 your agreement.
Every time I post something controversial someone responds to me telling me I don't know what I am talking about so let me try to be as clear as possible.I choose to use RTO in my business based on advice from my attorney for my situation.You should use your own attorney for your own situation and not believe everything you read in a post like this.
Brian Gibbons
Investor from Sherman Oaks, CA
replied over 5 years ago
Hi
Alot of attorneys do not know Dodd Frank, TILA, Safe Act, RESPA, etc.
If you finance an option, even at no interest, it is a financing arrangement. Get a RMLO to look at the deal.
I know of 1 investor in TX buying with private lender 1st mortgages, and selling on wraps, no due on sale clause on the private mortgages, and doing 100s of them.
Your RMLO should guide you (unless you have a lease and an option fee paid in full at move in, not financed.)
Regina Sitterley
Wholesaler from Marietta, Georgia
replied over 5 years ago
@Kevin Amolsch good advice to do what your legal advisor suggests!
I have never used this strategy before, but have spoken to my attorney about the possibility of it. He recommends that a property purchased in this manor (I'm the buyer) should be held in a trust for best protection of both parties. Just another caveat.
Thanks for the replay Brian. The funny thing is that Chris Dodd and Barney Frank dont understand the Dodd Frank. How can anyone else? There is much more to it than I posted in my comment but a lease is not financing so I am not sure why you would suggest collected it in full up front is the way to go. I do agree that a good mortgage loan officer can help but I have not found that they are better to consult with than a good real estate attorney. Both are licensed to help with owner financing. In any case my point was simply to not trust everything you hear and that each person needs to do what is best for them based on the advice they get from their advisers.
Bill Gulley
Investor, Entrepreneur, Educator from Springfield, MO
replied over 5 years ago
Well, have your attorney contact me, I advise attorneys often on financing matters.
Next issue, an option may not have any condition of performance required by an optionee (buyer). If an optionee is required to do anything to maintain the right to purchase, such as pay rents on time, you don't have an option, you have an installment sale or a sale contract.
The heading of a contract at the top margin does not define what type of contract you have, you don't just declare you have an option, the intent of the contract and the terms will define what you have.
The intent of a sale is spelled out in the Tax Code with the IRS, it is based on international accounting requirements, look up asset recognition of real estate options.
The IRS is not some lonesome dove, all agencies under the Executive and Judicial Branches work in concert, in other words, if the IRS determines requirements all agencies and courts will utilize the same requirements to make their determinations.
These "intent" rules go into effect this year, 2016. My guess will be that most attorneys who do smallish real estate transactions won't be aware of the new requirements, those dealing in multi million dollar transactions are much more likely to be aware as they probably work with CPAs.
Use to be that only public corporations were required to follow GAAP accounting requirements, that changes under the new laws that all option contracts made with terms greater than 12 months fall under GAAP, regardless of who the parties are, even mom and pops.
Doing renewable 12 month terms will not be circumventing the requirements as there is the intent card that will be played.
Dodd Frank doesn't apply to commercial financed options, it clearly applies to consumer financed options when the option price is applied to the sale price.
It is customary, but not required, that an option price is credited to the sale price so following custom with a consumer tenant you'll have a financing agreement subject to the Act.
If you so much as mention "rent to own" in your contract, the intent found will be a sale contract and/or an installment sale. There are also rules for an agreement to be an installment sale, if those are not met, you'll have a sale contract.
This is important because the type of contract you have determines the accounting and treatment of all funds. You can agree all day long, blue in the face, that an option price is non-refundable, but it depends on the determination of the contract as to how funds will be treated, that trumps any intended treatment.
In a Florida case an investor thought he had an option, it was determined by the court to be a sale contract and the buyer was then entitled to all funds paid under the contract! Surprise! Don't screw around with federal laws!
Most have heard the phrase "they threw the book at him", when you have a violation of law you'll usually be violating several related laws, especially in finance.
You can also take all your creative financing and option guru books that are out there and enjoy a big bond fire, because none of them will be addressing the new laws.
It's up to the client to find professional advice, it's up to you to determine if that council is current with the matters at hand, most aren't with real estate option contracts. These changes are the product of over 50 years of debate while nothing ever really changed, and opinions during the past were pretty clear cut and well established, but that has now changed. So, what you think you may know about options and installment contracts can probably be tossed out the window, you need to learn all over again. That goes for attorneys too!
Lastly, you must prove or show that your intent is not a sale because it will default to being a sale if the intent otherwise is not clearly stated and justified! See you in school! :)
As an interesting aside when a prospective renter picks a home, there is a company that will buy the home outright, make any necessary repairs, and then rent it to them. They rent it on a year to year basis with a max term of 5 years. At the end of any year on the lease, they can walk away with no further obligation.
Requirements are they need to have a combined income of $50,000/yr+, and a FICO score of 525+.
Homes that qualify have to be in a good school district, and can go up to $550,000.
It takes 2 months rent deposit to start.
Then, at any time when they can finance it, with their choice of outside mortgage companies, they buy the home from the company.
The selling price escalates 5% per year.
Since homes in many areas have been going up about 5-10% per year, that's not a bad deal.
This company has purchased $1.5 billion in homes so far, and has $1 billion more to invest.Decimal Degrees:
Latitude: 40.6441959
Longitude: -92.069899
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Building: Cantril City Fire Department, Cantril Public Library
Cemetery: Maple Grove Cemetery
Church: United Methodist Church, Cantril Christian Church
Civil: City of Cantril
Locale: Cantril (historical)
Populated Place: Cantril
Post Office: Cantril Post Office
School: Cantril Elementary School
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Time to build: 0.0470 Secs | Cached: 02-Dec-16 09:50 PMAn example is in the final episode of Gundam Seed Destiny where Rey said "I will deal with the Freedom!" which sounded better than its Japanese counterpart "フリーダムには俺が討つ!". And also in Episode 16 of the same anime, "War is not some game to play the hero!" also sounded better in dub.
As the person at the top has said: Dub is good if you're doing something else and can't properly watch the screen.
Personally (and I hope I don't offend anyone), I pretty much hate English dubs for anime, all of the dubs I've heard sound so annoyingly fake/forced for some reason and it's just awkward. I don't think American/English-speaking Voice Actors suck because they do a pretty great job when they're voicing a character that originated in an English-speaking country and in some cases, characters that originated in other countries but for some reason, they sound silly while dubbing anime. I've always wondered why is that, it's a mystery to me. I have yet to hear an English anime dub that I like.
I'm from a Spanish-speaking country (latin Spanish, not Spain's Spanish) and I think the dubbing here is really great (mostly it's the Mexican voice actors who shine the most, but there are some good Chilean/Venezolan dub actors) and that the dub here is the second best after the original Japanese (and in some cases, better) so I actually really like the Latin American dub... But in the end I prefer subtitles because sometimes the Latin dub goes with American name changes or different/so-so translated versions of the openings and endings and I'm not too fond of that and also some Japanese puns and other things can only