A Pactrust ™ Deal Part (4 of 5)

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After an inspection of the mess, he asks when I might be finished with all the work…I tell him maybe as much as two months (I know he’d like to move as soon as possible). He seems discouraged. I then tell him that if he’d like to finish the work himself, I’ll knock a couple thousand off the price and, say, $2,500 off the amount I need from him to get into the property (i.e., now he can get in for $5,000 plus the first payment when it comes due).

I fill out a purchase offer--from him to me--and have him sign it and accompany it with certified (non-refundable) funds in the amount of at least one full monthly payment obligation $1,200 (‘could be any amount you specify).

March 27:

I return to Mr. Brown, the seller, in order to give him my signed (and already accepted) purchase offer. First, however, before giving him the paperwork, I tell him that the property is a lot worse than I had first thought. I see him wince a little. At that point I tell him about the termite problem and tell him that he’ll need to pay the $2,000 for the tenting and spraying, but that I’ll take care of everything else. He heaves a sigh of relief and agrees, assuming that I’m paying the $10,000 that he estimated to cost to be and that I’m also paying all costs of marketing (‘when they say they don’t have money, what they mean is: I have some, but I don’t want to spend it unless you pull the right levers).

April 1:

The property is tented…at Mr. Brown’s expense. The poison is sprayed, the termites begin singing “***** Bah Ya” as they weaken and are no longer able to hold hands; and astheir grip fails them and their little arms fall to their sides, the house crumbles and falls down (no, just kidding…they all die and go to termite Heaven, I’m sure).

April 10th.

I complete the paper work for the “Joe Brown Land Trust” and have Mr. Brown execute the document (as the only beneficiary), thereby appointing PAC Holdings as the trustee.

April 11th:

I complete the “Assignment of Beneficiary Interest” agreement from Mr. Brown to my resident co-beneficiary and me. I then complete the “Beneficiary Agreement” between us. The Beneficiary Agreement designates our percentages of ownership of the beneficiary interest in the trust as: 10% to Mr. Brown; 40% to me; and 50% to the Resident Beneficiary. However, I arrange to have it stipulated in our agreement that Mr. Brown will forfeit his 10%, and any claim to profit, to me at termination (I just need him to hold onto it for now in order to avoid Due-on-Sale Clause issues, reassessment of property tax and the payment of transfer tax upon. Note here as well, that I leave Mr. Brown with 500f the voting rights so as not to invoke property tax increases, reassessment and conveyance tax: but I take a Power of Attorney from him so that I can vote his rights and not have to involve him in management decisions.

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