Real Estate Specialization

Steps in a Business Opportunity Sale

A financing statement (a written notice of a creditor's interest in personal property) is filed with the secretary of state and/or the recorder's office, according to the requirements of the Uniform Commercial Code (UCC). If a liquor license is part of the sale, the required forms are filed with the Department of Alcoholic Beverage Control (ABC). Arrangements for the assignment or transfer of the lease are made with the landlord.

Steps in a Business Opportunity Sale

The business is listed. A special business opportunity deposit receipt is completed when a buyer is found. The offer is presented to the seller by the broker for approval. Escrow is opened if offer is acceptable. Creditors are notified of the sale and a notice of intended bulk sale is published, according to the requirements of the Bulk Sales Act.

The HUD Code also sets performance standards for...

... the heating, plumbing, air conditioning, thermal, and electrical systems of the home.

Transforming a Mobilehome to Real Property

1. A building permit must be acquired. 2. The mobilehome must be set on a permanent foundation. 3. A recorded document must be filed stating that the mobilehome has been placed on a foundation. This typically is done by the local building department. 4. A certificate of occupancy must be obtained.

According to the United States Census Bureau, what percentage of mobilehome production make up out of the total housing stock?

7%

resale certificate

A business owner who purchases tangible personal property for resale should obtain a resale certificate, so that any property purchased for resale is not subject to sales or use tax.

certain legal demands in business opportunities

A licensee must be aware of certain legal demands, however, that might not be required in the sale of other types of non-business properties.

business opportunity sales

A licensee, in the course of the usual business opportunity sale, may become involved in the sale of shoe stores, bars, hotels, and bookstores.

the bulk transfer laws

A real estate broker, as well as both buyer and seller, should be aware of the application of the bulk transfer laws on the sale of a business.

Are mobilehomes real property or personal property?

Because mobilehomes are manufactured in a factory, they are personal property, and remain personal property unless they have been converted into real property.

What happens when recording the finance statement?

By recording the financing statement, public notice of the security interest is given, and all parties are made aware of any interests in the property, much as a recorded trust deed gives public notice of a debt against a non-business property.

Improvements included in Farms and Ranches

Farms and ranches include improvements, such as structures, buildings, fixtures, fences, and water rights attached to the land.

hedge against inflation

Historically real property has shown a consistent growth in value and remains the best hedge against inflation. By owning assets that rise in value with inflation, e.g. real estate, you can beat inflation.

clearance of tax liability

If the mobilehome is real property, a clearance of tax liability must be signed by the county tax collector.

How are manufactured homes built?

Manufactured homes are built on a non-removable steel chassis and transported to the building site on their own wheels.

Who can sell mobilehomes?

Only licensed mobilehome dealers can sell new mobilehomes. However, a person with a valid real estate broker or sales license may sell mobilehomes, which have been registered with HCD and placed in an established mobile- home park or have been installed on a foundation system.

Where are houseboats common?

Richardson Bay in Sausalito

What will almost always be included in a sale of business?

Stock, fixtures, and goodwill

One time purchase price per year (timeshare)

Timeshares are usually for specific blocks of time per year. In addition to the one-time purchase price, timeshare owners pay an annual fee for property management and maintenance.

In order to sell a timeshare in CA, a person must have what?

a California real estate license.

The sale of a business opportunity may be negotiated by...

by anyone holding a real estate license.

What are other less-common accommodations of timeshares?

hotel rooms, houseboats, and even motor homes.

seller's permit

must be obtained by owners of a retail business to collect the proper sales tax from customers.

Sales and Use Tax Law

protects a buyer from liability for unpaid sales tax owed by the seller.

HCD

the Department of Housing and Community Development (HCD)

What happens after transforming a mobilehome to Real Property?

the Department of Housing and Community Development (HCD) must cancel the registration. Then, ownership of the mobilehome is recorded with the county recorder and taxed as real property.

Which code is the only federally regulated national building code?

the HUD code

To whom is the sales tax paid to?

the State Board of Equalization, usually quarterly.

execution of a security agreement

the borrower executes a security agreement that gives the lender an interest in the personal property

On the other hand, if you are looking for income:

then buying a rental building can help provide regular income.

Steps in a Business Opportunity Sale

Copies of the seller's permit and a clearance receipt are obtained from the Board of Equalization, according to the Sales and Use Tax Law. The buyer then is protected from liability from any unpaid sales tax that the seller might owe. Information about employee's salaries, benefits, and unemployment insurance tax is noted. An inventory is taken of stock, fixtures, and any other personal property that will be transferred by the sale and the seller executes a bill of sale, which transfers ownership of all personal property belonging to the business. At the close of escrow, buyer and seller receive closing statements.

