| Frequently Asked Questions |
What is PrepaidX?
Business Legal Plan
Overview
-What does this plan cover?
Buyers Representation Service:
-How is our Network of Buyers Agents different from other real estate companies?
-How does PrePaid give me cash back?
-What can I do with my commission refund?
-Why do we do this?
-Who is your typical buyer?
-I also need to sell my property, can you help me?
-What other resources can you provide that will save me money?
Commercial Real Estate FAQ
-What exactly is "commercial real estate"?
-Should I hire a real estate broker or a real estate lawyer?
-If I hire a real estate broker, why do I need to hire a lawyer?
-What is title insurance and why is it necessary?
-Does it make any difference how I take title to commercial real property?
-If I am buying real property for my business, do I need to get an environmental site assessment?
-What is a 1031 exchange and why do I care?
Sales Information & Comps
-Where do you get your data?
-Which property types does PrePaid Network cover?
What is PrePaidX.com?
A: PrePaid Commercial Exchange is a web-based network of real estate products and services for investors of commercial real estate nationally. Our members receive complete access to commercial real estate loans with no origination fee, a nationwide network of buyers agents that refund commissions above 1% back to our clients, access to a national database of commercial real estate sales and property information to make better buying decisions and finally access to a network of attorneys to prepare and review all necessary legal documents for the real estate transaction.
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Business Legal Plan Overview
Q: What does this plan cover?
A: It is the broadest and most comprehensive legal service plan in the entire United States, particularly and exclusively designed for use by business owners and its authorized representative. There is no other service plan that covers virtually all the legal problems or questions you will ever face like this one does.
1. Unlimited phone consultations and face-to-face consultations with your designated attorney:
Just call your designated attorney any time you have a legal problem or even think you might. He or she will explain your rights and decide what action is needed.
2. Letters and phone calls on your behalf:
Your designated attorney will make phone calls or write letters on behalf of the business to assist you in resolving legal situations or controversies.
3. Document review and preparation:
Your designated attorney will review or prepare any necessary legal documents related to the affairs of the business and all usual and customary documents, amendments, papers, forms or other contracts of the business.
4. Mechanics, labor and material and other liens:
Designated attorney will, on information provided by member, prepare, file, perfect and, if necessary, foreclose through trial all mechanics and liens customary to the business or its authorized representative.
5. Debt Collection and worthless checks:
Designated attorney will make telephone calls or write letters from within the state of domicile for debt collection purposes including worthless checks.
6. Garnishments or attachments:
Attorney will legally respond on behalf of the member of business or its authorized representative as a result of any garnishment or attachments on money, wages or property held for others by member of business or its authorized representative, whether same be filed or brought by individuals, other businesses, any local, State, or U.S. Governmental Agency, including the Internal Revenue Service.
7. Civil Rights (Title VII):
Advice and consultation by attorney concerning discrimination based on race, color, religion, natural origin, or sex.
8. Pension and salary deferment plans:
Attorney will provide advice and consultation to member in establishing, and/or maintaining pension, salary deferment, or savings plans for eligible members or employees of the member business, as such may be established or allowed by U.S. Public Law or the rules and regulations of the I.R.S. of the United States Government.
9. Corporations:
Your designated attorney will form and file a corporation for the member and assist their accountant or CPA in its designation as a “C” or “S” corporation or as a non-profit corporation if the member so designates pursuant to the regulations of the IRS. Attorney will also review, if requested, customary by-laws, amendments, notices or annual reports.
10. Americans with Disabilities Act:
Attorney will provide advice and consultation concerning the above, which applies, among others, to all private employers of 25 employees as of July 26, 1992 and private employers of 15 employees as of July 26, 1994, and which prohibits employment discrimination in job application, hiring, advancement, discharge, compensation, training terms, conditions, privileges of employment, including social and recreation programs.
11. Traffic violations:
If the authorized representative is charged with a civil traffic violation your designated attorney will provide representation provided both the operator and the vehicle were properly licensed.
