Odd Refinance & Title Question
I have a question about refinancing a property. I have a partner who I will be taking title together with on a rehab property. I am thinking of an exit strategy in the event that he doesn't want to sell but would like to hold onto it for himself once we are done. When the property is refinanced ( We paid cash for it in the first place) Do both people on the title need to do the refinancing or can just one do it if they qualify? If they can what does the other person do once it is complete if they want off the title? can the person who wants off just quitclaim deed thier portion over to the person with the financing? Basically what would happen is he would pay me back my initial coasts, plus my profit out of the refi and then I would be out of it. Is this possible?
Thanks
I hope I was clear
Joe
_________________
If you do what you have always done, you will get what you have always gotten. Success can't occur whithout taking risks, just be sure to take calculated, informed risks![ Edited by joefm26 on Date 06/02/2004 ]
how do you hold the property? TIC, sole and separate, that will dictate alot.
A friend is going thru a divorce. He and wife are TIC, she won't short sell, it's heading for forclosure and his credit is going with it.
Think about a co-tenancy agreement that defines right to buy/sell deals w/ death, etc.
Well a co tenancy agreement is what I have drawn up bt we are going to take title together. What my question is
1) If he wants to refiance can he do it by himself even if I am on the title with him and
2) Once he does refiance it how do I get off the title?
Thanks
Joe,
The answer to number 1 is ...Yes, your partner can refi with you being in title with him. Answer to question 2 is to simply file a quit claim deed to get off the title.
BTW...both can be done simo by the title agency if needed :-D
You really should have an agreement stating how different situations will be covered. How you take title is one action but not the same as having an agreement covering a number of exit plans.
Assume that the bus hits one of you and some stranger has to step in to figure it out. Hence the need for a clear agreement as what was said in the past might be lost when the bus came visiting.
John
[addsig]
Another question, once I sign off the title, then I am released from liability I assume? Also when he goes to sell the house later down the road, he will pay the capitol gains taxes not me yes?
I nearly got shafted in this exact situation, so if my tone is a bit off you'll know why.
Bought a condo together, had co-tenancy agreement which included a buy/sell agreement w/ right of 1st refusal (which means that if he offered me X for my 1/2, I could turn around an say here's X, you leave)
All is fine. I sign the grant deed as directed by escrow officer (such an official title). Thing get tense btwn roomie and I, and then the day the deal is closing I realize (ahh youth!) that the Grant deed said "For valuable consideration received". I though fine, close of escrow I'll get a check.
He (accidentally?) opened the escrow as a refi, and not a sale AND refi.
Long story and lots of drama later, the escrow officer pages the messanger telling him not to have the deed recorded. He literally was the next person in line, and I would have (short of suing) been out 67K.
Nice lesson. I did have to pay CG on the difference in my basis and the 67K.
You will pay taxes in the year you are bought out by your partner. You take the payment as income and expense off your portion of the rehab and holding costs, plus any other expenses.
Make sure the new deed is recorded after you quitclaim, and that you are removed from the insurance to make sure you sever the connection in case someone sues your partner.
Peter
"Buying out the partner" is a reason for refinancing that banks hear all the time. Make sure that they know this is the purpose of the loan and it will go a little easier for your partner doing the refinance. Then you can do a standard closing moving the property from the partnership name to the partners solely.
What s the best wat to set it up then? When one of us is ready to buy the other out, we just go to the bank or broker and explain that one of us wants to buy the other out? Is it better to set it up as a sale or as a refi?
[addsig]