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I was scheduled for closing on Friday, March 16. I was

I was scheduled for...

I was scheduled for closing on Friday, March 16. I was informed on Monday that sellers had transferred the property ownership from one LLC to another LLC on January 28, so they can't complete sale via FHA loan until April 27. The sellers' agent says it shouldn't be a problem because both LLCs are owned by the same person (who has done a legal name change). My lender's underwriter says the same cannot go forward. Meanwhile, I'm 3hrs away in Wichita, KS with my entire apartment packed to move. Also, had I known the situation, I would not have paid $1000 earnest money plus more than $1100 in appraisal and inspection fees.

Lawyer's Assistant: When we are ready I'll take you to the appropriate web page.

What recourse do I have, and against whom?

Lawyer's Assistant: What steps have you taken so far? Have you prepared or filed any paperwork?

Not yet. "My" realtor is trying to rush me into cancelling contract, even though sellers say they will protest return of my earnest money and will not reimburse other fees, even though it appears that they advertised the property as available for FHA sale, though it isn't.

Lawyer's Assistant: Have you talked to a KS lawyer about this?

No. The property is located in Missouri.

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

On a personal note, I was to move on March 20, in time for my mom's 79th birthday. At the last moment, I've had to disappoint her with news that it won't happen. I'm from KC, but haven't lived in the area for 30+ years. My mom is extremely disappointed

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Answered in 3 minutes by:
3/18/2018
Attyadvisor
Attyadvisor, Attorney
Category: Real Estate Law
Satisfied Customers: 8,891
Experience: 30 years of experience in General Practice, Real Estate Law and Estate Law.
Verified

Welcome and thank you for your question. I will be the professional that will be assisting you. What date did you enter into the contract? What I am getting at is if the sellers signed the contract or the LLC?

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Customer reply replied 4 months ago
I signed the contract mid-February with 30 days to closing. The Blackstone,LLC signed the contract

If that was the case why didn't your lender realize this was an LLC?

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Customer reply replied 4 months ago
Are you a real estate attorney licensed in Missouri?

I have 30 years of real estate experience. There is no reason that the deed cannot be taken out of the LLC and placed into the name of the sellers.

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Customer reply replied 4 months ago
The issue, I'm told, is that since the transaction between LLCs was less than 30 days ago, sale via FHA loan rules cannot take place until April 27. Is that true or not?
Customer reply replied 4 months ago
I meant less than 90 days ago

It is true that they should never have sold as an LLC. In that regard you were mislead and they should have taken the property out of an LLC to close the transaction. If there was a listing agent, even if the seller didn't know the law the agent should have advised the seller.

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The time period that you are being told does not hold true as the seller can change the title from the LLC into their names. What it sounds to me that your lender is saying is that they will not start the underwriting process until the title is out of the LLC.

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Either was if you cannot get approved you would have an action against the seller and you would be entitled to the return of your earnest money as well as any costs that you have incurred. Do you have a copy of your contract?

"What are the FHA requirements for an LLC to be an FHA-approved Mortgagee?

A Limited Liability Company (LLC) is organized under applicable state law which creates a legal Entity with a combination of the legal and tax attributes of corporations and partnerships.

The LLC must:

  • consist of two or more members, unless its single member is a corporation or LLC consisting of two or more persons or members;
  • have a minimum term of existence of 10 years from the date of application; and
  • provide for succession and continuance in the event of the withdrawal or death of a member.


A Series LLC is a specific type of LLC that is composed of separate membership interests, which are divided into individual series.

The Series LLC must comply with all requirements for approval of an LLC. The Series LLC must be organized in accordance with state law that does not conflict with FHA requirements.

The Series LLC’s operating agreement must stipulate that:

  • no series may participate in FHA programs unless the approved Mortgagee owns 100 percent of the membership interests in that series; and
  • the approved Mortgagee remains fully liable for the debts, liabilities, obligations and expenses of any and all series that participate in FHA programs.


For additional information see Handbook 4000.1 I.A.3.c.i.(A)(2)-(3) available at" https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

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Customer reply replied 4 months ago
I have a copy of the contract. The lender is telling me that the Jan 28 transfer is the issue preventing closing. So, are both sides gaslighting me?

I have no idea why the seller would sell as an LLC or change the LLC.

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The lender is technically correct. I have no idea why the underwriter would not accept a deed out of the LLC into the sellers name. If that is the case and you cannot get the financing the seller should NEVER have advertised this as FHA friendly and they will owe you more than your earnest money.

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Can you attach your contract so I can see the damages that you will be entitled to. Do not agree to cancel the contract and let the seller off the hook. The transfer from one LLC to the other is a huge issue for the seller.

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Customer reply replied 4 months ago
I will pursue sellers for return of my funds spent toward this deal.
Customer reply replied 4 months ago
Thank you for your assistance. I'll contact a lawyer to move forward.

I would not sign a cancellation and release. The seller should not have changed the LLC within the time frame for selling. Do you know how long the LLC that signed the contract was in existence?

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I can also provide you with a link for Attorneys in the area of the real estate that provide FREE consultations.

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Customer reply replied 4 months ago
I would greatly appreciate an attorney list for Kansas City, MO area.

The reason I asked you if the lender knew the seller was an LLC, is that if this was an issue for the lender (the lender received a copy of the contract) that should have been disclosed to you. After asking additional questions it appears the issue is the LLC change. This is a seller issue. Please give me a few moments to provide a link for you.

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http://lawyers.findlaw.com/lawyer/firm/real-estate-law/kansas-city/missouri

Your realtor needs to settle down and not rush the cancellation to make sure you are fully protected.

Further, the listing agent (sellers realtor) should not have assured you of anything as this was in the hands of the underwriter.

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Customer reply replied 4 months ago
Thank you, again.

You are most welcome.

Please do not hesitate to ask me any additional questions that you may have with regard to this matter. It would be my pleasure to continue to assist you.

If you would be kind enough to rate my service positively so I will receive credit for my work from the site I would appreciate it. A positive rating will not impact your ability to obtain a refund.

You may not be familiar with how the site works. The Attorneys to not receive credit from the site for their time or with customers unless the customer provides a positive rating. We answer your questions in good faith, hoping for a good faith response regardless of whether the law is in your favor or not. If you were unhappy with my service please let me know that you would prefer to work with another Attorney and I will opt out.

Can you see the rating scale on your end, 5 stars?

Thank you for your consideration.

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Are you still online with me?

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Customer reply replied 4 months ago
I cannot see rating stars

There should be a rating scale at the top of the page on your end, 5 stars. No worries. Thank you for using JA!

Attyadvisor
Attyadvisor, Attorney
Category: Real Estate Law
Satisfied Customers: 8,891
Experience: 30 years of experience in General Practice, Real Estate Law and Estate Law.
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