12. Worker’s Compensation:
Attorney will provide advice and consultation pursuant to State Statutes, in relations to compliance or claims made by covered employees of member, group or association.
13. Insurance Law:
Representation and consultation in all matters between the member and any insurance company with which the member has dealings or relations.
14. Major litigation defense for criminal and civil cases:
In the event an insured member, group, or business is sued or named as a defendant in a business related civil suit in the State in which you are covered or the named and insured member or business or its authorized representative is indicted or charged in business related criminal action in the State in which you are covered, the attorney will represent and defend the named and insured member of business or its authorized representative through trial, including consultations, conferences, depositions, hearings, pre-trial motions, other pre-trial activities and if necessary, representation and attendance in court through trial. This coverage is specifically limited to ten (10) hours of the attorney’s time. Further required legal services under this section shall be provided at 33 1/3% discount off the attorney’s normal hourly rate.
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Buyers Representation Service:
-How is our Network of Buyers Agents different from other real estate companies?
-How does PrePaid give me cash back?
-What can I do with my commission refund?
-Why do we do this?
-Who is your typical buyer?
-I also need to sell my property, can you help me?
-What other resources can you provide that will save me money?
Q: How is our Network of Buyers Agents different from other real estate companies?
A: Our Network is unique in 3 ways.
1. We give you cash back via our flat fee commission refund business model
2. We specialize in one thing: working with buyers
3. We concentrate on commercial real estate
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Q: How does PrePaid give me cash back?
A: In 40 states, we are allowed to give the buyer a share of our commission when buying a commercial property. When you buy a property with our network of buyers agents they receive our flat fee commission of 1% and we cut you a check for the balance. On average the refund is greater than $50,000. (Learn More)
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Q: What can I do with my commission refund?
A: Simple answer: Anything you want! We cut you a refund check approximately seven days after you close on your commercial property. It is as good as cash. Many of our clients use it to buy new furniture, remodel the property or just put it in the bank
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Q: Why do we do this?
A: Why should a real estate agent make more if you spend more? We developed this business model out of common sense. Helping our members purchase a $3,000,000 property is not different than helping them buy a $300,000 property, so why should they be paid 10 times more? Our efficient business model is consumer centric: Our clients should be rewarded when they participate in the transaction.
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Q: Who is your typical buyer?
A: Our buyers range from first time buyers to savvy investors. Throughout every age and experience demographic, one common trait found within all of our buyers is their drive to save money with us and learn throughout the buying process.
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Q: I also need to sell my property, can you help me?
A: At this time PrePaid is a pure buyer’s broker network and does not list, market or represent any sellers or properties for sale. HOWEVER, we know who all the best listing and sales agents are. Call us or and ask us for a referral to the best listing agent in your city/neighborhood.
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Q: What other resources can you provide that will save me money?
A: There are a few other areas to save a significant amount of money on your commercial property purchase. The top three being (besides commission refund) on your mortgage rate, closing costs and on your attorney fees. Your membership in PrePaid offers you no origination fee on your mortgage (saving you thousands) and access to our network of attorneys to handle all your legal requirements. Our membership is designed to offer all the products and services you need to complete a commercial real estate transaction at a fraction of the cost. (Learn More)
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Commercial Real Estate
· What exactly is "commercial real estate"?
· Should I hire a real estate broker or a real estate lawyer?
· If I hire a real estate broker, why do I need to hire a lawyer?
· What is title insurance and why is it necessary?
· Does it make any difference how I take title to commercial real property?
· If I am buying real property for my business, do I need to get an environmental site assessment?
· What is a 1031 exchange and why do I care?
Q: What exactly is commercial real estate?
