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Trust This.
By Joseph E. Seagle, Esq. ● Dec 09, 2022
Smart Brevity® count: 4 mins...1069 words
👋 Happy Friday! This week is Clerc-Galludet Week, honoring the memory of the founders of the first permanent U.S. school for the deaf. Galludet was an American student who met a deaf girl and discovered that there were no schools for deaf children. He moved to Paris to attend a school to learn how to teach deaf children. While there, he met Clerc who was a teacher’s aid. They came back to the US and opened the first permanent school for the deaf in Connecticut in 1817. The first student was the little girl Galludet had met a few years before. Thousands of students have learned how to teach others, and have opened other schools for the deaf across the country.
The two scholars’ story exemplifies how adversity can inspire us to help others, and how that help is then amplified by those who are helped, creating a positive feedback loop for everyone. 🤟
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1 big thing: Florida sues MV Realty
Florida’s attorney general sued Delray Beach real estate brokerage MV Realty on November 29 for injunctive and monetary relief.
Why it matters: This is the first step the AG can take to shut down the company that we’ve written about here before, and — in other posts — we’ve pointed out that other states were also investigating the company’s business practices.
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The company uses phone solicitations and other marketing channels to solicit homeowners who need quick cash.
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The company pays the homeowners between $300 and $5,000, which they assure the owner is not a loan that has to be paid back.
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Before owners receive the funds, they must sign a 40-year listing agreement with MVR.
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MVR gets 3% of the sales price even if they had nothing to do with the sale.
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If the property transfers by gift, death, or foreclosure, MVR still gets paid 3% of the value as determined by MVR.
By the numbers: The company
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Is operating in at least 33 states, including Florida;
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Left over 6.8 million automated voicemail solicitations between 2021 and 2022;
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Made over 4.5 million calls to phone numbers on the Do-Not-Call registry;
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Has filed approximately 9,123 liens against properties across Florida, with at least 440 in Hillsborough County (where the case was filed) alone; and
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Received hundreds of consumer complaints through the AG’s office.
The big picture: The AG’s case is based on Florida’s Deceptive and Unfair Trade Practices Act, which is very broad with a fairly low standard of proof for the AG to make. The State only has to prove by a preponderance of the evidence (more than 51%) that MVR’s actions tended to deceive consumers.
Our thought bubble: The company has been doing this since at least 2018, and real estate lawyers and title agents have been ringing bells about it for some time. It’s about time the AG’s office finally took action. Now, let’s get some popcorn and watch other states pile on.
Go deeper: Read the complaint
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2. Business sales on the rise
With the real estate market cooling, we see an uptick in business acquisitions and litigation.
Why it matters: Knowing the different ways to structure a business purchase or sale can help avoid problems after closing.
The big picture: Selling a business can be handled a couple of ways:
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The buyer can buy all of the seller’s business assets, such as accounts, equipment, trademarks, phone numbers, websites, and furniture. This is an “asset purchase.”
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Alternatively, the buyer can purchase the shares or membership interests of the company that is the business, stepping into the owners’ shoes. This is an “equity purchase.”
Equity purchases are often used when the business being purchased is heavily regulated, such as title agencies, real estate brokerages, property management firms, or other professional firms. Asset purchases are used when the business is less regulated or is heavily dependent on physical assets such as manufacturing equipment, inventory, goodwill, intellectual property, or real estate.
By the numbers: Asset purchases typically are easier to value and fetch a higher multiple for a higher purchase price because the businesses are easily integrated into the purchaser’s existing business, and they retain existing customers.
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Equity purchases go for lower prices since customers who are loyal to the seller will be more likely to leave after the closing.
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The seller may stick around for at least one to three years after closing to help retain customers for the new buyer.
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A major sticking point in either type of sale is how long the seller will agree to be on the hook for problems that arose during their ownership.
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Customers and contractors of the sold business may show up years later to claim they’re owed money. In an equity purchase, this is a major problem; but an asset purchaser is more insulated from the seller’s prior bad acts.
The bottom line: This is the tip of the iceberg. In addition to complicated due diligence, business sales and acquisitions are tangles of other financial, tax, and legal issues. Professional advisers in all of these areas are a must to help avoid post-closing surprises.
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A record number of sellers are de-listing their homes that were for sale. MReport
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FHA raised the limit on loans it will insure to over $1 million. DSNews
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The rate of inflation is rising more slowly than expected, so the Fed is signaling that they will slow down on their interest rate increases. The next hike on December 14 is expected to be a half point instead of three-quarters. CNBC
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What buyers and sellers are getting wrong about the current state of the market. The Title Report
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Brokers who understand the temporary 2-1 rate buydown can sell more homes. HousingWire
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Redfin partners up to add zoning and use data for over 70 million homes, making it easier to find out what uses the property can have before you buy. RealTrends
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That Little Beach! The three bears find a drunk Goldilocks after she damaged their sand castle handiwork. - Photo: Joe Seagle
The sand sculpture took second place at the Treasure Island sand sculpture competition. We snapped this picture while on vacation down there last week.
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This sculpture took Abe Waterman, Benoit Dutherage, and Mel Beauregard two days to make with 16 tons of sand.
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Looking closely, you can see Goldilocks’ footprint over the “R” in “JR.” Looks like she had too much beer during her day at the beach.
I bet Goldi was humming this song as she felt “just right” lying on that lounger.
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We hope you found this helpful — any feedback is appreciated and can be shared by hitting reply or using the feedback feature below.
Be on the lookout for our next issue! 👋
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