Deed Pass-Through Defined (CFFL 0303)
Deed Pass-Through Defined
Jack Butala: Deed Pass-Through Defined. Every Single month we give away a property for free. It’s super simple to qualify. Two simple steps. Leave us your feedback for this podcast on iTunes and number two, get the free ebook at landacademy.com, you don’t even have to read it. Thanks for listening.
Jack: Jack Butala with Jill DeWit.
Jill: Hey.
Jack: Welcome to our show today. In this episode, Jill and I talk about what a deed pass-through is, deed pass-through defined.
Jill: I’m not even sure.
Jack: That’s why … That’s why I threw it in [inaudible 00:00:12] Recurring question and success plan we’re going to talk about in a few minutes. Before that, let’s share something interesting that happened to us lately Jill.
Oh, it’s me. I’m supposed to say it.
Jill: I’m looking at you like, “Wait”.
Jack: Today is Wednesday and I am so happy to report that I … Wednesday is the day that I do, what we call around the office, deal-review. It’s a chance for our members to schedule calls, and talk to me and say, “Hey. Would you do this deal? I got this deal, I’m thinking about doing it. Should I do it?”
Well, there’s one … One of our members, he’s now officially our star-member. He has calling me just about every Wednesday to review deals for maybe 2 months. I think, as a member, I think he’s 2, maybe 3 months into this with us. He’s officially clearing 100,000 dollars a month, cash flow.
Jill: That’s awesome.
Jack: Unbelievable.
Jill: Exactly.
Jack: I’m not going to … he said it’s okay to disclose his name, I’m not going to do that.
Jill: I think it’s good if we don’t.
Jack: We’ll put a whole thing together at some point with the calls, and get him directly involved, because we all want to know his secret.
Jill: You know it’s funny, I know one little thing about this person, is that, we weren’t his first encounter with this. He was like a lot of people that have come to us, that have tried other version of what we do. Trying to be investors and learning about the business, but they ran into … They’re missing a lot of the pieces. This person I know came, to us and clearly got … Now has all the answers, because clearly, now, he’s very successful. It’s not like the guy’s not motivated man, the guy is clearly motivated. Now he’s doing what he wants to do and all that. It’s really good.
Jack: I asked him why he’s so successful and some people aren’t, and he said, “It’s because I have to know … I have to have the answers to everything. I have to know the why.” That’s how he put it.
Jill: I love it.
Jack: W H Y, you know. That really makes a lot of sense.
Jill: That’s what we do, we help you. That’s part of the show.
Jack: Yeah, that’s what this show is.
Jill: Yeah.
Jack: Boy, he listens to the show too. He says, “You know what you said on the show last week, this and that.” It’s amazing.
Jill: Good.
Jack: I’m super proud of him.
Jill: Me too.
Jack: All of our members are killing it in their own way, but this just happens to be … He just figured … Made this work for him really, really well.
I feel like a parent … it’s just weird.
Jill: Parental pride.
Jack: Yeah, I just feel proud.
Jill: It’s the same … It’s interesting, you’re right. It’s the same feeling, and I think it’s the most wonderful thing.
Jack: Jill, let’s take a question posted by one of our members on the Land Academy online environment, community.
Jill: Soon to be the Jack and Jill online community.
Okay, not that we’re going to change it again, but we’re going to land on one, I promise.
All right. Ron asks, “If I’m buying property from Jose ‘blank’ in California, and he’s married, but the vesting deed shows just his name, what are you requiring the spouse to sign? Are you requiring the spouse to sign the purchase agreement, or adding an extra signature line on the new deed? I’m assuming leave the grantor name as Jose ‘blank’, and to match the old deed’s grantee name.”
Jack: How would you answer this Jill? I bet we might be a little bit different on this.
Jill: I would do exactly what the deed says. Create the new deed and have it pass-through and being recorded just as if it’s … If it was an individual, like it was bought by Jose whatever, Jose Torres, as an individual. I would have the new deed say to Jose Torres as an individual, selling to me and my new thing. I would only have Jose signing it.
Jack: That is exactly what I would do.
Jill: Yeah, I wouldn’t add any other names, because now we’re making everybody confused to, like, “Why are we doing that? Let’s see some marriage documents.” Blah, blah, blah, blah, blah. Complicating it, when you maybe not need to.
Jack: The whole notion of marriage and community property, the way that it’s disclosed on a deed, is from 1955. It still sticks in everybody’s head. The vast majority of stuff doesn’t apply any longer. It may apply if they get divorced, but that’s not what we’re doing here.
Jill: Exactly.
Jack: That’s what family law attorneys do and undo, and they get paid to do that. We get paid to convey property effectively and efficiently. Here’s the rule, not just in this case, but in nearly … I can’t think of when it’s not a case. The name that’s on the vesting deed, goes on the new deed. That’s it.