It is unlawful for any real estate licensee to advertise or represent a mobilehome as...

... a new mobilehome or that it can be transported on California highways if the mobilehome does not meet all of the requirements of Vehicle Code §24000.

When is a mobile home considered as real property?

A mobilehome is considered real property when it is attached to a permanent foundation.

red tag

Each home or segment of a home is labeled with a red tag that is the manufacturer's guarantee the home was built to conform to the HUD code.

What are each of the 3 elements worth?

Each of the three elements in the sale is worth value and must be considered when listing a business opportunity.

objective: capital appreciation

If your objective is capital appreciation, then buying a promising piece of property in a promising neighborhood will help you achieve this.

Which type of housing has become a major source of the residential housing supply?

Manufactured Housing. -Due to the increased need for affordable housing and the relative low cost to build, manufactured housing has become a major source of the residential housing supply.

mobilehome park rules

Most mobilehome parks require buyers to sign a copy of the rules and agree to comply with them. At the time, the licensee accepts the mobilehome listing, a copy of the park's rules and regulations should be obtained.

Laws to selling mobilehomes that are personal property

Real Estate licensees must be sure that the certificate of ownership or certificate of title of the mobilehome is endorsed, dated, and delivered to the new owner.

regulation of houseboats

Regulation of the houseboats increased to solve the problems of pollution and safety and now they are a colorful addition to the Tiburon shoreline.

For Sale or Rent Sign requirements

Signs can be at least 24" wide and 36" high and can state the name, address, and telephone number of the mobilehomeowners or their agents. Additionally, folders containing leaflets, which provide information on the mobilehome for sale or rent, may be included on the sign.

Buyers in Agricultural Property

Some buyers are looking for working farms, recreational ranches, or horse properties, while others are developers looking to buy land for subdivisions.

The economic impact of the agriculture value chain in CA

The economic impact of the agriculture value chain (production through distribution) in California exceeds $300 billion annually and employs over 2 million individuals.

the U.S. government's Manufactured Home Construction and Safety Standards (HUD code)

The federal standards regulate manufactured housing design and construction, strength and durability, transportability, fire resistance, energy efficiency, and quality.

For Sale or For Rent signs in a Mobilehome park

The mobilehome park cannot prohibit For Sale signs within the mobilehome park. Mobilehomeowners, or their agents, have the right to display For Sale signs and For Rent signs if the mobilehome park management permits renting in the park.

Bulk Transfer Act

The purpose of the Bulk Transfer Act is to protect the creditors of a person who sells a business.

what is the sale of business considered as?

The sale of a business is considered to be the sale of personal property; and the rules about the transfer of chattels are applied.

What does the security agreement contain?

The security agreement contains all the details of the agreement, and is the document that describes the obligation.

the gentleman farmer syndrome

There is a tendency for many individuals to invest in small farms, ranches, and vineyards as hobbies as is seen in the wine grape growing regions.

How are manufactured homes built in terms of length and width?

They are built in 8-, 10- and 12-foot widths, and up to 60 feet in length, making them expensive and difficult to move once they are put in place.

Which houseboats are considered real houses?

Those that are permanently attached to city utilities are considered real houses.

Timeshares as Vacation Investments

Timeshares are frequently purchased as a vacation investment because the cost of owning a good timeshare is less than renting comparable hotel accommodations year after year.

What type of subdivisions are Timeshares?

Timeshares are usually resort-type subdivisions created with the intention of selling them to people who want a retirement home or second vacation home.

Are manufactured homes real property or personal property?

Today many manufactured homes are attached to a permanent foundation, and are considered real property. Once transported from the factory to a permanent lot, very few are ever moved again.

What must happen 12 days before the transfer of a business?

Twelve business days before the transfer, notice of the sale must be filed with the county recorder, published in a local newspaper in the county where the business is located, and delivered to the county tax collector.

promissory note

When money is borrowed, a promissory note is signed, just as in the financing of non-business property. The note is the evidence of the debt.

Uniform Commercial Code (UCC) Divisions 6 and 9

Whenever money has been borrowed for the sale of a business opportunity, it follows that someone has a security interest in the personal property belonging to the business.

transfer of a liquor license

a buyer must not assume an automatic transfer of the liquor license. A buyer must apply for the license and may be turned down for various reasons (e.g., criminal record).

What must be filed in order to protect, or perfect as it is called, the interest created by the security agreement, or prevent the security from being sold by someone else?

a finance statement

What would be useful when marketing agricultural properties?

a general knowledge of local farming practices, climate, hydrology, and soils

Whenever a new buyer takes title to a mobilhome, what must happen?

a new rental agreement must be negotiated with the owner of the mobilehome park. The new tenant (mobilehome owner) of the park must be approved by the owner and must agree to all terms of the park's rules and regulations.

