Purchasing of 2 washes, hit a snag. anyone can read contracts?

[soonermajic]

in my contract to purchase, which is 80 % bank & 20% from seller it states:

seller needs a "commitment for a lender's policy of title insurance".
I am not sure exactly what this means, entails.

he states he wants some type of guarantee that he will get his full 20% if something bad were to happen. I'm paying him for 10 yrs @ 5%.

anybody got any sound advice?

 

[tdlconceptsllc]

The lawyers office where you guys are closing at should have all this prepared before hand and this is part of closing cost and most of the time the buyer pays closing cost. The title insurance covers defects in transfer of title/deed and lender paperwork you probably had this when you bought your home and forgot. Most of the time the buyer has to provide title insurance that I have seen at a one time cost for doing the research. Now a personal guarantee that he will be paid if something happens to you would be a life insurance policy or some kind of assets or the carwash will be granted to him in the event of death equal to the value owed I would think its several different ways. Two totally different things someone correct me if I am wrong. I would call up the lawyer and ask him direct

 

[bert79]

Hi soonermajic, you may remember that I talked on the phone with you about 6 months ago regarding your washes and experiences. You were very helpful to me and I thank you. My dad and I are closing on a 3+1 in West Michigan on Thursday. We are purchasing the wash on a 3 year land contract with 85% seller financing. We used a realtor because of our lack of knowledge on how to structure a commercial business deal. He made us aware of the need for title insurance. We paid around $750 to a Title Company to do a title history on the property. As was said before this is to protect buyer and seller from "defects" in the transactions that may have occurred during prior sales. Basically they just make sure that the property has changed hands legally in the past and the persons who sold/purchased it, had their ducks in a row. Obviously we didn't want to buy a piece of property if the current owner (or any past owners for that matter) didn't have the right to sell it. It surprised me that that happens but apparently it does. When we conducted environmental assessments and a survey they required the title work. You may have know this stuff already but maybe that helps. Anyway, good luck with the deal!

 

[Roz]

The seller is asking for personal guarantee insurance (similar to title insurance but harder to find since he is not a bank or institution). By self financing he is making a hard money loan to you (5% is a very low rate for a hard money loan which is great for you). Most people who make hard money loans will require that the property title be held in their name until the loan is paid off which is their way to guarantee repayment. The bank would probably not allow such an arrangement.

Alternative is to find and pay a life insurance policy on you for the amount of the loan payable to the seller which might be the only and easiest way to go but increases your costs. As noted above perhaps a lawyer can draft a loan guarantee document however I suspect if something happens to you the bank will own the wash and the seller will not get the remaining money unless you are having him finance the deal so you do not need to sell any stocks in your portfolio. If you are the only party interested in the wash you probably can negotiate the guarantee away, really depends if there is another potential buyer in the picture. Good luck, you should be able to find a solution just depends on the cost and who pays for the additional cost.

https://www.thebalance.com/what-is-personal-guarantee-insurance-for-business-loans-398096

 

[wash4me]

You could double the payments on the portion he is financing.

 

[Earl Weiss]

anybody got any sound advice?

1. Get a lawyer.
2. Don't sign anything until your lawyer review and approves.

If you signed a contract without having a lawyer look at it you have already made a big mistake. Your questions stemming from lack of knowledge bear this out. This is not a slam on you. The average person may do this type of transaction a couple of times in a lifetime.
It amazes me that some areas do these transactions without lawyers. For Sellers it's not as risky because once they get there $ they are mostly done except for lingering liabilities. Buyers my not find issues until they try to sell.
Without a lawyer no one is looking out for your interests. Realtors protect their commission. Title companies only will give the minimum coverage they contract for. Sellers look out for their money.
For instance - Will you get "Extended Coverage" on the Title Insurance? Survey, Zoning and environmental endorsements? Will someone do UCC and Revenue lien searches against the property and Seller? Are their state and local clearance letters you need to get to eliminate any liability of Seller from passing thru to Buyer?
If a lawyer misses something and there is a cost discovered later you may have a malpractice claim. Who are you going to make a claim against if you miss something?

 

[Randy]

1. Get a lawyer.
2. Don't sign anything until your lawyer review and approves.

This is very sound advice.

 

[soonermajic]

A lawyer who represents himself, has a fool for a client....

I ain't a lawyer...but sometimes am a fool

 

[Car_Wash_Guy]

You'd be crazy to not have a experienced R/E lawyer at least look at the contract.

 

[Earl Weiss]

A lawyer who represents himself, has a fool for a client....

I ain't a lawyer...but sometimes am a fool

And a bigger fool for a lawyer.

Case in point I have an attorney representing me in a case where the car wash insurance company is shafting me on a damage claim to the tune of about $650,000.00

 

[Earl Weiss]

You'd be crazy to not have a experienced R/E lawyer at least look at the contract.

Should have experience in both real estate and business transactions.

For instance - Is there a non compete clause?

 

[Car_Wash_Guy]

Should have experience in both real estate and business transactions.

For instance - Is there a non compete clause?

True. I should've been more specific and said "Commercial R/E Attorney".

 

[Main Street Carwash]

Just be aware that there is a big difference between a title search and title insurance. A search may show that the title is not clouded and may be fine for some people to move forward. Title insurance, on the other hand, is actual insurance against any sort of clouding of the title after the title company guarantees there are none. The injured party would be made whole again in such an event. Title search just tells you there is or is not any clouding of title.

 

[soonermajic]

Just be aware that there is a big difference between a title search and title insurance. A search may show that the title is not clouded and may be fine for some people to move forward. Title insurance, on the other hand, is actual insurance against any sort of clouding of the title after the title company guarantees there are none. The injured party would be made whole again in such an event. Title search just tells you there is or is not any clouding of title.

Gotcha...I think. LOL

holler if you still want all those vendors & that Big SS vending station w/ sign

 

[Kevin James]

in my contract to purchase, which is 80 % bank & 20% from seller it states:

seller needs a "commitment for a lender's policy of title insurance".
I am not sure exactly what this means, entails.

he states he wants some type of guarantee that he will get his full 20% if something bad were to happen. I'm paying him for 10 yrs @ 5%.

anybody got any sound advice?

What’s going on with your multi-site car wash acquisition?

 

[soonermajic]

Looks like we'll close in a week. Of course, I've said that 2x b4

 

[Car_Wash_Guy]

Did you do the environmental tests? You're not assuming his corporations are you?

 

[soonermajic]

No environmental tests. Never heard of those in this area. Not assuming his corporations either. I'm just buying 2 carwashes