Are you a real estate investor? If so, we hope to see you at one, or all, of the following upcoming events!!
Quest Expo 2019
When: August 23-25, 2019
Where: Royal Sonesta Houston Galleria
Come visit our vendor table at the 2019 Quest Expo. Veronica and I will be giving out swag and discussing how we can help you with your real estate investment transactions. If you don't have tickets or want to check out the amazing speaker lineup, visit the event page at https://questexpo.com/.
Probate Issues and Solutions
Join American Title Company - Park Ten and the attorneys from Theander & Grimes, PLLC to learn how to resolve common title issues that arise after a property owner passes away. We will present different scenarios that investors run into when purchasing investment properties and then provide possible resolutions. So bring your questions and join us for this very informative, free seminar.
Latinos in Real Estate
Join Meg Banahan and Veronica Martinez on Monday, January 14, 2019, at The Event in Katy to get the answers to some of the most frequently asked questions by new (and seasoned) real estate investors. Be sure to stick around for the networking!!
B&M Law is excited to announce that Veronica Martinez will be a panel member at the upcoming Real Acquisitions November Summit. Veronica, and other real estate professionals, will be providing insight into hot topics in the real estate industry and sharing how they are preparing for 2019. For more information please visit https://realacquisitions.com/events/.
Real estate investing is an ever-growing business in the Houston area and wholesaling seems to be a popular way for many investors to get their feet wet. We conduct multiple consultations with budding real estate investors each month. In this blog we will provide you with some of the information we discuss with new investors who come to us wanting to ensure they are legally prepared to dive into the wholesaling business. They sound like smart investors already, don’t they?
What does it really mean to be a real estate wholesaler? A real estate wholesaler is someone who enters into a purchase contract with a property owner and then assigns the purchase contract to another buyer for a higher price or an assignment fee. The wholesaler has an equitable interest in the property and it is that equitable interest they are marketing and selling. The wholesaler is selling the purchase contract, NOT THE PROPERTY.
**Some wholesalers seek to “double close” the transaction, which is a topic for another day***
Why are you making a big deal out of marketing the contract and not the property? Isn’t the property what the Assignee really buying? No, the Assignee (person buying the wholesaler’s purchase contract) is not buying the property from the wholesaler because the wholesaler does not own the property. The wholesaler has only entered into a purchase contract with the owner and can only offer to sell and sell what he owns – his right to purchase the property subject to the terms and conditions of the contract. It’s as simple as one can only sell what one owns. While this might sound like an attorney just being picky with words, what we are trying to avoid is the real estate wholesaler violating the law by performing acts that constitute real estate brokerage without a license.
The Texas Real Estate Licensing Act defines Broker as a person who, in exchange for some form of valuable consideration, performs certain acts with regards to real estate. Two of those acts are selling and offering to sell real estate. So, an investor that offers to sell real estate that they do not own is performing one of the listed acts and must be licensed.
In 2017, the law was amended to clarify that an unlicensed person may acquire an option or an interest in a contract to purchase real property and then sell, offer to sell, or assign the real estate option or contract. See Section 1101.0045 of the Act. These are the acts a wholesaler performs, or can perform, so it is important to know the difference.
Must I disclose to my buyer that I am a wholesaler? YES. The Act goes on to state that a person that does not disclose the nature of their interest to a potential buyer is engaging in real estate brokerage services. Additionally, the Texas Property Code Section 5.086 requires the wholesaler to make the disclosure prior to entering into a contract with any potential buyer. Specifically, that disclosure must state that:
If you are a wholesaler, you must make it clear in all advertisements and assignment contracts that what is being offered is your interest in the contract and that you do not own the property.
Can I use this contract I got from ____________? You fill in the blank and we’ve heard it. The answer is usually “maybe.” Real estate documents are readily available online, given out in real estate classes, provided by coaches at investor group meetings, passed along from investor to investor, and numerous other places. Please be weary of these documents.
