Accepting Offers – Hey there, are you considering accepting an offer from an entity that doesn’t even exist under a state contract. Is your buyer putting in an offer under an entity that doesn’t exist yet?
Those are some things that we’re going to discuss here. That is luxury real estate broker Shana Acquisto. She’s kind of a local real estate celebrity, right? It’s a real thing. And we’re going to be discussing that here in just a second. So we’re going to talk about like, how do you check it? Right. How do you set up an entity real quick? What if it’s a trust? What if it’s an LLC? What if it’s just like a sole proprietorship? There’s all these different entities. We’re discuss all of that.
Yeah. The important thing to know about this is that they do exist. So how do you check? So if you have a buyer and they said, you know, I’m going to put this in my LLC, OK, well, the first question should be, is that LLC formed? Well, no, but I’m going to because what you have to understand is if your buyer puts this into an LLC and no one checks that and then they call you back in a year and they forgot to do that and they want to sell, they have a vested vesting issue. So say a problem.
Let’s define what this entity is. OK, OK, so my name’s Mike and that’s Shana, we’re humans. We’re individual people. When you create a business or an entity, you’re essentially in the business world creating a new person. Right. But it’s an entity. It’s weird’s. You kind of have to think about it that way and you give it a name. Right. So that’s what an entity is, is it creates this thing.
Now, there’s reasons you would do it, sometimes it’s for taxation, sometimes it’s for liability, sometimes it’s for ownership, because you have unique ownership that it’s not husband and wife, but it’s husband, wife and partner, like a business partner. Maybe it’s a joint venture. Maybe there’s something going on behind the scenes here, right? Maybe it’s being bought as a business.
There’s there’s a lot of reasons on why this could happen. Sure. OK, so now we know what this thing is. Then there’s various types. So Trust LLC, Sole Proprietorship S Corp, C Corp, a ton of them. And they’re each going to kind of contain their own item. Right.
And it’s probably you don’t necessarily have to dive in to their purse to find out all the specifics of that. But you do need to make sure that they are the company is formed, the entity is formed. Now, if you have, you know, a seller, you can you can vet the buyer by contacting the I think the secretary of state. You can contact and check if that business is formed. You can also reach out to the title company.
Don’t just assume that the title companies are are vetting and, you know, confirming that this business is formed because they’re not all doing that. And that was the reason that we brought this up. I know that Republik does a really good job and I believe that independence title does as well. But there are some that are not verifying this information. So just make sure that you take that step, ask the question, and then just do a quick, quick check. Even ask your client, hey, could you send me the the forms so I know the articles to know that this entity exists?
Yeah, I’m just telling you, you can do a certificate of good standing with the state of Texas or wherever they happen to be. And then what that’ll do is it’ll reprint out from the state website. It’ll tell you that this entity does exist. It’s in good standing and gives you a time stamp and all those items and that individual can go on there. It would kind of be like getting a driver’s license from somebody else because it has enough information on out.
OK, so that will help you get through and know that it actually exists and it’s valid and is in good standing. It does not mean that it has any money whatsoever. Right. Or any ability to purchase just because it’s in good standing simply means that it’s filed, it’s taxes and it exists. And there’s no like outstanding lawsuits or reasons that it can’t do business in the state. Yeah. Doesn’t have to have any money.
Could have zero money. Right. So you have to understand what assets that has because when you put it into an entity, right. And you accept an offer from the entity, then that entity is the party that’s responsible. Not like not Shana, even though that person is stating they’re the signer and it’s their entity. Right. Right. So that’s where the problem could be. Let’s talk about a trust for a moment. We’re seeing more and more buyers purchase in a trust. So it’s the same thing. You need to verify that that trust exists and that they can borrow against it or they have the right to pull money from that trust.
Yeah. And then so they would have who is the trustee. And there’s different types of trucks, trusts. Right. That exist. So that’s revokable and irrevocable. And there’s a lot of them that that go on. Yeah. So we need to know what’s going on and they would need to be some more research in there. If you’re not ultimately super aware, then it’s a question that you need to be asking and looking up and kind of get some research on. You’re not necessarily an attorney. Right.
But you can do some initial Google looking. You can see what’s going on. You can ask for more documentation on it. It’s that detective hat we put on. We’re all good at that, some better than others. But we can we can do a little search and research and make sure that we, you know, that the client and know what we’re talking about and know what we’re looking for. So very Good. Well, I think that was good covering that in brevity.