Removing Deed Restrictions – MUST READ
Removing Deed Restrictions Requires Reading
My wife teases me all the time about my distain for reading instructions. It just seems natural that men should be able to figure out how to make things work without having to read a small folded paper to guide them. Real men should be able to take things apart and put them back together without reading any micro-sized instruction pamphlet. Some of the best instructions are just one page of pictures! That’s how it should be and I hate to admit it, but in the real world it is sometimes better to read.
An example where reading can be cost effective is reading contracts for removing deed restrictions when buying real estate property. This is especially true where large institutions are the sellers. A case in point is when lenders are selling their REOs or approving short sales and at the last minute, sometimes at closing, the institution decides to slip in an agreement for the investor to sign. Usually it’s at the last minute because they want to trip up the investor with a deed restriction or other contract limitation and usually it’s the closing agent who discovers the issue – since, of course, real men don’t read.
A few years ago I looked into removing deed restrictions as a system and developed a Course called “Deed Restrictions Be Gone” which gave eight (8) ways to overcome the onerous and wasteful deed restrictions lenders decided to impose on investors. Sales were pretty good but as I looked closely at who purchased the course, it was mostly law firms and national lenders. It was actually funny to watch these same lenders develop new contract language to overcome my suggested tactics. I guess the guys had their secretaries read the materials because real men don’t read.
I love to write but I hate to read. I blame this on my male genes, because real men don’t read. But I slipped up today and accidentally read an addendum from Freddie Mac. In their Addendum they stipulated that the buyer (investor) agreed to pay the seller (Freddie Mac) “Liquidated Damages” of $10,000. What this means is that if your Earnest Money Deposit (EMD) was $1,000 on a specific property and you defaulted and didn’t close, your liability was not $1,000 but rather $10,000 plus the $1,000!
When investors ask me what risk they have in a deal I explain that most contracts limit the liability to the amount of EMD. As you can see this isn’t always the case – I know that because I accidentally read it. It is very important that every investor READ whatever he or she will be signing BEFORE they sign it. If it says one thing and the opposing party (seller or buyer) tells you it won’t happen and to just sign it, it likely will happen and you’ll have no recourse.
This Must Read Policy is especially true when you are dealing with an experienced investor who is selling you a property or buying one from you. A simple sentence in the Addenda Section added by this opposing investor can make your life miserable, cost a lot of money or often lose the deal for you. For example, a buyer wants to use his closing agent and you notice he wrote in a clause allowing his closing agent to extend the closing up to ninety (90) days to provide clear and marketable title.
Often times your buyer will delay the closing for numerous reasons knowing that you have to close by a certain date. At some point your original seller will no longer give you an extension and you have to default on your contract and lose you EMD. You are thinking you’ll get your buyer’s EMD but that doesn’t happen. What does happen is your buyer contacts your seller and simply says he is the real buyer and is ready to close and takes your deal.
So here is what I suggest- turn your computer monitor away so no one can see what’s on your screen, go into a vacant room where no one will bother you and READ every contract and especially the contract clauses and addendum’s for removing deed restrictions for example. Do not let anyone know what you are doing but make sure you confront your opposing party about contract terms you don’t like. If you have to, read the contracts at home at night under the covers with a flashlight (preferably an LED) with the sheets pulled up because real men don’t read.
To your limitless success,
Real Estate Mentoring Program Founder