Wholesalers must ensure that they enter into a favorable purchase contract with the seller because the purchase contract is what the wholesaler is assigning to the end buyer. The wholesaler wants to ensure the ability to assign the contract is preserved. Without this, the wholesaler might not be able to accomplish their ultimate goal of assigning the contract and will either be stuck with breaching the contract or buying the property themselves. The wholesaler must also have a valid assignment contract with the end buyer that contains all the necessary terms and disclosures. There are numerous terms that must be contained in the purchase and assignment contracts but that is outside the scope of this blog.
We recommend all investors have their contracts, no matter the source or author, drafted or reviewed by an attorney prior to finding their first deal. The real estate investment business is fast paced so you want to be ready to act immediately upon finding that great deal!!
We understand the nature of the real estate investment business and pride ourselves in providing RELIABLE. RESPONSIVE. RESULTS! To set-up a consultation to discuss your questions regarding real estate wholesaling, please call Banahan & Martinez, PLLC at (281) 394-3122 or email firstname.lastname@example.org.
The information provided on bmlawhouston.com is provided for informational purposes only and shall not constitute legal advice or create an attorney-client relationship. Users of this website should contact a licensed attorney in their jurisdiction for a full and complete review of their legal issues.
Title Insurance: Your Questions Answered.
What is title insurance? Do I have to buy title insurance? How do I get title insurance? If I buy a title insurance policy does that mean I am guaranteed to have perfect title to the property? How much does title insurance cost? Can I shop around for a better premium amount?
These are often the first questions clients ask when they are buying a property, and we recommend, or the lender requires, that they purchase a title insurance policy.
What is title insurance? It is a contract of indemnity that protects people from losses arising from a real estate transaction. Unlike homeowner’s insurance, title insurance protects from past errors related to ownership history and not future risks, such as fire, flood, or other physical damage to the property.
Do I have to buy title insurance? The better question is “Should I buy title insurance?” The answer to that question is almost always yes. Your home, vacation home, ranch, or investment property is most likely one of your most valuable assets, and title insurance is one of the best ways to protect your ownership of that asset.
How do I get a title insurance policy? Take a signed property/home contract to a title company, and the company will submit your order to a title agent. A title plant then carefully reviews the records affecting the property. Next, the underwriter makes insuring decisions and issues a Commitment for Title Insurance. The Commitment is the promise to issue the insurance policy. You must carefully review the Commitment because it contains any exceptions or exclusions to the policy. Title insurance is regulated in Texas, and each Commitment contains four parts:
Once the transaction is closed and funded, you receive a policy of title insurance with only the exceptions to coverage disclosed on Schedule B of the Commitment and any unresolved matters listed on Schedule C. So, read the Commitment carefully!
What is covered? An owner’s policy protects the buyer against losses due to ownership problems that originated prior to the date the policy was issued. In other words, losses that originated before you became the owner of the property. Below are a few examples of what a standard policy may cover:
What is not covered? Title insurance is not a guaranty of title. The title insurance company is not promising perfection of title but is instead reviewing the title and letting you know whether they are willing to insure title and under what terms they are willing to insure title. Defects created after the policy is issued or defects you create or knew about are not covered. Additionally, any claims related to the exclusions and exceptions in the policy are not covered. Again, it is important to carefully review the Commitment.
How much does title insurance cost, and can I shop around for a better rate? Title insurance in Texas is fully regulated and enforced by the Texas Department of Insurance (TDI). Coverage may only be offered on the forms promulgated by the Texas Department of Insurance, and only the premium rates adopted by the TDI may be charged. This means that you pay the same premium at each title company. What you can shop for is good customer service, a reputable title company, and knowledgeable escrow officers!!!
For more information you may visit the Texas Department of Insurance at http://www.tdi.texas.gov/index.html.
Banahan & Martinez, PLLC serves as a fee attorney office for American Title Company of Houston and can be reached at (281) 394-3122 or by email at email@example.com.
Yes, You Need a Will.
Each person’s situation is different, but everyone can benefit from having a Will. If you do not want to do it for yourself, do it for your loved ones who will be handling your estate in the event of your death.
If you still are not convinced, here are five good reasons to have a will.
To discuss your estate planning questions, please call Banahan & Martinez, PLLC at (281) 394-3122 or email firstname.lastname@example.org to set up a consultation.