From: William Bronchick
Re: Foreclosure Disclosures
Dear Foreclosure Investor,
In my 22 years of practicing law and doing real estate transactions as an investor, I’ve seen a lot of foreclosure deals. Some deals are very profitable. Some deals go bad, and these deals generally fall into two categories. In the first category, deals go bad because investors acted unethical or foolishly. In the second category, they go bad because the seller didn’t understand the transaction or got “seller’s remorse” when he saw the investor made a profit. If you are in the first category, I can’t help you. But, if you are in the second category, you are ripe for the picking by a good lawyer who will make your life a living hell unless you learn how to properly document a foreclosure transaction.
With all the media attention on bad foreclosure investors, every deal you do is under tight scrutiny. While you may have the best intentions, it’s easy for a lawyer to convince a jury that you “swindled” the seller and void a legitimate, fair and profitable deal. You could also end up with a big judgment against you simply for having bad paperwork and sloppy documentation.
In some cases, the homeowner truly didn’t understand the deal. I sympathize with these people and have contempt for unethical investors who make a bad name for our business. However, many deals that blow up are simply the result of poor explanations and poor disclosures. In other words, you can prevent a great many problems by simply explaining things better so the seller has realistic expectations about the transaction and fully understands what he is agreeing to do. In some cases, it’s the seller who is acting unethically by trying to “weasel” out of a fair deal that he agreed to. A tightly worded agreement will take away any ammunition his lawyer may have.
That’s why I dug through my legal files and came up with the ultimate set of “foreclosure disclosures.” In an affidavit form, I came up with 20 separate disclosures to help cover your backside when dealing with a seller in foreclosure.
Here’s an example of some of the things I cover: