Getting Started + No Money...

[transactionsengineer 0]

Dan,

 

What's your escape clause?   Morally and ethically, if you tie the house up with a S&P contract, you really should be prepared to close on it yourself if you can't find a buyer for your simultaneous closing.

 

That said, what's your "out" if you can't find a buyer in time?

 

And do you contract to close in, say......, 90 days?  120?

 

Thanks,

<{POST_SNAPBACK}>

 

I state in my contract that earnest money is paid at closing. If the contract defaults, no payment is paid to the seller because there is no closing.

 

Also, I only tie up a home for 2 months maximum because if I can't locate a buyer within that time, the home is over-priced or the market is not responding to the home. In any case, I will have no responsibility to the seller.

 

I care about what is legal and good financial planning. If you are concerned about what is moral or ethical, you are free to buy the home yourself. Nobody is stopping you.

 

Dan

[Sold ! 0]

I care about what is legal and good financial planning. 

Dan

<{POST_SNAPBACK}>

 

Legal is making good on contract obligations, or esle you default. I assume you have remedies built into the contracts you use. And, I assume those remedies take you completely out of the picture at no fault to you, right?

 

I'm sure we'd all benefit from seeing some of the verbiage you use in your contract clauses that get you released from a binding contract.

 

I may be confused, here, but I think you said that you tied the property up with a sales contract, not an option. But, you contarct for 2 months with the seller, right? That sounds like an option, no?

 

Help me understand what's in it for the buyer if he doesn't get earnest money until closing and why he agrees to take his house off the market for 2 months with no compensation and no real security that the deal is going to go through.

 

If you don't go to closing, why can't he sue for damages?

 

I think I am missing apiece of the puzzle, Dan.............HELP !

 

Thanks,

[transactionsengineer 0]

My contract states that earnest money is payable at closing. If there is no closing, there is no earnest money paid.

 

Here is the exact verbage you requested:

EARNEST MONEY: Within 60 days of the execution of this contract by both parties, Buyer shall deposit $10,000 as earnest money with (Any Company) as escrow agent, at (Any Location) payable at closing. If Buyer fails to deposit the earnest money as required by this agreement, this agreement shall be in default.

 

Legal is making good on contract obligations, or esle you default.

 

This statement is not true. Your definition is an issue in morality, not legality.

 

Contracts are promises that the law will enforce. The law provides remedies if a promise is breached or recognizes the performance of a promise as a duty. Contracts arise when a duty does or may come into existence, because of a promise made by one of the parties. To be legally binding as a contract, a promise must be exchanged for adequate consideration. Adequate consideration is a benefit or detriment which a party receives which reasonably and fairly induces them to make the promise/contract .

 

The seller makes a choice to accept my contract. I fully disclose that I am arranging a simultaneous closing and that if I do not find a buyer, I will default on the contract. The term is 60 days. I don't tie them up like realtors who will have agreements of 6 months to a year.

 

If you don't go to closing, why can't he sue for damages?

Read my first line. What will the seller sue for?

 

Daniel

[JerseyJeff 0]

Within 60 days of the execution of this contract by both parties, Buyer shall deposit $10,000 as earnest money with (Any Company) as escrow agent, at (Any Location) payable at closing. If Buyer fails to deposit the earnest money as required by this agreement, this agreement shall be in default.

I thought with a short sale, the seller cannot receive any money?

 

Jeff

[MichaelC 160]

Within 60 days of the execution of this contract by both parties, Buyer shall deposit $10,000 as earnest money with (Any Company) as escrow agent, at (Any Location) payable at closing. If Buyer fails to deposit the earnest money as required by this agreement, this agreement shall be in default.

I thought with a short sale, the seller cannot receive any money?

 

Jeff

<{POST_SNAPBACK}>

This isn't a Short Sale that Dan is describing. A Short Sale is when the lender is willing to accept less than the full amount due, in the interest of moving the property.

[Doug Pretorius (ON) 9]

Dan, I feel a bit uncomfortable with the term "default" at the end of that clause. Doesn't the seller have some recourse against you if you "default" on a bilateral contract?

 

I'd prefer to replace "default" with "null and void".

[transactionsengineer 0]

Dan, I feel a bit uncomfortable with the term "default" at the end of that clause. Doesn't the seller have some recourse against you if you "default" on a bilateral contract?

 

I'd prefer to replace "default" with "null and void".

<{POST_SNAPBACK}>

 

Doug,

Stick to law and use the word default. If you like null and void, don't do the deal.

 

My contract is geared toward protecting me and is weighed heavily toward me. Even if I use a general state approved contract, a few words placed in different areas will make the contract geared toward protecting me.