Jill: Exactly. You know what’s interesting about this? Just to give another example. Pretend it was … Because we’ve had this. Where we bought property from a church, and it was the name of the church on there. Nowhere on there, does it say the name of the individuals, because they changed, the board members changed on the church. We had supporting documents, because we asked for it, to make sure that the one person signing on behalf of the church is the president of the board or whatever, whatever the official title was. We made sure that we stated it like that, but yeah, it could change. You just have to … You know. Copy … I guess my point is-
Jack: Copy and paste if you can.
Jill: Copy the exactly … And I’m talking-
Jack: Cope and paste.
Jill: You know what’s so funny too? I’ve had them where we’re spelling it wrong, I’m keeping the misspelling going. I don’t want-
Jack: Yes, exactly Jill. That’s a perfect example.
Jill: I don’t want to create complication down the road for somebody else, because it looks like maybe I made a change. I don’t need to make that change. I know that it’s really … Jose had 2 S’s instead of one, guess what? We’re going to keep doing the 2 S’s, even though it’s spelled wrong. Jose, he could care less.
Jack: Yeah.
Jill: We’re going to sign it, then move on.
Jack: I don’t want this to sound … If you’re new to this show or new to this whole thing, it’s not a complicated. This is a very good question, by the way, Ron. Excellent question, comes up quite often. I don’t want to scare anybody, a listener, that this is complicated. It’s not.
Jill: No. If anything, keep it simple. Don’t try to make it harder on yourself, that’s the whole point, too.
Jack: Just [inaudible 00:06:31].
Jill: I love where you’re going with that, Ron, and just … You’re doing great.
Jack: Jill and I are in the process of putting together … What it’ll end up being is like escrow school. Where you can learn about the whole process of what a vesting deed is, how to deed property in someone else’s name. What’s legal, what’s not legal. What you need to have a license for, and all that stuff.
We’re having some fun doing it.
Jill: Totally.
Jack: If you have a question or you want to be on the show, reach out to either one of us on the Land Academy online community.
Today’s topic is “Deed Pass-Through Defined”. What did Jill say right when we sat down? She said, “What the heck is that? I don’t even know.”
Jill: I’m not even sure what it means.
Jack: How can we do a show about something … I don’t even know what this phrase is. We do … Jill’s going to describe, and probably like 30 seconds or less, what an option is, and what we discuss, and why you should never do a deed pass-through on an option. Does that make sense now?
Jill: Now I know what you’re talking about.
Jack: Please describe just a basic option, Jill.
Jill: Okay. A basic option deal is me … On the buy side or the sell side? On the buy.
Jack: Yeah. Just walk us through a regular old option.
Jill: Okay. I’m doing an option when I don’t have the money, or I’m not on the same page with the seller about the money. I’m doing an option to purchase a property, which is an agreement that we have. It’s usually a simple one page thing, where I’m saying, “Hey Mr. Smith, look. You want 8,000 dollars for it, I’d give you 4, I don’t know about the 8, but here’s what I’ll do. I’ll go see if I can put it on my website, market it all over the place that I market all my properties. Let me see if I can sell it and get your 8 out of it. If I do, can I have 90 days … Here, sign this please and can I have 90 days to try and sell this and get your 8 grand?” He’s obviusly excited, because he knows I’d give him 4 yesterday, but he’s going to hang out for this 8. Okay, so what am I going to do, I’m optioning the property.
Jack: It’s an option to purchase the property.
Jill: Exactly. I’m going to now have him sign this thing, then I’m going to go, make it look really pretty, add some good pictures, write a great description. I’m trying to sell it for 12 or 10 or something, then I want to make it … I want him to get his 8,000 and I want it to be worth my while. I’m not 100 percent sure I’m going to get it, that’s why I’m not flat out buying it and giving him 8,000 dollars today.
Jack: You’re not taking on any risk.
Jill: Exactly.
Jack: That’s why it’s so attractive.
Jill: Exactly. It’s a really simple one page thing. It’s kind of a step-up from a handshake.
Jack: Somebody shows up with 12,000 bucks and they say, “Yeah, I want to do the deal.” Walk us through that. “I want to buy this property for 12 grand.”
Jill: Wonderful. We got it all squared away. We’re a hundred percent there, the money’s there. We’ve got all that out of the way.
“Where do I wire the money? I can’t wait to get this property.”
“Okay, let me call you right back.”
Now I’m going to call Mr. Smith back here and say, “Hey, I just want to make sure … Remember 32 days ago, we had this agreement. Do you still have the property? 8,000 dollars still work for you?”
“Heck yeah. What do I do?”
