What is a Perc Test
Transcript:
Jack Butala: Jack Butala, with Jill DeWit.
Jill DeWit: Hi.
Jack Butala: Welcome to our show today. In this episode, Jill and I talk about perc tests, and what they actually are, and why you need to know about 'em. Before we get into this incredibly, potentially boring subject, let's take a question posted by one of our members on the landinvestors.com online community. It's free. I promise we'll make it fun.
Jill DeWit: Okay, good.
Jack Butala: I promise. It's about poop.
Jill DeWit: It's about poop.
Jack Butala: Poop's always fun.
Jill DeWit: Oh, everybody loves to talk about poop.
Alyssa asks, "If a friend asks for your help in selling his land, do you need a license to do it, whether or not you'll receive payment for him, or a percentage of the sale? Do the laws and regulations for this vary state to state?"
Jack Butala: Go ahead, Jill.
Jill DeWit: Great question.
Jack Butala: I want to hear your answer to this. I think we're gonna have a different answer.
Jill DeWit: Oh, really? Seriously?
Jack Butala: I think it's more fun for me to have different answer.
Jill DeWit: You know what?
Jack Butala: If we just sat around and agreed with each other all the time, what fun would that be?
Jill DeWit: Okay. Let's cover all the bases here. If I really wanted to cover my butt, I would have a ... I could even go so far as to create a separate LLC, technically, where we're both little investors, even though it's a small, little percentage of properties that we're gonna do, where we're both owners and I'm just doing all the work. That's how I would easily cover my rear.
Jack Butala: It comes down to one word. Representation. Are you representing your friend in the purchase and sale of this property? Are you negotiating on their behalf? Here's where we see this a lot in our business. I see it with cars and stuff all the time, too. An older person wants to sell a piece of land, and they know nothing about the internet, at all. So, they call their son-in-law, who knows everything, or he thinks he does, about selling stuff on the internet. The son-in-law gets all the information, puts it on the internet. Is that guy representing the father-in-law? Because, that's where you get in trouble. If you represent somebody in the purchase and sale of real estate, you are required to have a license, by law. Does it vary from state to state? The details do, but that concept does not vary.
What Jill's referring to is, make the person a partner in an LLC, and now you're owners. Jill and I own a bunch of property together, and I negotiate all the time without talking to her about it, and vice versa.
Jill DeWit: That's my workaround.
Jack Butala: Now, we're just business partners, and we're owners. Neither one of us have a license by the way, and never will. That's a different topic.
You have to ask yourself, are you representing this person in the sale of their property. People say to us, well they used to, now, since we have this show they don't ask us anymore, "Can't you guys just take my property and roll it into the mix of whatever you have, and just sell it for me and I'll pay you?"
Jill DeWit: Right.
Jack Butala: No.
Jill DeWit: Exactly.
Jack Butala: That's ridiculously illegal.
Jill DeWit: Yeah, and I don't want to do that.