Dallas-Fort Worth Real Estate Investor Club

Memorandum of Contract Document

  • 13 Nov 2018 4:36 PM
    Message # 6903355

    I have questions for those that file a "Memorandum of Contract" to cloud title once you have a property under contract to prevent the seller from entering a contract with other buyers;

    1. When filing the Memorandum do you physically go to the county and personally file the document or is there a way to file the the document electronically?
    2. Does your title office file the Memorandum for you?

    On another note... I get mixed answers when I ask various Title offices if there must be an "exchange of funds" such as an option fee between Seller & Buyer. Some title offices say yes but this changes depending on who you speak to at the title offices these days... Myself I always exchange funds via an option fee check, even if there is no option period. I exchange funds as noted within page 8 of the TREC 2014 but enter a period of zero days as option period only if the seller insists on no option period and I'm confident that the house does not need further inspection. I note the physical exchange of funds on page 10 of the contract and have the seller acknowledge via a signature.

    I would like to hear what members of this group have to say regarding this topic. 



    Last modified: 14 Nov 2018 5:42 AM | Steve Labus
  • 14 Nov 2018 5:55 AM
    Reply # 6904046 on 6903355

    Steve, I do the same thing as you regarding exchanging funds and documentation, and teach the same.  I do not use the Memorandum but I know many do.

    Tim

  • 14 Nov 2018 11:25 AM
    Reply # 6904466 on 6903355

    Tim I've gotten burned twice within the last two months. Each time each seller signed a contract with me and did not tell me that they already signed a contract with another investor. Each time this ended up costing me time and credibility with contractors, lenders and now end buyers. One of the two was a rehab the other a wholesale. Eight years in the business and this has never happened to me and now it happened twice within a two month period. I will certainly file a Memorandum of Contract after each receipted contract going forward. 

  • 14 Nov 2018 11:09 PM
    Reply # 6905369 on 6903355
    Robin Carriger (Administrator)

    I'm not an attorney, and the following is not legal advice.  It's just my two cents on this topic.

    Recording an Affidavit of Memorandum of Contract will not help you if one has already been recorded before yours.  To protect against what you've experienced, Steve, I'd simply do the following.

    1) Get your contract signed and executed between you and the seller.

    2) Confirm with the seller that they haven't signed any other contracts to sell the house and that they won't sign any other contract to sell the house, because the contract they just signed with you is legally binding and must be the only one.

    Because the appraisal districts often take a while to get documents online that have been officially recorded, even an online search for other Affidavits of Memorandum of Contract for the house you're buying may not show recently filed docs even though they've been filed before you got there.

    One more thing...  A common problem is that sellers think they have the right to rescind a contract they've signed within the last three days.  It's my understanding that when that law does apply that it only protects buyers, and that, when it comes to real estate transactions, it doesn't actually apply to either party.

    Last modified: 14 Nov 2018 11:12 PM | Robin Carriger (Administrator)
  • 28 Feb 2019 3:40 PM
    Reply # 7192293 on 6903355

    Hi Steve...old post but have a couple things to share on this topic.

    I always file Memo of Contract now after having some other wholesalers (who will remain nameless) start marketing my deal, which they had no legal interest in, as their own AND despite my written demands that they stop doing it.  I felt that in the future, having a Memo recorded would document my legal standing with regards to a deal, if it came to that.

    Secondly, I had a deal fall out for a title problem that I was not in a position to help the seller resolve because of the costs associated with doing it.  I had a Memo of Contract on that deal and forgot to file a release when the deal was terminated.  A couple months later someone that had the ability to work through the title issues with the Seller saw the Memo and we worked out an arrangement on it.  So having it recorded turned a deal that had cost me $ into one that at least got me back to neutral!

    I have had either the attorney that drafted the Memo do the electronic filing for me or the title company will do it if you have a relationship with them.

    Gloria

  • 05 Mar 2019 2:44 PM
    Reply # 7201050 on 6903355
    Richard Kellett (Administrator)

    If you have signed a contract and you feel the seller is a little shaky, then fill out an"Affidavit and Memorandum of Purchase & Sale Agreement with the county clerk. It is only one page, so it will cost you $16.00. It will cloud the title and allow you to deal with the seller or the other buyer.

    I have used this document several times and received money from the other buyer to void my P&S Agreement.

    Call me at 817-915-0122

Powered by Wild Apricot Membership Software