Ugh...time to call a truce on this topic before blood is shed.:greenchainsaw:
If I read Les' comment correctly, he is saying that a table closing is legal, and that a title company would have made no difference in what was (I believe) the fraud portion of this.
A title company employee might have confirmed that the buyer and seller understood the terms of the contract, but they wouldn't have said, "Gee...I think you should have charged him more for this place."
If predatory pricing is what the judge is calling the guy a fraud for, a title company wouldn't (and shouldn't) have any reason to know about it or comment on it. Of course, that doesn't make it right.
If the seller had an attorney, the attorney "might" have commented on the price. He also "might" have insisted on a DOS clause. That said, there is no requirement for the seller to have an attorney.
Of course, all of this might be for nothing. We have no idea what the judge was referring to when he was threatening fraud. In fact, I'm not even sure that a judge COULD charge him with fraud. It seems like that would be up to a District Attorney, or the attorney of the lady, not the judge.
Now we come to the morality issue. "What you don't know can (or can't) hurt you." I have a real struggle with this one. Here's how I see it.
If your buddy told the lady the house was only worth $35k when he knew it was worth $50k, then what she didn't know DID hurt her. But if he told her he could only afford to pay $35k if he hoped to make a profit on the place, then what she didn't know DIDN'T hurt her. After all...he could have had to insure, heat, and pay mortgage and taxes on the place for 6 months before he sold it.
If I understand Les correctly, he is saying that an AITD (mortgage wrap) would have kept the lady happy. She wanted $X per month from the buyer, and she would have continued to get $X per month from the buyer. What she didn't know would not have hurt her.
On the other hand, if he had done the AITD, she never would have found out that your buddy was trying to screw her over on the price (if that is what the judge was claiming), so what she didn't know DID hurt her.
Either way, I think the seller financing is fine. The problem occurred either because your buddy tried to disguise the value of the house, or because he did a lousy job of communicating his part in the transaction to her.
Cat...I take it you are an RE Broker or Agent. I have no doubt that you know your stuff. But I don't know many RE professionals who go much more moral than what the law requires.
For example, when representing the seller...
If you do, I commend you. But my experience is that most of these bits of knowledge are things that RE agents feel "the buyer doesn't need to know -- even though they may hurt him". I've even heard agents say "Don't tell me those sorts of things or I'll have to disclose them."
Finally...there is the matter of Mark Kemp a/k/a UtahInvestor. If you read the filings at http://www.securities.state.ut.us/dockets/cr0040601.pdf you'll see there is a big difference between table closings and what he did -- felony securities fraud. I did some digging on him, and it appears he is out of jail and doing internet marketing now.
If I read Les' comment correctly, he is saying that a table closing is legal, and that a title company would have made no difference in what was (I believe) the fraud portion of this.
A title company employee might have confirmed that the buyer and seller understood the terms of the contract, but they wouldn't have said, "Gee...I think you should have charged him more for this place."
If predatory pricing is what the judge is calling the guy a fraud for, a title company wouldn't (and shouldn't) have any reason to know about it or comment on it. Of course, that doesn't make it right.
If the seller had an attorney, the attorney "might" have commented on the price. He also "might" have insisted on a DOS clause. That said, there is no requirement for the seller to have an attorney.
Of course, all of this might be for nothing. We have no idea what the judge was referring to when he was threatening fraud. In fact, I'm not even sure that a judge COULD charge him with fraud. It seems like that would be up to a District Attorney, or the attorney of the lady, not the judge.
Now we come to the morality issue. "What you don't know can (or can't) hurt you." I have a real struggle with this one. Here's how I see it.
If your buddy told the lady the house was only worth $35k when he knew it was worth $50k, then what she didn't know DID hurt her. But if he told her he could only afford to pay $35k if he hoped to make a profit on the place, then what she didn't know DIDN'T hurt her. After all...he could have had to insure, heat, and pay mortgage and taxes on the place for 6 months before he sold it.
If I understand Les correctly, he is saying that an AITD (mortgage wrap) would have kept the lady happy. She wanted $X per month from the buyer, and she would have continued to get $X per month from the buyer. What she didn't know would not have hurt her.
On the other hand, if he had done the AITD, she never would have found out that your buddy was trying to screw her over on the price (if that is what the judge was claiming), so what she didn't know DID hurt her.
Either way, I think the seller financing is fine. The problem occurred either because your buddy tried to disguise the value of the house, or because he did a lousy job of communicating his part in the transaction to her.
Cat...I take it you are an RE Broker or Agent. I have no doubt that you know your stuff. But I don't know many RE professionals who go much more moral than what the law requires.
For example, when representing the seller...
- Do you tell them how little the seller bought the place for?
- Do you prepare a list of comps that are the cheapest in the area, or do you go with medium to high comps?
- Do you tell buyers that, "He is asking $100k, but he only really needs $80k"?
- If you are aware of it, do you tell buyers that the guy next door uses drugs?
- Or that the neighbors like to play the stereo loud late at night?
- Or that the taxes are based on the seller's purchase price of $50k instead of the sales price of $100k?
- Or that insurance rates on the purchase will be way higher than they are now?
- Or that the biggest employer in town is going to lay off 2,000 employees so property values are likely to fall?
If you do, I commend you. But my experience is that most of these bits of knowledge are things that RE agents feel "the buyer doesn't need to know -- even though they may hurt him". I've even heard agents say "Don't tell me those sorts of things or I'll have to disclose them."
Finally...there is the matter of Mark Kemp a/k/a UtahInvestor. If you read the filings at http://www.securities.state.ut.us/dockets/cr0040601.pdf you'll see there is a big difference between table closings and what he did -- felony securities fraud. I did some digging on him, and it appears he is out of jail and doing internet marketing now.