What does it mean when Sales tax and Use tax are "mutually exclusive"?

a person will either pay sales tax or use tax, but not both

When must be given when a business is sold or transferred?

a public notice

Timeshare advantage: trading vacations

ability to trade vacations with other timeshare owners through exchange programs and travel to destinations all over the world.

What happens if an owner wants to move a mobilehome after is becomes real property?

anyone who has an interest in it must approve. Thirty days before moving it, the owner must notify the HCD as well as the local tax assessor. The mobile- home becomes personal property once again and returns to the unsecured property tax rolls after the owner obtains a new registration or transportation permit from the HCD or DMV.

manufactured homes

are homes built in a factory after June 15, 1976 and must conform to the U.S. government's Manufactured Home Construction and Safety Standards (HUD code)

houseboat

basically a barge that is designed and equipped for use as a dwelling.

Livestock

includes domestic animals (cattle, horses, sheep, etc.) that are used for food, breeding, or draft purposes.

mobilehome

is a factory-built home manufactured prior to June 15,1976, constructed on a chassis and wheels, and designed for permanent or semi-permanent attachment to land.

What is the most common type of timeshare?

is a resort condominium (which can range from a studio with a partial kitchen, all the way up to a five-bedroom unit with a full kitchen and luxury amenities).

Use tax

is a tax imposed on the buyer who purchases goods from an out-of- state supplier for use in state.

mobilehome park

is any area or tract of land where two or more mobilehome lots are rented or leased or held out for rent or lease to accommodate manufactured homes or mobilehomes used for human habitation.

business opportunity

is any type of business that is for lease or sale. It also includes the intangible but salable asset of goodwill.

sales tax

is collected as a percentage of the retail sale of a product by a retailer.

noncompliance w/ the bulk transfer law

is considered valid between the buyer and seller but fraudulent and void against creditors. Therefore, the buyer is liable to creditors who hold valid claims based on transactions or events occurring before the bulk transfer sale.

Agricultural Property

is defined as property zoned for use in farming, including the raising of crops and livestock.

Ranch

is land that is used for grazing livestock.

finance statement

is merely the document used to record the debt; it is not actual evidence of the debt.

timeshare

is the common ownership of a single piece of property by an association of people with each owner having the exclusive right to occupy a unit for a specified period each year.

security agreement

is the document commonly used to secure a loan on personal property, much as a trust deed secures a loan on real property. The security agreement creates a lien on personal property, including fixtures.

Department of Alcoholic Beverage Control (ABC)

issues liquor licenses and regulates the transfer of a liquor license from a seller to a buyer.

Farm

produces plant and animal products like grains, milk, eggs, and meat.

turnkey projects

projects that are ready for occupancy

total and uninterrupted period of at least 1 year

real estate licensees can sell or lease a mobilehome if it is on a lot where its presence has been authorized for a total and uninterrupted period of at least one year.

carrying capacity

refers to the number of animal units or tonnage of crops per acre that the land can support.

The Department of Housing and Community Development (HCD)

registers and licenses mobilehomes, and must be notified by anyone acquiring or releasing an interest in mobilehomes within 10 days after a sale.

Division 9 of the Uniform Commercial Code (UCC)

sets out the requirements for regulating security transactions in personal property and fixtures.

What do licensees need to become familiar with when dealing with Farms and Ranches?

the carrying capacity of the land and soils

goodwill

the expectation of the continued patronage of an existing business.

What documents are used in security transactions in personal property and fixtures?

the promissory note, the security agreement, and the financing statement

Bulk sales

the sale of a substantial part of the inventory of a business, are regulated by Division 6 of the UCC.

What happens once the interest created by the security agreement is "perfected"?

the secured party's interest is protected against the debtor's other creditors.

Before assuming the ownership of a business, what should a buyer obtain a copy of?

the seller's permit and a clearance receipt stating that the business is current on sales taxes from the State Board of Equalization.

Who regulates the rental of lots in a mobilehome park?

the state Department of Housing and Community Development (HCD).

What are the fees in getting a liquor license dependent on?

the type of establishment and the population of the city.

certificate of title

transfers ownership of a mobilehome owned as personal property. Both seller and buyer must sign it.

a finance statement must be filed with...

with the secretary of state or in the county recorder's office giving public notice of the security interest created by the debt.

After receiving notice that the mobilehome is no longer available, a licensee must stop advertising that the mobilehome is for slae or lease within how many hours?

within 48 hours after receiving notice

Elements of the Sale of a Business

• Lease or Real Property • Inventory • Goodwill

Codes and Laws Involved in the Sale of a Business

• Uniform Commercial Code • Bulk Transfer Act • California Sales and Use Tax Law • Alcoholic Beverage Control Act