I am just wondering- What is your favorite weasel clause to enable you to get out of a purchase contract if you have a change of heart for whatever reason?
If I want to write up a contract and I do not know the area, but the owner is insistant that the house is worth 200k yet they will sell it to me for 150k, I put the 200k in the contract.
You would have gotten better response if you did not call them "weasal" clauses. All contracts have contingencies and even if you do not close move P&S contracts stipulate that the buy is only responsible up to the deposit. And nobody who has been in this business for very long has been able to close on ever house that they have ever written up. Everyone got on their high horse because of the way you worded the question.
VIII. INSPECTION OF PROPERTY: Buyer shall have until the close of escrow to complete all Buyer investigations of the property, approve all disclosures, and other applicable information, which buyer receives from seller and/or persons hired to inspect property on behalf of Buyer; and approve all maters affecting the property, including, but not limited to, the marketability of the property, the elevation, grade, and topography of the Property and to conduct engineering and soil boring tests as the Buyer deems necessary in order to determine the usability of the Property. Buyer may in its sole and absolute discretion, give notice of termination of this Agreement at any time prior to the expiration of the inspection period, and upon such termination, all deposits held in escrow shall be returned to Buyer.
Is this weasel enough?
And although it should never be your intention to enter into contracts that you subsequently will cancel having the right to do so is invaluable..
After all sellers don’t always tell you the truth regarding the conditions which effect the property and having a time period to complete your due diligence is always necessary...
[addsig]
Just wrote this one in a contract. The house was an older house and the drywall and texture was perfect. I suspect there must have been some water damage and all the drywall was replace.
Seller will complete a sellers disclosure, provided by buyer, within 10 days of effective date. If buyer determines that the disclosure is unsatisfactory buyer may cancel the contract.
This does not give the buyer a time limit to declare it unsatisfactory.
In my state, Iowa, a sellers disclosure is required on all real estate transactions, and you are only allowed up to 10 days for an inspection.
Quote:
On 2006-04-26 11:53, bgrossnickle wrote:
Just wrote this one in a contract. The house was an older house and the drywall and texture was perfect. I suspect there must have been some water damage and all the drywall was replace.
Seller will complete a sellers disclosure, provided by buyer, within 10 days of effective date. If buyer determines that the disclosure is unsatisfactory buyer may cancel the contract.
This does not give the buyer a time limit to declare it unsatisfactory.
Chris,
Thanks for the responce. I went and looked at your post as well. I am still looking in to this and will let you know what I fid out.
What this guy really needs is the write offs so maybe an agreement that gives him more intrest 90/10 with me getting a managment fee. We could have an agreement that states before any sale I will be moved to a %50 ownership thus I get my share and maybe the tax issue on the sale will be less. What do you think about that?
And there is always the possiblity that congress will not keep the capital gains rate low. Then this becomes a bigger problem/question.
I am sure I (or she) will eventually talk to a financial advisor about this issue; but I always like to go in knowing as much as possible. When I learn more, I will let you know.
Thank you. If I was to do this it would have to been done threw a well written partnership agreement. I was just wanting to make sure that we could allocate the taxes to him. It is a win/win deal for both but the tax issue is the big selling point.
Also do you have an idea about self-employment tax. Chris had said something about having to pay that.
So beside the legal issues is there any tax issues. Have any of you done a partnership where one partner pays the bills and then takes them off their taxes but the positive cashflow is split 50/50 and then if it is sold the profit is split the same way. Could this work or not?
Quote:So beside the legal issues is there any tax issues. Have any of you done a partnership where one partner pays the bills and then takes them off their taxes but the positive cashflow is split 50/50 and then if it is sold the profit is split the same way. Could this work or not?JamesStreet.,
You are asking if it is legal for the partner who pays the bills to get the deductions, and if it is legal for partners to equally share in cash flow and sale profits.
I agree with John Merchant. This type of partnership deal is done all the time and is perfectly legal. As long as each partner pays the appropriate taxes due on his share of the distributed partnership income, there should be no tax issues either.
Thank you to both. I was hoping that was the case. When it comes to rent I would still claim it as passive income correct. However would it be better to set up the partnership as an s-corp or an LLC and take my money out that way?
Are u saying if I take a smaller split ( ie: 60/40 ) instead of 50/50, with ten percent going to the partner that wants the tax deduction for my share of the taxes, that would be ok.
And only the one would claim the property and pay any taxes which are due, although I would have paid my portion of taxes to the partner in the split, but not on tax returns.
Just trying to get a good understanding how this can be done.
[addsig]
Are there any community colleges close to where you live? If so, check them out. At my community college they offer RE pre-license, appraisal courses, para-legal RE abstracting.
financing with a low interest rate clause
Must appraise for a certain value.
If I want to write up a contract and I do not know the area, but the owner is insistant that the house is worth 200k yet they will sell it to me for 150k, I put the 200k in the contract.
None,
My cash offer will bet your weasel clause offer.
None.
I don’t write offers that I need to weasel out of because of a change of heart.
I only write offers I intend to close on.
