Re Safe Law Enactment

Who told you this, or where did you find out about it?

I learned this information at the NHREIA. This information was delievered by a Real Estate Attorney that works with some of the largest investors in NH. This new law has NH Investors rethinking the way they do business.

I know that each state had the right to build upon the original safe act law. It appears that NH has gone way over. I did meet an Investor that had been singled out by a NH Commission due to her advertisement concerning "stop foreclosure". (can't say that in NH anymore)

Not sure if people on this site are aware of the Safe Act... Not sure if we should care about it... However, there are fines in NH for people who don't go by the guidelines of the Law.

The claim is that if you sell a property with any kind of seller financing, you will be breaking the law if you aren’t licensed to do so.

This is simply NOT true.

Seller financing is alive and well today for those who understand how to structure deals even if you DON’T have a real estate or mortgage license.

It’s scary enough starting a new business without someone telling you what you are doing is illegal. I’m going to try and ease your fears about this issue.

Here is my take on the new Federal S.A.F.E. Act.

I do not believe it is going to affect the folks who are using Daens techniques. Here is why…

SAFE Act Info Regarding Selling On Terms
This is taken from the Legal Hotline newsletter put out by the Indiana Association of Realtors for Brokers.

It is directed at agents and brokers, but addresses the issue of dealing in Land Contracts and Lease Options specifically.

BEGIN QUOTE
“Furthermore, land contracts will not fall under the SAFE ACT requirements since legal title in a land contract does not pass until the end of the payments. With seller financing, the difference is legal title passes from seller to buyer at closing. If your client wants to sell property under a land contract, there should be no legal issue under this Act.

If title does not pass from seller to buyer, it is DFI’s position that it is not subject to licensure. Similarly, a lease with an option to purchase or other agreement where title does not pass is not subject to licensure.

IN SUMMARY, a seller will be exempt from this Act if:

1.) Owner is selling own residence vs. a rental property;

2.) If the seller never lived in the home (investor), seller is still exempt if the property is being sold on a land contract or lease with option;

3.) If title does not pass, owner is exempt.
END QUOTE

DFI is the Department of Financial Institutions and can be found online at:
http://www.in.gov/dfi

Although this is Indiana specific, you could check with your own local board of Realtors to find out how they interpret it.

But keep in mind, all of these regulations are based on the Federal SAFE Act which required compliance in all States. So other than a few amendments here and there, the State by State legislation is not going to be much different anywhere you go.

What this means to me?

The only difference that we have to keep in mind when using the things we learn is that you should no longer sell a property “subject to” if you are not the owner residence of that property. That is not a problem if you use the techniques. We don’t sell “subject to” we BUY “subject to” and then sell with a Land Contract or Lease Option. Once you understand zero down structures, all this is very clear.

Ultimately, if you do what we learn, you won’t have to worry about this issue or this legislation.

Hope this answers the question. Keep in mind this very….

IMPORTANT NOTE: I am not an attorney. Don’t count on my advice as legal advice. One of the things I find is when folks are frightened about a particular issue, it makes them freeze up and hesitate to take action. If you are not comfortable with this issue, be sure to speak with a local attorney.

The bottom line? If being afraid means you don’t take action, being afraid means failure.

If you have questions or comments, leave them below and I’ll make an effort to answer them.

As always, you have my very best wishes,

LUIZ

good and timely post. However, to those investors who are afraid they will be breaking the law; seek the answer in your state (from a true authority) and then make a decision as to being a viable investor. You cannot be an investor if you are unsure of your boundaries; it will seize you into inaction and you will be paralyzed from making any positive momentum forever.

Perhaps you could contact the attorney who gave the presentation and ask him to cite the specific provisions of the NH Safe Act which address the issues that you have a question about.

The seller's primary residence is exempt from the Safe Act.
"First, the New Hampshire SAFE Act does not apply to those involved in sales of commercial real estate. Additionally, other specific exemptions include providing financing for the sale of one's personal residence, as well as the sale of residential property between immediate family members"
http://www.seacoastonline.com/articles/20100524-BIZ-5240307

As for the lease/option being related to a mortgage, I myself am interested in what part of the NH Safe Act refers to this as I am interested in the logic they use to arrive at this. All things that you have been taught are still applicable. Worst case scenario, find a licensed individual and run your deals thru them for a flat fee. Bottom line is not that you can't do them anymore, they just have to go thru a licensed individual. Another avenue is to invest in Maine, Vermont, or Massachusetts.

After looking at the NH Safe Act, I couldn't find anything relating to lease/options. But I did however come across...

HB610 (2009) – 2009-01-26 revision
XIV. “Mortgage loan” or “residential mortgage loan” means any loan, including a first or second mortgage loan, primarily for personal, family, or household use which is secured in whole or in part by a mortgage, deed of trust, or other equivalent consensual security interest upon a dwelling or any interest in real property [used as a dwelling with accommodations for not more than 4 families] or in residential real estate.
http://www.nhliberty.org/bills/view/2009/HB610/2009-01-26

....So if they are defining a mortgage loan as "primarily for personal, family, or household use", are investors and hard money lenders exempt? Again, specific citations are needed from the attorney who provided the presentation.

DISCLAIMER: I am not an attorney. The matter posted above is for discussion purposes only. Competent legal advice should be sought for your specific situation.

know where and how you step. Set business up correctly. Know when to ask for Professional help

quote=trustpoint]good and timely post. However, to those investors who are afraid they will be breaking the law; seek the answer in your state (from a true authority) and then make a decision as to being a viable investor. You cannot be an investor if you are unsure of your boundaries; it will seize you into inaction and you will be paralyzed from making any positive momentum forever. [/quote]

Anyone else done any research or spoken to anyone regarding this? Bsteller, any info from the attorney who did the presentation on this?

I just asked about the PML workshop to ask questions and this was brought up by TRSD.
I asked him what this was, and then saw this thread.
Does this apply in Wisconsin or several states, as I never really heard of it.
If it is true, a lot of investors wouldhave to change the way they do deals.
But doubt it is even in every state.
Sandi

You can do 3 seller financing deals a year. Otherwise you need to hire a licensed mortgage person to write up the contracts to stay in legal boundaries or save money and do a lease option. It's not a big deal.

Oh yeah, the SAFE ACT applies to all 50 states. Each state will interpret the federal law the way the want to. However, for the most part... it's 3 seller financing deals a year.

Any seller provided financing must be fully amortizing, no balloon payments.

No rumors here. Everything I post is citable from reliable sources