How to save money on real estate investing

The letters NOI are also called Notice of Intent or sometimes incorrectly called Contract of Agreement or MOC. It is usually a one-page document that states that the person who files the deed at the county clerk’s office has an equitable interest in the property as a result of a signed purchase and sale agreement.

NOI is commonly used when an investor signs a purchase and sale agreement with a home owner/seller and wants to show that anyone trying to make another offer on the property has a legal interest in the property. This is when someone else, often another investor, comes along and offers the homeowner a higher price.

Investors who bid after contracting are common in stressed markets, but they also occur in normal markets. Investors who regularly give statements to homeowners say, “Get your highest offer from other people and call me back, I’ll give you more money than anyone else – just look at the text”. The ugly part of that statement is the word “in writing” because that usually means the contract must be signed by the homeowner.

While I can’t blame the home owner for wanting more money, what I’ve seen happen far too often is a black hat investor trying to steal the deal, getting to the closing table and renegotiating the price below what he’s asking for. In the beginning, he offered a reliable seller. how do i know I ran out of supplies from him and had to fight to keep my vendors.

So occasionally we have to fight for closure and I have explained how to do this in other posts. The interesting part is that it is a crime to “induce” someone to sign a contract when another contract is in effect. If you show evidence and the seller cooperates, the attorney general’s office will take those cases — which usually happens when the homeowner is threatened with lawsuits or foreclosure.

So when we sign a contract with a seller, we almost always record an NOI in public records, which is effectively a lien on the property. I want to repeat this because the subtlety of this “catch” is so far-fetched. This NOI must now be released as a lien on the property before title can be transferred, unless there is a foreclosure action to extinguish it, or the lienholder (the original investor/buyer) initiates a foreclosure action to take the property. If this sounds extreme, the only solution to the problem is for one party to the contract not to terminate the contract – as a lender does to a homeowner.

An NOI does not need to be signed by the home owner/seller in order for anyone to do an NOI on anyone else’s property. Please remember, there’s usually a sign in the clerk’s office that says “It’s a felony to file an improper lien” so think twice before you do it – don’t make Don angry or it could cost you a lot in attorney fees.

Having said that, courts and sometimes recording writers treat NOI’s as unruly in-laws. They may tolerate the payments, but the seller does not like them much because of historical issues without knowing that they have these debts. Many standard real estate contracts specifically prohibit the filing of a notice of interest in the public registry. This prohibition can be overcome by striking this clause and having both the seller and buyer preempt it, or by adding an overriding clause or addendum to your contract.

Once the NOI is registered in the public registry, the next time the ownership of the property is transferred, the owner’s representative should write a title policy on the property or sign a lien for the NOI to be mentioned as “exception” in the policy. If the NOI is not extinguished by lien release, the title has become “clouded” and must be cleared and transfer to a new purchaser may not work properly.

This is where you step in to release the lie and it usually happens when you least expect it – right before you plan to shut yourself up! Sometimes the homeowner calls when he gets a copy of the registered NOI from the clerk’s office and he doesn’t expect it—either way, the seller is trying to reverse the transaction. Sometimes the seller changes his mind for a valid reason, but more often than not.

When NOI “hits the fan,” you have two choices:

1.) Release the NOI using the lien document and pay to release the lien

2.) Downgrade and fight the seller to pay to close or release the lien.

In summary, your choice is personal and depends on the potential gain in the deal, the real reason the homeowner/seller doesn’t want to sell, how much you’ll be charged for a lien release, and your position that day. In the final analysis, it is your choice whether to force the seller to close or release the foreclosure.

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