John (LV)
You would have gotten better response if you did not call them "weasal" clauses. All contracts have contingencies and even if you do not close move P&S contracts stipulate that the buy is only responsible up to the deposit. And nobody who has been in this business for very long has been able to close on ever house that they have ever written up. Everyone got on their high horse because of the way you worded the question.
VIII. INSPECTION OF PROPERTY: Buyer shall have until the close of escrow to complete all Buyer investigations of the property, approve all disclosures, and other applicable information, which buyer receives from seller and/or persons hired to inspect property on behalf of Buyer; and approve all maters affecting the property, including, but not limited to, the marketability of the property, the elevation, grade, and topography of the Property and to conduct engineering and soil boring tests as the Buyer deems necessary in order to determine the usability of the Property. Buyer may in its sole and absolute discretion, give notice of termination of this Agreement at any time prior to the expiration of the inspection period, and upon such termination, all deposits held in escrow shall be returned to Buyer.
Is this weasel enough?
And although it should never be your intention to enter into contracts that you subsequently will cancel having the right to do so is invaluable..
After all sellers don’t always tell you the truth regarding the conditions which effect the property and having a time period to complete your due diligence is always necessary...
[addsig]
Just wrote this one in a contract. The house was an older house and the drywall and texture was perfect. I suspect there must have been some water damage and all the drywall was replace.
Seller will complete a sellers disclosure, provided by buyer, within 10 days of effective date. If buyer determines that the disclosure is unsatisfactory buyer may cancel the contract.
This does not give the buyer a time limit to declare it unsatisfactory.
In my state, Iowa, a sellers disclosure is required on all real estate transactions, and you are only allowed up to 10 days for an inspection.
Quote:
On 2006-04-26 11:53, bgrossnickle wrote:
Just wrote this one in a contract. The house was an older house and the drywall and texture was perfect. I suspect there must have been some water damage and all the drywall was replace.
Seller will complete a sellers disclosure, provided by buyer, within 10 days of effective date. If buyer determines that the disclosure is unsatisfactory buyer may cancel the contract.
This does not give the buyer a time limit to declare it unsatisfactory.
Yes, you are setting yourself up for future tax issues.
Can you give me a little more detail? Thanks
Chris,
Thanks for the responce. I went and looked at your post as well. I am still looking in to this and will let you know what I fid out.
What this guy really needs is the write offs so maybe an agreement that gives him more intrest 90/10 with me getting a managment fee. We could have an agreement that states before any sale I will be moved to a %50 ownership thus I get my share and maybe the tax issue on the sale will be less. What do you think about that?
And there is always the possiblity that congress will not keep the capital gains rate low. Then this becomes a bigger problem/question.
J
I am sure I (or she) will eventually talk to a financial advisor about this issue; but I always like to go in knowing as much as possible. When I learn more, I will let you know.
Chris
John,
Thank you. If I was to do this it would have to been done threw a well written partnership agreement. I was just wanting to make sure that we could allocate the taxes to him. It is a win/win deal for both but the tax issue is the big selling point.
Also do you have an idea about self-employment tax. Chris had said something about having to pay that.
Thanks again
J
So beside the legal issues is there any tax issues. Have any of you done a partnership where one partner pays the bills and then takes them off their taxes but the positive cashflow is split 50/50 and then if it is sold the profit is split the same way. Could this work or not?
Suggest you put this question on Tax Strategies Forum
Quote:So beside the legal issues is there any tax issues. Have any of you done a partnership where one partner pays the bills and then takes them off their taxes but the positive cashflow is split 50/50 and then if it is sold the profit is split the same way. Could this work or not?JamesStreet.,
You are asking if it is legal for the partner who pays the bills to get the deductions, and if it is legal for partners to equally share in cash flow and sale profits.
I agree with John Merchant. This type of partnership deal is done all the time and is perfectly legal. As long as each partner pays the appropriate taxes due on his share of the distributed partnership income, there should be no tax issues either.
Thank you to both. I was hoping that was the case. When it comes to rent I would still claim it as passive income correct. However would it be better to set up the partnership as an s-corp or an LLC and take my money out that way?
J
So Newkid ,
Are u saying if I take a smaller split ( ie: 60/40 ) instead of 50/50, with ten percent going to the partner that wants the tax deduction for my share of the taxes, that would be ok.
And only the one would claim the property and pay any taxes which are due, although I would have paid my portion of taxes to the partner in the split, but not on tax returns.
Just trying to get a good understanding how this can be done.
[addsig]
No, I am only saying that you will pay taxes on your personal 1040 for your share of the partnership income that was distributed to you.
New Kid,
Thank you that helps. Would you (or others) happen to know of any books about partnerships that would help.
J
bump
Talk to your agent about "procuring cause" and if
he feels this could be an issue.
Jim
This is not a rehabbing topic.
Buy It, Fix It, Sell It: Profit! by Kevin C. Myers is a great book.
http://www.amazon.com/gp/product/079312610X/qid=1146493612/sr=1-1/ref=sr_1_1/103-9795390-2928665?s=books&v=glance&n=283155
Good Luck.
[addsig]
Are there any community colleges close to where you live? If so, check them out. At my community college they offer RE pre-license, appraisal courses, para-legal RE abstracting.