HERE ARE THE FACTS...MILHOUSE

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Posted by Bill Gatten on October 23, 2001 at 17:34:39:

In Reply to: STICK TO THE FACTS, CLINTON! posted by William Bronchick on October 22, 2001 at 20:42:01:

Bill,

You are not really a two-faced XXX are you? Well then, what? Pleeeese don't let that be the case...please! You wrote me a private E-mail regarding some criticisms (of YOUR programs) that I had voiced, and I was gentleman enough to write you back privately, even commisurating with you and providing the (proprietary) answers to what I thought were sincere personally questions...presuming that you wanted to handle it personally before publicly humiliating yourself.

You write privately about how this is supposed to be a "heated but friendly" debate, then you do this (torpedo attack thing) again. No, Bill, I don’t care to call you names, as I am trying desperately to assure my self that you are not an embodiment of any of those names that DO in fact come to mind at times.

Understand that our programs and our documentation processes have grown over the years, and are always changing and improving. If you found an inconsistency or discrepancy in our documents, why didn't you just say so...we'd have changed it...such an error would be in MY (OUR) disfavor...not to the detriment our members' or clients'. And BTW did you 'buy' those documents from us that you have appointed yourself to review...I bought all yours (never mind...just a cheap shot...I'd have given them to you anyway…no problem).

On the issue of a "settlor's" holding ownership interest...as I've told you repeatedly...we are relying only on the current regulations (IRS) to allow that when a property is placed into a land trust and NOT transferred, except to the trustee: the transfer being only of a partial personal property interest in the land trust; and then leased out, and again not sold... that neither IRC 167 or 163 have been compromised for either party. We know that the resident's write-off is held intact by Sec. 163 and presume that the settlor's benefits remain in tact under 167 and related section pertinent to Depreciation.

Bill, like I said before, you 'could' be right on this issue, especially if both parties were audited as stock holders in a corporation or GP (we do everything we can to avoid that characterization, however)...I don't know. All I really know is that we have been informed otherwise, and feel good about the information proffered. And whether we are right or not, the parties (the non-resident especially) are always advised to treat the transaction solely and completely in accordance with the advice of their professional advisors. My advisors openly tell me, as well as they do their other PACTrust clients, to take the Depreciation on the properties not lived in (because the IRS, it is assumed, will levy it anyway upon final disposition); and that I should take the active write-off on the house that I do live in. And that's what I do. What you do is your business. Other than 163 and 167 and related codes and IRR 92-105 and our accounting firms position, I have no more ammunition for you. Sorry...but they all seem plain enough to me. If someone chooses to do it all otherwise...well, they always have you to fall back on.

And if you think you're going to continue this court trial (more an inquisition or bullying, some have said)...don't you think we need an impartial judge that we both agree on? Personally, I don't have an individual in mind...but the majority of the people who lurk and post here are plenty good enough for me, as several if not most are beginning to see through what it is you're trying to do.

One of our attorneys is convinced that you are simply endeavoring to get all of our internal secrets and recipes, so that we do all your research for you, and tell you all our tricks so you can become our biggest competitor. I didn’t think this could possibly be true until today (and I'm now rubbing my chin and looking skyward). Even our 1031 Accommodator...refuses to give his information, up even to me (as to how he handles partial interests in PACTrusts and 1031 exchanges without continuity issues).

For all to read now...here is the "private (...ha!)" E-mail I sent to you on the other issue, which I falsely presumed was internal proprietary information being shared in strict confidence (I should know better by now). The bracketed comments were added since the original note was sent:

-0-

Bill,

Thanks for your note...I agree that those [DRE} charges in Colo. [re. L/O's and due on sale violations] will "probably" never be brought [those things "hardly ever happen"]. I won't hold your feet to the fire on that one.

Re. your question as to who represents whom in a PACTrust arrangement...remember that most PACTrusts are done by our students without our assistance or input; however, we are involved in helping in maybe 5 to 10, or maybe 20 transactions per month (20 would be a 'real' good month).

We are assured by all of our advisors that we are quite OK in what we are doing as long as the boilerplate documents remain just that. As well, we and the attorneys are well aware that neither of us can handle closings, collect payments for a fee or provide legal advice for a fee unless retained to do so by all of the beneficiaries (to act on behalf of the trust re. evictions, drafting of unrelated docs, etc. e.g., in California). In certain cases NARS does, however, charge a consulting fee in a transaction, which fee is based upon the value of the property...but only if we are called upon to consult with clients, aid in marketing, etc. in that particular transaction. That fee is forgone, however, if the transaction is not closed by virtue of the parties' not having utilized (needing to use) our services: trustee, typing service, Escrow company, collection service, etc.

As far as the documentation is concerned, we have paralegals in our office who work for our attorneys (I used to do it alone, but the load got too heavy) as a Scribner (your term, which we have adopted). They type up the docs as directed by the client in their worksheet (i.e., the fill in the blanks) and they merely put them in typed form from the BP's). Those documents then go to the attorneys for review (to assure that nothing has been added or subtracted) prior to being sent to the closing agent. The only Escrow companies we recommend are--American Title and/or Stewart Title who handle all PACTrust closings throughout the country. The actual closings take place in the offices of the Title Company without participation by our attorneys or us, or can often be handled by mail in counter-parts. The attorneys for the national title companies are also quite OK with what we do as well; and we never do a transaction any other way, or in any other sequence.

Do note that our attorneys do not advise or represent any party in the transaction, and do not handle closings or settlements. We do not prepare documents; we only provide boilerplates and type them up ("Scribner" service) for the parties as overseen by our attorneys (to assure that no errors, commissions or omissions--mostly on our part--have occurred). The client provides the data.

We do not provide legal advice (try not to)...although we do provide a sales and marketing consulting service for the assistance in marketing of our system for our paid network members, advising them (always that we are not accountants or attorneys, and that they need to seek their own professional direction. If any document provision is requested that is not in the BP documentation, the beneficiaries are allowed to make up their own Rider to be included in the file...we include a boilerplate for that as well. On this level I may in fact be guilty from time to time of assisting someone on the phone as to perhaps the best way to phrase the Rider verbiage though the form does not contain our name or logo, and is executed only by the parties.

Note too, Bill, that our collection services (we have two) are provided at no charge when our trustee is used. They are designated and appointed by the beneficiaries themselves (if they wish) to act purely at their behest as a free bill-paying service for them (not as a property manager or mortgage service). Our provided trustees, on the other hand, do assess the required fee ("...in keeping with industry standards...") for their title holding services, and are each non-profit corporations acting exclusively on behalf of, and for, the benefit of their own members (the beneficiaries of the various trusts).

Also note that we are contemplating giving over the entire documentation assistance program to the office of one of our Attys (eventually).

Regards,

Bill

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