Reply To: When the going gets tough, the tough go get an attorney

[Lance Thompson]

Yeah…….

The attorney was out of town last week y’all so we haven’t been in communication…..But both before he left town and while he’s been out of town “the fast talkers” have basically been trying to make an end-run around him…..I told Mr. Yang that I have had to REPEATEDLY tell these guys that he speaks for me and that all negotiations go through him and him only……It was like they didn’t want to accept that……Like they were going to “make me” do this deal. Now that Mr. Yang has had a chance to go through the deal and “read the fine print” I understand why. Below is the e-mail that Mr. Yang sent me this morning…….And for anybody asking “Lance, please tell me you weren’t stupid enough to take that deal?!?!”……Good people, not only did I say NO, I couldn’t say no FAST ENOUGH……I did tell Mr. Yang to inform them that if they were interested in buying the property at the $120,000 asking price we can talk……Other than that they can “kick rocks”……………

Oh and one last thing y’all……Although in THIS case the fast-talkers where White, don’t place a color on that……Fast-talkers come from all races and they definitely aren’t always White, I can tell you that right now.

ATTORNEY-CLIENT PRIVILEGED COMMUNICATION

Lance,

Good morning.

Yes, I spoke with them last week and I wanted to touch base with you before I contacted them back, hence why I had not followed up with them yet.

Essentially, they are proposing a “subject-to-deed” conveyance. What that means is that the property would be transferred to them, at a purchase price, but instead of the existing mortgages being paid off, they would pay you a monthly amount, which would go towards the mortgage for you to pay. This is not an assumption of mortgage where the bank approves of the transaction. So, what that means is that the bank would not be notified of the transaction. However, if it became aware of the transfer, it could trigger your “due on sale” clause, meaning the entire loan amount could be demanded by the bank–you’d technically be in breach. Both parties assume a lot of risk by entering into this transaction. The seller (you) does because the “due on sale” clause could be triggered, in which case, the property could go into foreclosure, and then you might be subject to a personal deficiency judgment if you cannot come up with the full loan amount. The buyer assumes risk because if you failed to pay the mortgage, then they might lose the property due to foreclosure or if you filed for bankruptcy. It’s basically a creative way to get around traditional financing, which saves the buyer a lot of money on closing costs. Presumably, what this company does is then either attempt to sell or rent the property to turn a profit. This then becomes a risky proposition because if they cannot, then they might default on their payments to you, in which case, the property should revert back to you, but depending on the contractual language, it might not be that simple or cheap. What I can advise you is that unless you are in dire straits with this property and you absolutely need to convey title to another individual or entity to avoid financial liability, then I would proceed with extreme caution regarding a transaction such as this. If you can hold onto the property, then the safe approach would be to find a traditional manner of selling the property, if possible. Otherwise, there are any number of ways for this type of transaction to fall through. Bear in mind, I have not reviewed the proposed contract because I wanted to first understand what was being offered. Now that I do, it’s really up to you whether or not you want to assume these risks. I would assume that any proposed contract pushes most of the liability onto you if things go sour. Even if there is a reversion clause, which transfers the property back to your name if the buyer cannot make payments, you have no assurances that the property will be conveyed to you in the same condition that it was in prior to the conveyance. This type of transaction might make sense if you are close to filing bankruptcy or you cannot meet your mortgage payments–basically if you’re anticipating a financial loss if you continue to own the home. But, if not, then the risks involved probably outweigh any benefit you might receive. Please let me know if you’d like to discuss transfers further and we can schedule a conference call. If this is something that you are still interested in pursuing, I can request the proposed contract for my review. However, I would only advise doing so, if you are serious about moving forward.

Thanks,

Andrew Yang, Esq.