A: Broadly defined, the term "commercial real estate" can be used to refer to any dealing with real property in a business context. It could involve leasing out office space, owning an apartment complex, or selling real property along with and as part of the sale of a business. It might be industrial or agricultural property. It could even involve residential properties like apartment complexes or rental houses being held for business or income-producing purposes. It can even involve working with the government. Unless the property is a residence where the homeowner is living, you are probably dealing with commercial real estate.
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Q: Should I hire a real estate broker or a real estate lawyer?
A: The goal of every seller is to maximize profits, and every prospective buyer wants to get property as cheaply as possible. Having to pay a real estate commission or other professional fees as part of a real estate deal only works at odds with these goals. Consequently, many business people who are sophisticated when it comes to negotiating real estate deals may feel comfortable with doing a lot of the work themselves on commercial real estate deals. However, even sophisticated business people will still rely on professional advice when comes down to actually closing a deal, as the potential pitfalls can be significant. The bottom line is that you should seriously consider hiring real estate professionals, and professional fees should be factored in as a cost to doing any commercial real estate deal.
There are many reasons why you should hire your own real estate broker (an agent who works for a buyer). The broker or agent should have specific expertise in commercial real estate, and particularly in the area where you need it (for example, office space, retail space, industrial warehouse space, apartment complexes, agricultural land). Even if you're just leasing property, a real estate broker may be invaluable. If he or she is good, an agent will go out and find property for you. The agent will also serve as an arm's-length intermediary to negotiate on your behalf, which can be much more effective than you trying to negotiate the deal yourself. (Wouldn't you love to have an agent representing your interests when you go buy a new car? It would help you to avoid high-pressure sales tactics, prevent you from making rash decisions and make it easier for you).
If you are a buyer, it really makes no sense not to hire a buyers agent when it would usually be at no extra cost to you. The seller usually pays the commission in most real estate deals. Most real estate agents agree to split the commissions on listed properties, though, so an agent has a real incentive to be involved in a deal even if he or she is not the listing agent. A buyer can simply chose to work with the seller's agent to close a deal. The seller's agent usually won't object if a written consent is signed. (Incredibly, this happens all the time and it only makes sense from the standpoint of the seller's agent, who then gets to keep the whole commission!)
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Q: If I hire a real estate broker, why do I need to hire a lawyer?
A: The benefit of competent legal advice on a real estate deal stands on its own. There are so many things that can go wrong on a real estate deal that you may very well end up kicking yourself mightily if you don't hire an attorney to help you with the transaction. You may even end up hiring a lawyer on a lawsuit, which could end up be a lot more expensive. Real estate agents don't usually get paid unless the deal closes (or unless you somehow become obligated to pay a commission by backing out of a deal or otherwise breaching your listing agreement). Listing agreements will clearly state that real estate agents are not providing legal advice. So real estate agents are typically not going to worry about the "what if's" of the legal details and are inclined to do whatever they can to push a deal to closure. This is not the case with an attorney working on an hourly basis, who is going to get paid one way or the other. An attorney will be in a better position to provide you with essential legal advice and to do so with more impartiality than may be the case with your real estate agent. (Access to your Designated Attorney is included in your PrePaid Membership).
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Q: What is title insurance and why is it necessary?
A: Title insurance is nothing more than an insurance policy that provides assurance to interested parties that there is good and marketable title to the property being insured. However, this never means that title insurance guarantees perfect title. As with all insurance, there are a number of different types of policies and endorsements. There are also many exceptions to title, which all tie back into information in the preliminary title report. These include specific exceptions listed on the property to be insured, as well as standard exceptions.
One standard exception, for example, is that the insurance will only be provided for exceptions to title that are reflected by the public records. Unless a special endorsement is obtained (which costs more money), there is no obligation on the insurance company to insure against defects in title that would have been apparent from surveying or otherwise physically inspecting the property.
There are also different types of policies. For example, it's customary in most states for a seller to pay for standard coverage for the buyer that insures that the deed from the seller is conveying title that it purports to convey, subject to exceptions in the title report. If a buyer wants additional protection against third party claims such as mechanic's liens, the buyer can purchase an owner's policy. If a loan is involved, a lender's policy can be issued that specifically insures the lender against title defects.