 

Jeff,

I was not talking about a short sale. It is true that in a short sale, the seller receives no money but you can do a side deal by purchasing his fine china set for some money. Just don't let the lender find out.

 

This topic is on simultaneous closings, not the short sale. If you want information on the short sale, your questions were addressed under a different heading.

 

Daniel

[Craig 0]

I state in my contract that earnest money is paid at closing.  If the contract defaults, no payment is paid to the seller because there is no closing.

 

<{POST_SNAPBACK}>

Dan

 

If no money is transacted is the contract legal and binding? I thought it had to be a dollar or more?

 

Craig

[Doug Pretorius (ON) 9]

Craig, exactly! No consideration = No contract. That's a very clever way of doing it that Dan's got there. He's promised a deposit, but given himself time to provide it (there's no law saying WHEN the deposit has to be paid) and if he doesn't provide it by the end of the 60 days then the contract is simply incomplete.

 

Correct me if I'm wrong, Dan.

[transactionsengineer 0]

Craig, exactly! No consideration = No contract. That's a very clever way of doing it that Dan's got there. He's promised a deposit, but given himself time to provide it (there's no law saying WHEN the deposit has to be paid) and if he doesn't provide it by the end of the 60 days then the contract is simply incomplete.

<{POST_SNAPBACK}>

 

Craig,

 

Read the verbage I have provided. In most states, it is now $10 or more. Put any amount you want on it. I've put in $10,000 - $20,000, PAYBLE AT CLOSING.

 

No Closing means the contract was incompleted as Doug states.

 

Thanks Doug.

 

Daniel

[Sold ! 0]

Does the "consideration" have to be MONEY? Consideration can be love and affection, can't it?

 

Consideration is whatever is given in exchange for something else, actually. Legally, consideration is the obligation that each party makes to the other to make the contract enforceable. A promise undertaken by one party must be supported by a promise undertaken by the other party. Mutual promises to do or not do some specific act are sufficient consideration, even though the benefit or sacrifice may not be equal.

 

Also, the law does not generally concern itself with the fairness of the consideration, or whether it was "valuable" consideration (money) or "good" consideration (can't be measured in terms of money....like love and affection).

[transactionsengineer 0]

Here is a lesson on contract law and consideration:

 

One of the other important elements of contract law, which is difficult for the non-lawyer to understand, is the requirement of consideration. One 1875 English case, Currie v. Misa, offered a definition of "consideration" which is still used:

 

".. some right, interest, profit or benefit accruing to the one party or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other."

 

As such, a contract differs from a gift. This also explains why you sometimes hear of very expensive objects sold for $1; which is done to ensure that what is essentially a gift, comes with the legal protection of contract law.

 

Under contract law, there is no contract if there is no consideration.

 

But consideration does not necessarily have to be quantified or quantifiable in monetary terms. Any discernible detriment to one of the parties could be that party's consideration. In one case, Hubbs v. Black, 1918, agreeing not to take a certain plot in a cemetery was considered to be sufficient consideration. Giving a right to sue on a "bona fide" claim has been deemed to be adequate consideration. Also, the courts don't really care about the adequacy of the consideration. This is the business of the parties and not a matter for judicial interference.

 

There is one exception to the requirement of "consideration" and that is a "deed", which is a contract "under seal" or a "specialty contract". In centuries past, persons contracting would drip a drop of hot wax on the bottom of the contract and press a family ring into the wax, thereby signifying consent to the terms of the document. Nowadays, deeds are used mostly in contracts that involve real estate. If a contract is a "deed", then no consideration is required. If charitable donations are made under seal, they are valid contracts even though there is no valid consideration.

 

Daniel Ng, JD/LL.B (Honours)

[jtlab 0]

Ardy,

 

  Since you say you havent gotten started in LPs, could you please explain how you do your Simultaneous Closings ?

I mean the contract that you make with the seller, is it just 1 option contract to buy the house ? And then you find another traditional buyer(not a T/:lol: who has or can get the reqd. funds ready to buy the house ? Before your option period with the seller is over, your Buyer closes with you(with all cash ?) the same time you close with your seller ?

Please let me know if my understanding is correct and if it isnt then could you briefly elaborate on how you do it ?

 

I use a real estate contract, not an option, to tie up the property. I sell the property with the contract because the contract gives me sufficient interest in the property.

 

When I sell to a traditional buyer, I arrange for his financing through a mortgage broker that I get a referral fee. I get to know what the buyer's FICO score is, what he can afford, if the loan is 100% or 80/20.

 

The closing attorney handles the simultaneous closing.

 

Dan

<{POST_SNAPBACK}>

 

 

Their called sub2's right?

[transactionsengineer 0]

Their called sub2's right?

 

Simultaneous Closings and Sub2 are two separate techniques.