Shortsales And LLC's
When writing up a contract to do a shortsale, do I have to put my name on the contract, or can I use my LLC? I say that cause I dont want the bank to look at that crosseyed, and I want to see if it's common practice or not.
I want to try to find a way to assign these pre-shortsales to another investor for a fee without potentially tee'ing off the bank and then the seller. If there is a way to do that without doing a double-close, please let me know.
btw, I cant do a double-close in my area cause of recent "flipping" scandals and now the titles' insurance companies wont insure "flipped" houses. So there lies in my dilema
Thanx-
Good, forward thinking question!
If you don't intend to take ownership, but rather 'flip' or assign the mortgagee approved, preforeclosure sale contract,
I've recommended that the named Purchaser be an entity (not an individual)
including an LLC. The contract becomes an asset of the LLC, whose members may be added or removed if permitted in the operating agreement.
You simply add a new member who pays you a membership fee to join the LLC.
The LLC doesn't necessarily have to complete the purchase... but the LLC's member would step up and take title in his/her own name, and bring in the financing to acquire, as well.
The rationale to the Foreclosing Mortgagee would be that the LLC can't secure financing, or the Title Insuror requires that title be taken by the individual member... and should agree to the substitution.
It would be good to have the 'member' in place before the date of the original Contract.
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Short Sale Practitioners can't predict, or guarantee results... but can take steps to insure the likelihood for success.... and MAKE IT HAPPEN![ Edited by TheShortSalePro on Date 07/07/2004 ]
I already have an investor lined up to take assignment of my LLC, do I just have to have him ready to take ownership, or does he have to be an actual member before the contract date?
Also, if the bank asks why it's in an LLC, do I just give them the "It's just standard asset protection" line? or will I come off too much like an investor, in that case what should I say then?
Thanx-
If you already have the Investor in place.... why not place both your names on the Contract and forget about the LLC?
Posted: 11:32 on 07-07-2004
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If you already have the Investor in place.... why not place both your names on the Contract and forget about the LLC?
In response to your post,
This is interesting, I gues your end buyer could not resell the house w/o your signature. this way you wouldn't have to worry about him/her trying to rip you off. Is that the theory behind this?
I wouldn't add a member to my LLC, unless I was very carefull to outline their abilities, and responsibilities. That seems like huge risk to me.
So explain something to me... You already have the purchaser in place, and you have not arrived at the acceptable price with the bank yet? It also sounds like you haven't drafted the contract with the sellers yet...
Is the purchaser getting a loan, or paying cash? If cash that would make it easier.
Explain the deal a little more.