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Giving Legal or Financial advice to sellers!

Home Forums General EHTrust/EHT Topics and Creative Real Estate Financing Giving Legal or Financial advice to sellers!

This topic contains 10 replies, has 0 voices, and was last updated by Avatar of jerry carey jerry carey 8 years, 11 months ago.

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  • #4982
    Avatar of jerry carey
    jerry carey
    Member

    A question that has always “nagged” at me is … under what authority do we have the LEGAL right to advise a Seller to establish their own Living Trust. To give Legal or Financial adice don’t you have to be a licensed Attorney or C.P.A.? We not only advise them … we help facilitate it’s creation. Doesn’t this cross some legal boundries?

    Any comments or clarifications will be appreciated!

    Jerry Carey

    #26423
    Avatar of areyes
    areyes
    Member

    wouldnt that same question apply to creating an LLC for holding real estate?

    #26424
    Avatar of jerry carey
    jerry carey
    Member

    Yes Alvin … I believe it woud apply. I think advising anyone to create a legal entity … a Trust, a LLC, or a Corporation and then facilitating the creation of those entities might cross some legal boundries! That’s why I posed the quetion!

    This is not just telling a friend or family member what you think (your legal or financial oppinion) … you’re advising them and acting on their behalf to create the legal entity for them!

    Jerry Carey

    #26425

    @Jerry Carey wrote:

    A question that has always “nagged” at me is … under what authority do we have the LEGAL right to advise a Seller to establish their own Living Trust. To give Legal or Financial adice don’t you have to be a licensed Attorney or C.P.A.? We not only advise them … we help facilitate it’s creation. Doesn’t this cross some legal boundries?

    We DO NOT give ANY advice whatsoever. We are making an offer to Aquire an Interest in a Trust, period, end of story. Besides it is not required for you to be an Attorney to do a “Living Trust” or advise someone to do so.

    I have been an Estate Planner for many years and have never had a Securities License or License to practice Law. I “Sell” Revocable Living Trusts all day long to my clients.

    Jus like with NARS, I have an Attorney, Staff or Legal Team that drafts ALL documents and all I do is gather the information. I charge a fee for my service which includes the what I have to pay the Attorney for his services and documents. The Fee also includes a consultation with the Attorney, if desired or needed. It can either be in person or by phone.

    All documents are prepared and reviewed by a “Legal” Staff. All we do is make an offer and gather information. If you find yourself giving “advise”, stop immediately and just make your offer.

    Over half of the Financial and Estate Planners I know have NO Licenses of any kind. They also don’t sell Insurance, Securities or give advice and neither do NARS Members. In most States it doesn’t require you to be an Attorney or CPA etc to draft a Living Trust.

    If what we or NARS does, crossed some legal boundry, don’t you think someone or thing would have tried to put a stop to it years ago?

    With every NARS or EHTrust offer you make using the “approved” and “legally reviewed” NEO, Appendix #1 and Proposal Template, it always suggests and tells the Owner to have these documents reviewed by their own Legal Counsel. I’ve had several occations that required me to make a call to the NARS Legal Counsel and do a three-way call with the Attorney or Trustee.

    The bottom line here is… We make offers. We DO NOT give legal or other financial advice.

    #26426
    Avatar of jerry carey
    jerry carey
    Member

    Thanks Scott!

    I’m not giving out Legal or Financial advice to anyone! I just always wondered if we were making an offer to buy a financial interest in an entity (Trust) that doesn’t exist … if that could be construed as legal or financial advice requiring licensure. Obvivously from your response … it does not! As you said, the creation is legally reviewed by an attorrney who is paid for this service.

    Thanks for your clarification!

    Jerry Carey

    #26427
    Avatar of homesavers
    NULL
    Member

    I looked into this myself sometime ago. I agree with Scott. Look up the Attorney General’s official opinion on the “Practice of Law”
    Here at this web site: http://da.co.la.ca.us/pdf/UPLpublic.pdf

    This is an official document by the Attorney General of Los Angeles County.

    #26428
    Avatar of nyreattorney
    nyreattorney
    Member

    The definition of the Unauthorized Practice of Law differs from jurisdiction to jurisdiction so make sure you check with the state law in the state you wish to work in.

    UPL can be avoided, and the accompanying criminal and civil penalties, by not giving legal advice. Do not interpret the meaning of a legal document for another. You can preface your conversation by stating plainly that you are not a lawyer and you are not giving legal advice. Work with a friendly lawyer or have one available to explain docs to your client.

    After the subprime meltdown, I believe you are going to see State Bars finally pulling real estate transactions back within the fold of the Practice of Law. There is now case law in NY that states that a real estate transaction requires the presence of an attorney. While this may offend some of you, I happen to agree with it, especially in light of what went on the past few years. I sat at many a closing table and was the only professional who had my client’s interests at stake with a sheaf of documents that included a neg am MTA loan that would reach the 110% mark in 2 years requiring full amortization and yet there was a 3 year prepay. That deal my clients, a waiter and a secretary, walked away from.

    #26429
    Avatar of bill_gatten
    bill_gatten
    Participant

    Kathleen,

    Thank for jumping in here.

    Let me reiterate…

    Avoiding the characterization of practicing law without license is paramount in our business. Many falsely think that because we deal only in personalty and not realty that a judge or a court would ignore such an assertion by a plaintiff. However, I don’t think that would happen…even in view of the defense being wholly valid (…valid or not, in this country the cost of defense is too often greater than the cost of unwarranted and unjust punishment). The best approach is always a CYA in front, a CYA in at the end, and a couple CYA’s along the way..

    As Kathleen said…always declare early that you are not an attorney and are not intending to, or licensed to, offer legal advice or interpretation, accounting advice, or real estate agency representation in any manner.

    Bill

    #26430
    Avatar of jonrobinson
    jonrobinson
    Member

    Ah but if you are some type of professional lets say a Real Estate Agent and you don’t suggest that they find out more about a specific subject that you know (or should know) affects their situation such as the capitol gains tax situation on a short sale or possibly advantages to do a 1031 exchange you may be liable for not leading them to that professional that would handle those questions and save them from making an adverse decision.

    #26431
    Avatar of bill_gatten
    bill_gatten
    Participant

    This is basically a moot point.

    Bear in mind that we have never facilitated a single transaction in our company’s nearly 25 year history without advising a buyer, seller and/or investor to seek their own legal, accounting and agency representation.

    When we acquire a property’s ownership benefits, we suggest that the seller NOT take any chances with us and agree to having him set up a trust to protect himself and the property from us. We can pay for the trust set-up if we choose, but it is the seller’s trust in which he is the only beneficiary until the assignment and it is created (settled) by him/her).

    We then agree not to take any ownership in the property until we’ve performed on the contract and arranged for the sale or refinance of the property at termination, and have repaid all of its liens (including the settlor’s own lien for his/her financial equity).

    Bill

    PS, it’s alway best to state concerns in the form of a question that can be “answered,” versus a didactic statement that must be refuted or argued.

    #26432
    Avatar of homesavers
    NULL
    Member

    Thanks Bill You may have solved my Title transfer paradox. I am finding alot of Owner/Settlors are not liking the idea of transferring title to a trust. Since they want to be in control and do not understand the concept. Of course I don’t have the time to teach them. I just come in to solve their problem if they have all this paranoia and fear I have no patience with them.

    #26433
    Avatar of jerry carey
    jerry carey
    Member

    Bill:

    You are a MASTER of “reverse-psychology” selling :!:

    I always learn something from your posts!

    With great respect,

    Jerry Carey

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