It is not always necessary to get title insurance. In a transaction between related parties, for example, they may decide not to pay for it and take the risk of transferring property interests without purchasing title insurance. In a typical arm's-length deal, though, it almost always makes sense to purchase title insurance. If a commercial loan is involved, the lender will require title insurance to protect its interest.
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Q: Does it make any difference how I take title to commercial real property?
A: There are many issues that can arise with respect to how you take title to property, and especially so in a commercial context. If you take title as an individual, you may be exposing yourself to potential liability exposure that you might want to try to avoid or at least minimize. You can take title through a business corporation, but doing this could be disaster from a tax standpoint. Sometimes, there may be other alternatives such as forming a limited liability company that you would own and control that, in turn, could lease the property to your business entity.
If joint ownership is involved, you should clearly understand the differences between taking title as joint tenants, as tenants in common, as a partnership, or as community property. You should also clearly understand your rights versus the rights of your co-owners. Each and all of these types of ownership have significant ownership implications and rights of survivorship.
It short, there are no universal rules of thumb with respect to how to take title. It's always advisable to seek professional advice, including your lawyer and CPA, to assist you in making a smart decision. (Access to your Designated Attorney is included in your PrePaid membership).
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Q: If I am buying real property for my business, do I need to get an environmental site assessment?
A: Some lenders may require an environmental site assessment, and there are certain situations where it only makes sense to get one (such as when you're buying a service station or a manufacturing business). Otherwise, though, the chance of there being any problem may seem remote and it may be tempting to pass on doing an expensive assessment. But you're probably doing yourself a disservice if you don't get one, as any problem that arises could result in catastrophic liability exposure for you even if you didn't cause the problem.
There are also different types of environmental site assessments. A "Phase I",for example, generally involves an inspection of the property and review of various records, but it doesn't actually involve any boring or drilling, or the testing of soil or water samples. These activities are usually done during the course of a “Phase II” assessment, which can be quite expensive. It's usually an option for a buyer to do a “Phase I” assessment and consider the results and recommendations of that process before deciding on whether to proceed further.
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Q: What is a "1031 exchange"?
A: A "1031 exchange" refers to a method of deferring tax on the sale of an interest in real property allowed under section 1031 of the Internal Revenue Code. In brief, it allows a seller to defer tax on a gain that would otherwise be realized on a sale of property if the proceeds from the sale were reinvested in like-kind property. It's quite common for a 1031 exchange to be involved in some manner in a commercial real estate transaction.
A seller must contractually arrange to convey his or her interest in the property being sold in exchange for receiving an interest in another piece of commercial property. If cash is involved, an escrow company or facilitator usually hold it, because treatment under section 1031 won't be possible if the proceeds are paid to the seller even for an instant. In practice, however, the rules for a 1031 exchange can be quite complex and it is easy for a seller to run afoul of them. It's always advisable to have competent legal counsel involved in the transaction.
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Sales Information & Comps
Q: Where do you get your data?
A: Our network partner derives information from proprietary research, including the cumulative sourcing and cross-referencing of over 250 independent reliable sources. These sources include:
· Press releases & news reports
· Public Records
· SEC filings and reports
· Listing services (confidentiality honored)
· Industry associations
· Agency/ FHA, FNMA filings
· Investment brokers
· Feedback from subscribers
· Other available/licensed databases
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Q: Which property types does PrePaid Network cover?
A: PrePaid’s Network has followed four property types: Office (single tenant, CBD and suburban, medical and parks), Industrial (warehouses, showrooms, distribution facilities, etc.), Apartment (garden and mid/high-rise) and Retail (strip centers, malls and others).
PrePaid’s Network provider tracks properties $1 million or greater in the United States. Information is updated continuously and sales comparable data is available in eighty (80) U.S. markets.
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