Good Tips and Tricks To Know About

Last Updated on Sunday, 27 August 2023 03:19 Written by Chris Griswold Monday, 12 May 2014 03:11

This month I want to hit on a couple of good tips for everyone’s general use.  This is good stuff for everybody to know so read on further below… (and don’t forget to click on my Facebook or YouTube links below to also see my short video on this material).

Good Tips and Tricks To Know About….

Naming entities:  When you form a corporation or an LLC, usually, you have to first inquire with your State’s Secretary of State as to whether your proposed entity’s name is free and available.  If it looks available, then you’ll apply and go through all the paperwork – sometimes just to find out that the name is already taken (or, more often, too close to some other previously approved entity’s name to be permitted).  This takes a lot of time and productivity away from your business.  Instead, think about simply naming the entity with the name of the asset at issue.  For example, if you’re creating an LLC to hold title to real property, then name the LLC the name of the physical address of the property (e.g., 123 Easy Street, LLC).  This way, you’re a lot more likely to come away with an approved entity name the first time – as opposed to a lot of back and forth….

Notarizing documents:  The reason why things have to be notarized (also called acknowledged) is so that they can be recorded with either the Court and/or County Clerks in the official court and/or land records of a certain County.  The reason why things have to be notarized (or acknowledged) in the special nature of what’s called a “jurat” (i.e., where the notary testifies that the documents were signed by someone in the presence of both the notary and other witnesses – and that the person signing them was at least 18 years of age and of sound mind at the time of signing the documents) is so that, in addition to being able to record the documents in the official land and/or court records, they can also be admitted into evidence in a court proceeding (e.g., a probate proceeding).

What My Clients Are Saying

“Chris works hard, is extremely talented and very knowledgeable when it comes to commercial real estate transactions.  But most of all, he has a personal approach to every deal and genuinely cares about the best interests of his clients.” Paul Stuke / Director of Business Development, Stewart Abstract & Title Co. / Oklahoma City, Oklahoma

Explaining Mezzanine Financing

Last Updated on Sunday, 27 August 2023 03:19 Written by Chris Griswold Monday, 17 March 2014 02:04

“Mezzanine Financing” is a term you’ve heard before but you might not yet fully understand what it means.  Let’s shed some light on it.  This is good stuff for everybody to know so read on further below… (and don’t forget to click on my Facebook or YouTube links below to also see my short video on this material).

Explaining Mezzanine Financing

What is it?  It’s a way for borrowers who don’t have enough equity (in the traditional loan-to-value calculus) to get traditional financing for their project.

How does it work?  Instead of there being enough equity (i.e., cash) available in the project to make a lender adequately secure/comfortable (through a traditional promissory note and properly recorded mortgage scenario), a borrower will grant unto the lender (and the lender will take and accept) a security interest, not in the real property itself, but in the shareholder or membership interest of the actual borrowing entity itself (usually an LLC entity).  Lenders often require the LLC to be a “single purpose entity” which exists solely to hold the title to the real estate to be purchased (thus avoiding the liability problems which might otherwise be encountered if the real estate was held jointly along with other real property (all in one, single LLC) and that was either: i) foreclosed upon as regarding such other real property held jointly, ii) the subject of an involuntary or voluntary petition for bankruptcy instituted by other creditors against such other real property held jointly, and/or iii) lawsuits brought by third parties against such other, jointly held real property (like “slip and fall” accident claims”)).

What does this accomplish for lender?  In the event of a default by the borrowing entity, the lender can “foreclose” its right to the membership interest in such LLC.  Keep in mind, lenders aren’t in the real estate business – so they’d rather have their monthly payments from borrower.

What is the real value of mezzanine financing to a borrower?  It gets deals done that otherwise wouldn’t get done.  In essence, it’s the equivalent of “credit card debt” in the real estate world and, at the end of the day, it’s undesirable and to be avoided whenever possible (by both bankers and borrowers).  However, again, it’s sometimes the much needed “grease” that makes the difficult deals work.

What My Clients Are Saying

“Chris is always there when you need him and you don’t have to wait a day to get a returned phone call.  He does what he says he is going to do in a timely manner.  He has the expertise to make problems simpler which makes them easier to solve.  He is honest, consistent and reliable.  He loves what he does and is active in the community.”
Randy Lacey / Broker, Newmark Grubb Levy Strange Beffort / Oklahoma City, Oklahoma

The Importance of Consideration in Contracts

Last Updated on Sunday, 27 August 2023 03:19 Written by Chris Griswold Tuesday, 4 February 2014 02:54

Everyone commonly uses contracts (think insurance contracts, lease contracts, real estate purchase/sale contracts, business buy-sell contracts, etc…).  However, contracts legally require that good and sufficient consideration be exchanged by and between the parties to the contract – lest the contract not be validly formed.  This is good stuff for everybody to know so read on further below… (and don’t forget to click on my Facebook or YouTube links below to also see my short video on this material).

The Importance of Consideration in Contracts

We’ve all seen language like the following at the top of contracts we’ve signed/used:

“In consideration of the facts set forth hereinabove, and for and in exchange of the consideration of ten and no/100 Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by all parties hereto, and the mutual promises set forth herein below, the parties hereto agree as follows….”

What is it?  It’s an important consideration recital; without which, the contract wouldn’t be valid (Note: the law actually implies that, if the obligation is reduced to a writing, consideration was exchanged, however, a party wishing to get out of the contract could always contest the presumption that sufficient consideration was actually exchanged when the contract was entered into – accordingly, putting this recitation in the contract could save you a lot of heartache!).

Why wouldn’t it be valid?  Parties to contracts have to give something of value to the other party (which they’re not already legally obligated to provide), or, in the alternative, refrain from doing something (which they’re not otherwise legally refrained from doing).

Why are the words “…ten and no/100 Dollars ($10.00)…” used above?  They’re used in situations where rights to real property are involved (e.g., the sale or purchase of real property, or the leasing of real property is at issue).  By law, if real property rights are involved, then a minimum of $10.00 must be exchanged by the parties.  Whether it’s a $5 Million Dollar house or a lease of a very small, vacant lot at the lake – a minimum of $10.00 must change hands, otherwise, the contract would fail for the failure of the exchange of adequate consideration.

Are there other minimum amounts that apply in other circumstances?  Yes, the transfer of personal property (such as cars, boats, tractors, furniture, clothing, etc…) requires that at least $1.00 be exchanged by and between the parties.

Are there any exceptions?  Yes, if, for example, a parent was to deed real property to a child or their spouse (or some other family member), then sufficient, legal consideration could instead be for the receipt of such other person’s “…love and affection.”      

What My Clients Are Saying

 “I have worked with Chris Griswold on several real estate related legal issues in recent months, and I’ve been very impressed with his suggestions and efforts.  I can recommend him wholeheartedly.”
Carl Edwards / Partner, Price Edwards & Company / Oklahoma City, Oklahoma