“Let me get back to you.”
Now I can … You want to go? Want to jump in?
Jack: Yeah, so … You mean what do I do with the paperwork piece?
Jill: Did you want me to … I didn’t know if you had a pause, like you wanted to interject a little something.
Jack: No.
Jill: You want me to keep on going?
Jack: Yeah, keep going.
Jill: Okay cool. So now, what am I doing? I’m going back to my buyer. I’m having them wire credit card, whatever the agreement is, get the money to me. I’m going to, pretty much on the same day, get the 8 grand to Mr. Smith, and he’s over the moon.
Jack: You collect 12, you pay 8, and you keep the difference.
Jill: Keep the 4.
Jack: Keep the 4. Some people, and this is what led to this deed pass-through thing. What you want to do then, is deed the property into your name … Deed from the 8,000 dollar sale into your name, and then immediately, and I mean immediately afterward, deed the property into the new purchaser’s name. The 12,000 dollar person. What you do not want to do, and people do this with cars all the time, this is how this came up. The old car, the car is still … The car on the car title, is still in the person that you bought it from, never titled it into your name. You sit this and say, “Yeah, why should I title this into my name anyway? I’ll just title it right into the new person’s name.” That is a really bad situation to get yourself into in real estate. In cars, I don’t know the legality of it, I don’t think it’s good there either. It can be misconstrued as representing somebody in the sale, and you need a license for that. Again, I don’t want to make this sound super-complicated.
Jill: It’s really not.
Jack: Okay, good.
Jill: No.
Jack: You just want to follow some basic rules, that’s all.
Jill: Yeah, you’re just making sure that it’s all legitimate and you’re really showing that, “I’m in the middle of this transaction. I’m here, I’m not doing anything sneaky or representing anyone, and just doing it right.” When you say immediate, what I think is really … I’ll make it really simple for everybody, so you can breathe.
Jack: Yeah.
Jill: Here’s really what I’m doing. While I’m sitting down, and I’m using DeedPerfect by the way, because I’m not going to sit and type up the deed from scratch. I’m doing two deeds at the same time. From Mr. Smith to me, okay, print it out, good. Now from me to Mr. Jones, because he’s my buyer, done. What am I doing? I’m having the deed completed from the person to me. I’m signing mine to the new guy, then I’m going to send them in just … You don’t have to do it this way, but I like to just send them in to the recorder myself and I know it all gets done right and perfectly. I’m going to send them both in, in the same envelope, to the recorder at the same time. Then I sticky-note on it, saying, “Please record this one first, and this one second.” They can be done in order, that fast.
Jack: Now you have a whole perfect, recorded paper-trail for the whole world to see that you purchased a property and then sold it.
Jill: Exactly.
Jack: You didn’t represent anybody.
Jill: You owned it for 5 minutes and that’s okay. It really is that okay, and everybody’s cool and legit, and all that good stuff.
Jack: That’s it.
Jill: Thank you.
Jack: Join us in another episode, where Jack and Jill discuss how to use information, that’s me.
Jill: And inspiration, that’s me.
Jack: To get just about anything you want.
Jill: We use it everyday, to buy property or half of what it’s worth, and sell it immediately.
Jack: You’re not alone in your real estate ambition.
Boy this is … Was that complicated?
Jill: No.
Jack: Would it scare you if that was the first show you ever listened to?
Jill: I hope not. That’s why I was trying to make it real simple and tell them that … Just pretend you-
Jack: Like we always say, some of the shows are a little bit techincal and some of them are funny and inspirational.
Jill: You know what’s funny? I think that until you get into this, and start doing it, you don’t realize it’s almost like you’re riding a bill of sale. Imagine, I’m doing chicken scratch bill of sale, Jack, to sell you that watch, that you have. You’re going to do another bill of sale, cause you’re selling it to your cousin.
Jack: How much would you pay for this watch?
Jill: I don’t know, but you know what I mean. Your writing your own chicken scratch bill of sale to sell to the next guy. It’s like that, it sounds … We have it built in our head that, “Oh, there’s stacks of paper and there’s an escrow involved, and there’s this involved, that involved.” You know what, we’re … Now in this transaction, that’s a whole other thing. This is 8,000 dollars, we might have done it a different way. Let’s just say it was 800 dollars. Now for 800 dollars, I can do a chicken scratch bill of sale, I’m comfortable with that.
Jack: Right.
Jill: If anything with sideways, and I got to refund or come up with 800 dollars, I can do that.
Jack: Exactly.
Jill: Most people can. It’s not going to … It doesn’t go that way, but it just … To help you breathe, if you think about that, that way, there you go.
Jack: Exactly.
Jill: Thank you.
Jack: Information and inspiration to buy undervalued property.
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