Tim Bell Affadavit and memorandum

Okay, now you can see the next item here that we're going to talk about is the affidavit and memorandum of agreement concerning real estate or real estate contract. Basically what this is is this is a public records filing that we're going to use. Let me show you how it works. You can see on our copy here the one I've sent you. I've sent you a blank copy and a filled in copy. You can see on the filled in copy it says state of California County Los Angeles. Before me the undersigned authority on this day personally appeared Tim Richards who first being duly sworn deposes. Duly sworn meaning you raise your right hand, I swear to tell the whole truth, nothing but the truth, blah blah blah, deposes and says that number one, an agreement for the purchase and sale of the real property described in the attached exhibit A was entered into buy in between the affiant, that's the swearing person as the buyer and Sam seller is the seller on whatever date it was that you signed the original contract with the seller. Now the exhibit A will be a copy of the first page of your contract. If you have a multi page contract, it's the first page. If you have a single page contract like the one that we just went over in the previous lesson of the offer to purchase, then what you want to do is take a copy of that first page and you want to blank out or black out the dollar amounts on that copy. Why would you want to do that? Because you don't want the dollar amounts going into the public record. Okay? This is a matter of public record. Okay? So that's what exhibit A is, is a copy of the first page of your contract. Okay? Now number two, the closing of the purchase and sale of said real property per the terms of the agreement is to take place on. And that's on or before and whatever the date was in that contract, okay? So whatever the date was in that contract that you originally had with Sam, that's the reference date that's in there. And then number three, a copy of the agreement for purchase and sale of said real property may be obtained by contacting Tim Richards whose mailing address is 123 Sesame street, blah blah blah and whose number is blah blah blah. Okay? Dated this whatever day. So you that's you put in your address, there's and your phone number and then dated this day. So whatever day you're recording this the county recorder's office, that's the date, okay? And then it says further affiant saith not that's some legalese term that needs to be in there. And then it says signed, sealed and delivered in the presence of the two witnesses. Those are typically the people at the county recorder's office. Two clerks at the county recorder's office. And you, as the affiant, you sign saying that you're filing this. Now, basically, what this is is a sworn statement saying that you have a contract with the seller. And what this does is it creates a cloud on the title. The cloud on the title. The cloud is a matter of uncertainty on the title. Well, once you file this against the property, there's a matter of uncertainty. There is a cloud. Okay, so basically, the title company, if Sam tries to sell this property to someone else, the title company is going to find this affidavit and memorandum, and. And they're not going to close the deal. Okay, so let's have a scenario here. You get together with Sam and you say, sam, I'll pay you 150,000 for your property. Sam says, okay, I'll take it. He signs the contract. You sign the contract. You now have a contract. You. The next day Bob comes along and says, hey, Sam, I'll give you 200,000. And Sam, being a little bit on the shady side, says, well, let's see, Tim agreed to pay me 150, but Bob wants to pay me 200. That's 50,000 more. I'm going to conveniently forget that I forgot that I agreed to sell the property to Tim, and then I'm going to sell the property to Bob. Okay, Again, not honest, but there are some people that will do that. Okay, so Sam takes the agreement with Bob to his title company, not my title company, but to his title company, and he turns that in. Now his title company is going to go through the public record, and the public record is going to have this affidavit and memorandum agreement concerning real estate in it. And they're going to read through it and they're going to say before me, the undersigned authority on this day personally appeared Tim Richards. And they're going to go, wait a minute. The contract that Sam gave us says Bob buyer is the buyer. And who's this Tim Richards guy? Okay, so that's a red flag to the title company saying that, bless his little evil heart, Sam has agreed to sell the property to two people. Now, obviously, Sam can't legally do that, but he may try to get away with it. Okay, now the next thing that's going to happen at that point, once they find this affidavit memorandum agreement concerning real estate. Sam's title company is going to call him. Here's how the conversation might sound. Hello, this is Sam. Hi, Sam. It's Susie from your title company. How you doing? Oh, I'm doing good, says Sam. Yeah, you know what? You might not be doing so good. Sam says Susie, the title person. We were going through the public records and we found an affidavit memorandum agreement concerning real estate, and it was filed by some guy named Tim Richards. The contract that you submitted to us says that your buyer is Bob. Buyer? Oh, what's the deal? Are you going to sell it to Tim? Are you going to sell it to Bob? What's going on here? Then Sam says, yeah, yeah, yeah. I originally agreed to sell my property to Tim, but I decided because Bob wants to offer me $50,000 more money. I want to forget about the fact that I decided or agreed in writing to sell it to Tim. I want to sell it to Bob. The title company says. Oh, oh, oh, contraire. We cannot close this thing without this affidavit being removed from the public records. Okay. Why? Well, it's a matter of title insurance. See, if the title company goes ahead and closes it with this cloud out there without it being removed, then it's possible that after the fact, I could go back and sue Sam because he defaulted on the contract. Remember our discussion of defaults? Well, I could go back and I could sue him and I could get a judgment against him. Well, as soon as I sue him and get a judgment against him, he's going to put in a claim against his title insurance policy, and the title insurance company is going to have to pay that claim. Well, a title insurance company is just like any other insurance company. The perfect business model for an insurance company is take in lots and lots of premiums and never pay any claims. Right. That's the perfect business model for an insurance company. Title insurance company is the same way. They don't want to pay claims. And if they see by virtue of the fact that I filed the affidavit of memorandum agreement concerning real estate, that they may run the risk of having to pay a claim. There isn't a title company in the United States of America that will close this thing, okay. They're going to require that the affidavit memorandum be removed before they close it. Okay. Off the public record before they close it. There's only one person in the whole world that can remove the affidavit that I filed, and that, of course, is me. So the next thing that Happens is Sam calls me on the phone, here's how the conversation might go. Hello, Tim, it's Sam. How are you doing? I'm doing good. Getting ready to go to closing. Getting all excited here with you, Sam. Well, that's what I was calling you about, says Sam. I decided I don't want to sell you my property because Bob came in and offered me a lot more. He offered me 200,000. You only offered me 150. I want the extra 50. So I'm not going to sell you the property anymore, Tim. I'm going to sell it to Bob. Well, I guess that's your choice, Sam. But you did agree to sell it to me. Yeah, yeah, yeah. I don't care about that. Then why are you calling me? Well, I talked to my title company, says Sam, and they said that. That you filed an affidavit and memorandum thingy against my property. Yeah, I did. Well, I need you to take that off of there so that I can close with Bob. Okay, Sam, I'll take it off there. That's fine. Send me a check for $10,000 tomorrow. A cashier's check would be preferable. As soon as I receive it and deposit it in the bank, then I will go down to the county recorder's office and remove the affidavit and memorandum off your property. What do you think? Yeah. In other words, it gives you leverage against Sam without having to sue him. Okay. This is cheap insurance. Where I live, it costs $25 to file one of these with the county recorder's office. Okay. It's a cheap insurance policy against Sam going around you or deciding to sell it to someone else or canceling the deal. So, again, this is a very powerful document that I do recommend that you file with every single property you put under contract with Sam.