do you handle or who do you use for insurance since loan is still in his name? : What special instructions do I tell title/escrow since he is carrying back most of his equity, but the exact amount is unknown since it depends on how much net equity is there? : I plan to use a title company and is there any risk in waiting to get prelim if it delays the close a few days? : If sale date is June 4, I have until May 27 to bring loan current? : If he decides not to vacate after I bring loan current, do I then evict and what should I watch out for in that case? : THANKS!! =•=•=•=•=•=•=•=•=•=•=•= Matt, INSURANCE—There are two different approaches to the insurance problem. One way is to get your insurance agency to issue a new policy in the name of the seller, but in their records they hold a contract-for-deed rider showing you as the true equity owner. The other way is to deed title from the seller to a title holding trust in the seller’s surname. Then send a letter to both the lender and insurance company with an included copy of the recorded transfer of title to the trust. In the letter to the insurer ask that they change the property’s vesting to reflect the transfer to the trust. FIGURING NET EQUITY—Split the net equity at the bottom line of the net equity worksheet on a 50/50 basis. That will give you an exact dollar amount going to the seller. From that figure subtract the cash amount you’re giving the seller upfront and what’s left is the exact amount you specify in the seller’s carryback trust deed/mortgage. THE RISK OF WAITING TO CLOSE—I think it’s marginal since you’re offering a larger split than your competition wants to pay. REINSTATEMENT TIME—Almost all institutional lenders waive their right to insist on a full payoff during the last 5 days before the foreclosure auction. So you can actually plan on reinstating up to the day before the sale and even the day of the sale if the sale is at 10:00 AM or later. VACATING AS PROMISED—Tell the seller that you’re prepared to give him positive marks whenever any landlord calls inquiring about the seller’s cleanliness, keeping commitments, etc. Tell him you’re counting on him keeping his promise to move out as agreed. If, in spite of all his promises, the owner refuses to move out as promised, then you’ll have to evict him as soon as you can. Hope this helps. Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : : Hi Ward, : : Here's the scenario: : : Trustee Sale date of June 4 : : Property in Northern Calif. : : EPA signed May 6. : : Lots of net equity (about $100K) : : $10K to bring loan current, $93K owed. One loan only. : : Title company is backed up and can't deliver prelim until Wed/Thurs of this week which is 2 or 3 days after waiting period expires. : : Seller agrees to move June 11. He gets some money upon move out, but most after resale. I offered to advance him a bit more to move early. : : Questions: : : How do you handle or who do you use for insurance since loan is still in his name? : : What special instructions do I tell title/escrow since he is carrying back most of his equity, but the exact amount is unknown since it depends on how much net equity is there? : : I plan to use a title company and is there any risk in waiting to get prelim if it delays the close a few days? : : If sale date is June 4, I have until May 27 to bring loan current? : : If he decides not to vacate after I bring loan current, do I then evict and what should I watch out for in that case? : : THANKS!! : =•=•=•=•=•=•=•=•=•=•=•= : Matt, : INSURANCE—There are two different approaches to the insurance problem. : One way is to get your insurance agency to issue a new policy in the name of the seller, but in their records they hold a contract-for-deed rider showing you as the true equity owner. : The other way is to deed title from the seller to a title holding trust in the seller’s surname. Then send a letter to both the lender and insurance company with an included copy of the recorded transfer of title to the trust. In the letter to the insurer ask that they change the property’s vesting to reflect the transfer to the trust. : FIGURING NET EQUITY—Split the net equity at the bottom line of the net equity worksheet on a 50/50 basis. That will give you an exact dollar amount going to the seller. From that figure subtract the cash amount you’re giving the seller upfront and what’s left is the exact amount you specify in the seller’s carryback trust deed/mortgage. : THE RISK OF WAITING TO CLOSE—I think it’s marginal since you’re offering a larger split than your competition wants to pay. : REINSTATEMENT TIME—Almost all institutional lenders waive their right to insist on a full payoff during the last 5 days before the foreclosure auction. So you can actually plan on reinstating up to the day before the sale and even the day of the sale if the sale is at 10:00 AM or later. : VACATING AS PROMISED—Tell the seller that you’re prepared to give him positive marks whenever any landlord calls inquiring about the seller’s cleanliness, keeping commitments, etc. Tell him you’re counting on him keeping his promise to move out as agreed. : If, in spite of all his promises, the owner refuses to move out as promised, then you’ll have to evict him as soon as you can. : Hope this helps. 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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