Author: ft Editorial Staff

Anti-deficiency: past, present, and future

This article discusses the history, purpose and application of anti-deficiency laws as a borrower’s defense to personal liability for payment of debts secured by real estate.   Are owners losing their shield?   A buyer of real estate who executes a promissory note in favor of either a lender or a carryback seller agrees to pay the dollar amount of the debt as promised.  Securing the debt evidenced by the note with real estate does not abolish the buyer’s personal obligation under his promise to pay. But accepting real estate as security for a debt requires the lender or carryback seller to first foreclose on the real estate as the primary source of recovery to satisfy any unpaid debt. [Calif. Code of Civil Procedure §726]  Frequently, a further limitation on the recovery of unpaid debt exists when the debt is incurred to finance the purchase of the property which secures the debt. Some debts secured by real estate may only be enforced by a resort to the value of the property by foreclosure, legally referred to as purchase-money debt. Examples of purchase-money debt include:  ·     a carryback note on the sale of any type of property; and   ·     the purchase-assist funding of a one-to-four unit residential property occupied by the buyer. [CCP 580b]   Editor’s note: Purchase-money debt does not include purchase-assist loans which fund the purchase of...

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Selecting suitable investors

This article analyzes a syndicator’s need to associate with a few, congenial investors who appreciate the ownership risks of a cyclical investment and desire an investment with longevity.   Profiling for investment longevity Just as investors investigate and are selective when they consider a syndicator with whom they will entrust the management of their capital, a syndicator should collect information regarding the attributes of each potential investor. An analysis of character types during the selection of investors who qualify for membership will enhance the syndicator’s chances for the continuing success of the limited liability company (LLC) investment. Personal information on potential investors is typically compiled on an investor profile form prepared by the syndicator. The completed forms are placed in a binder (or file) used to compile a database on prospective investors. [See first tuesday Form 350] Before soliciting investors for a particular acquisition, it is best to set a limit on the number of members who will be involved. The more investors brought into a group, the more likely the syndicator will have difficulties controlling and coordinating the group, especially when the local economy moves through its cyclical recessionary period and the property underperforms. The amount of contribution from each investor should be nearly the same so no one investor has undue influence or dominates group meetings. A rough rule of thumb suggests no one investor should have...

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Adjustable rate notes

This article considers the use of an adjustable rate note (ARM) by a carryback seller during periods of low interest rates when it is foreseeable interest rates will rise. Editor’s note — This article does not apply to private lender loans or carryback notes secured by one-to-four unit residential properties.  Adjustable rate loans originated by institutional and private lenders or carryback sellers which are secured by one-to-four unit residential properties are heavily regulated by state law and federal agencies. [Calif. Civil Code §1916.7]  The bargain increasing interest rates   A seller of a parcel of real estate, other than one-to-four residential units, agrees to carry back a note secured by the property. The sale will take place at a time during the current business cycle when real estate related interest rates are rising or are likely to rise.  The seller and his listing agent have indications that both short- term and long-term interest rates are going to maintain (or begin) an upward swing over the next few years of national economic or inflationary upturn.  The resale value of a fixed-rate note arranged before the rise in rates will be decreased by any future rise in interest rates, resulting in a future loss of value in the note which the seller wants to avoid. The seller wants to be able to sell or pledge the note in the future without...

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December 2006 events

December is:  ·   Identity Theft Prevention and Awareness Month; ·   Learn a Foreign Language Month; ·   National Tie Month; and ·   Bingo’s Birthday Month.  Special dates in December: 12/01 (1990) Small holes on both sides of the English “Chunnel”, in construction, connect Great Britain and mainland Europe 12/01 World AIDS Day  (1955) Rosa Parks ignites a bus boycott by refusing to give up her seat to a caucasian passenger  12/03 (1967) First human heart transplant  12/05-12/12 Hanukkah  12/05 Bathtub Party Day  12/07 (1941) Japanese forces attack Pearl Harbor  12/08 (1980) John Lennon, a former member of the Beatles, is shot and killed by an obsessed fan in New York City  12/15 (1939) Cinematic classic “Gone with the Wind” premieres in Atlanta, Georgia  12/17 (1903) Brothers Orville and Wilbur Wright are first in successfully achieving human flight  12/21 (1958) Charles de Gaulle is elected the first president of France 12/25 Christmas  12/26-01/01 Kwanzaa  12/27 (1932) Radio City Music Hall opens in New York City  12/28 (1895) Screening of the first commercial movie is held in Paris, France  12/31 New Year’s Eve  For more information on the month of December, go...

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Christmas around the world

Christmas around the world Regardless of your beliefs, Christmas celebrations and traditions in the United States have become a prominent part of American culture. Globally, the Christmas season  is celebrated in a variety of ways. We here at first tuesday present a brief look at the Christmas celebrations of select countries around the world. Australia In December, Australians experience temperatures reaching over 85 degrees so it’s safe to say there will not be a white Christmas in the southern hemisphere. Given the differing climates during the Christmas season of the United States and Australia, one might expect different customs as well. Sure enough, Australia does not disappoint.  On Christmas Eve, thousands of Australians come to Melbourne to sing a variety of traditional Christmas songs at the “Carols by Candlelight” event. At this event participants hold a lit candle, mimicking stars in the night sky. “Carols by Candlelight” is a culmination of similar events occurring in preceding weeks in major cities throughout the country. On Christmas, you will find many locals and tourists alike eating their dinner midday, on the beach. Families use this time spent together to have pool-time, picnics, play cricket or spend time engaging in a number of outdoor activities. The traditional Australian Christmas dinner includes turkey, ham or pork as the main dish while enflamed plum pudding is served as desert. During the Australian gold rush,...

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[M]ost people join CAR in order to obtain the forms, not for the other services. And if there were any viable choices for agents, CAR would immediately suffer as much as a 40% to 50% loss in membership. […] CAR owns the “for profit” company that produces their software, with top officers in CAR sitting in top management spots in ZipLogix. This is the living, breathing definition of a conflict of interest. […] On their website they parade their forms software as “free” when cost of their forms software for non-members as a percentage of their actual membership cost speaks for itself.

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