Possible ways how to make a discount defensible (Always consult your attorney) Courts accept that a buyer is paid for risk. The deal has to show that risk on paper. 1. Write a valuation memo at signing. Include an appraisal or broker opinion, plus the liens, back taxes, repair costs, title-curative costs, competing heirs, will-contest risk, probate timeline, and carrying costs. Your discount should be explainable as the cost of those risks. 2. Disclose fully. Tell the heir the decedent, the case number, your estimate of the share’s value, and that you intend to profit. 3. Give the heir real independence. Include a written recommendation to consult their own attorney, a rescission period, and no time pressure. 4. Keep a clean file. Avoid texts or marketing language that is suspect under scrutiny. All of it is discoverable. 5. Comply with §11604.5’s formalities, including the 30-day court filing, and expect the agreement to be scrutinized. 6. Consider structure. Splitting upside with the heir, or paying a meaningful upfront price plus a later kicker, reads very differently than a flat lowball offer.

Situation: Ran into something a bit unusal the other day; some extensive construction work was done on a property by a contractor (a BRAND new poolhouse was built with a full outdoor kitchen, a large inground pool was installed, and a seperate large carport structure were all bulit by this contractor vendor). The contract was never fully paid so the property owner entered into a Mechanics Lien Contract for $200K. It apparently was never fully paid or was partially paid over time and the property owner and contractor vendor agreed to convert the Mechanics Lien Contract into a more customary Promissory Note secured by a 1st lien position DOT -Deed of Trust. Problem / Concerns: That Note has been paid on as agreed now for some time. There also appears to be enough adequate equity protection of the properties value Vs the amount of Debt still outstanding on the DOT and Note. The Contractor now wishes to raise funds thru the Sale / Liquidation of the DOT & Note. Assume that a loan title insurance policy can be obtainted to insure the priority 1st lien position of the DOT, however any thoughts on other minefields to be aware of here?

Yesterday I got a deal under contract from the leads Ellis gave us during Summer School. Goes to show how persistent you need to be on the follow up and working of these deals. Been working this one for 4-5 months now and now it’s under contract. Cool little win from Summer School after the fact. @Ellis San Jose

A Little Fun Tidbit about Estates and the estate of Howard Hughes who passed without a valid Will When Howard Hughes died without a will, over 400 people claimed his $2.5 billion empire. One was a gas station attendant who demanded $156 million for rescuing him in the desert. The chaotic probate battle began shortly after Hughes died aboard an airplane en route to Houston in 1976. Because the reclusive billionaire had kept his affairs notoriously secretive, his lack of verified instructions left the door open for hundreds of claimants. These included women asserting they were secretly married to him and a legion of alleged illegitimate children. The most infamous claim—the one involving the gas station attendant—came via the "Mormon Will," a handwritten document discovered on a desk at the headquarters of the Church of Jesus Christ of Latter-day Saints in Salt Lake City. The will left large chunks of the estate to charities, Hughes’s ex-wives, and church organizations. It also allocated one-sixteenth of the fortune to Melvin Dummar, the attendant who claimed to have picked up a disheveled Hughes in 1967 and given him a ride to Las Vegas. After a sensational seven-month trial in 1978, a Nevada jury ruled the document a forgery. Once the fake wills and spurious claims were dismissed, the courts determined that Hughes had died intestate. Under the law, his estate passed to his closest living relatives: 22 cousins on his mother's and father's sides of the family. The most prominent of these heirs was William Lummis, a Texas attorney who had not seen his famous cousin in 40 years. Lummis took over the administration of the estate, which was entirely tied up in Summa Corporation, the holding company for Hughes’s casinos, hotels, vast tracts of Nevada real estate, and aviation interests. Lummis spent over a decade systematically unwinding and liquidating Summa Corporation to distribute the cash. While the cousins did eventually receive their inheritances, the final payouts were heavily diluted from the original valuation. The estate faced immense inheritance taxes from the federal government, and the sprawling legal battles consumed tens of millions in attorneys' fees. By the time the estate was finally settled, the remaining money had been quietly dispersed among the large pool of distant relatives.

I'm working a ex tax-defaulted vacant lot in Southern California. It has two private loans on it, both recorded in 2018: - 1st: about $617K, split among five private lenders: - Lender A: 38.9%. He's also tied to the borrowing entity and is the trustee. - Lender B: 20.6%, held in a self-directed IRA. He's in his 80s. - Lender C: 16.2% - Lender D: 16.2% - Lender E: 8.1% - 2nd: about $265K seller carry, held 100% by one LLC. What went wrong the first time: I had the lot under contract with the owner, who is also the person who raised the private money. We ended up canceling. He had no servicing agreements on file, so nobody had clear authority to sign payoffs or releases for the lenders. The lenders themselves were hard to pin down, too: several are out of county or out of state, and at least one was reportedly deceased. Without everyone on the 1st signing off, we couldn't get clear title. The workaround I'm considering: the 1st's deed of trust says the lenders agreed in writing to be governed by holders of more than 50% of the beneficial interest on default, foreclosure, and sale, "including designation of the broker, servicing agent, or other person acting on their behalf." That's the Civil Code 2941.9 language. 1. Buy Lender B's 20.6% out of his IRA. He directs his custodian to sell, and I'm not a disqualified person. 2. Buy Lender A's 38.9%, or get him to vote with me. Together that's 59.5%, a majority. 3. Use the majority to appoint a servicer, then approve a short payoff or short sale and take the lot, or foreclose if needed. A foreclosure on the 1st wipes out the 2nd, which gives me leverage there. Questions for the group: - Has anyone used a 2941.9 majority to appoint a servicer and push through a payoff or foreclosure over missing or non-responsive minority lenders? Did title insure it? - If a minority lender is deceased, does the majority clause get around needing their estate to sign, or does title still want probate or a successor? - What are the gotchas with buying a fractional interest out of an IRA (custodian timing, paperwork)? - Lender A is on every side of this. How would you protect yourself? - Is there a risk of merger of title if I hold part of the note and then take title? - Anything I'm missing on the tax-default side?