Should I Give My Equity Partner The Deed?

I have an equity partner who is a very good friend. He trusts me with his money. I have been wondering why not just put the deed in his name and work under a Power of Attorney?

The question is really about FUTURE equity partners who I dont know.
Its Hard to convince them to invest with a stranger. Hard to convince them to give me 100% of purchase price + repairs.

They may only invest with me if I give them the semblance of control. They ask "what is to prevent you from going bankrupt and they will be screwed"?

Very hard to refute that so I wrote a strict contract that says I earned my 50% split when I buy. And if they give me a written revocation of contract they have to pay me 50% of appraised value within 30 days.

That gives me some protection.
I wont have ownership liability. But I can still work under the POA.

Is there any other problem you guys see with this?

Comments(3)

  • mussetter12th September, 2003

    The rehab lenders that I'm dealing with don't care about purchase price. They'll loan up to 80% of repaired fmv. Then, if you default, they can recoup and probably make a profit.

    I haven't closed the deal yet, but that is the preliminary information I'm getting.

  • JohnMerchant13th September, 2003

    I work a lot of deals with OPM (other people's money) so I'm familiar with the issue.

    A couple of suggestions: get a well written Trust agreement written, then deed the RE into the trust.

    Have the trust provisions clearly set forth who the beneficiaries are, their interrest, their right to control or vote, etc.

    A probate & estate planning lawyer will have all the forms & some experience dealing with these issues, so he/she can help you think of all those things that should be included. and then write it up in a tight package for you.

    With such a pro doing your first one, then all you need to do is a copy & paste for your next Trust deal, with a brand nw trust agreement to fit those partners and that deal.

    Such a trust would of course have as its trustee, some neutral person you'd all agree on, such as perhaps the lawyer who does the trust for you all...his/her professional ethics and rules keep him/her on the straight and narrow.

    And as long as the trust doc itself, details how the members vote, and the duties of the trustee to follow the voting majority. he/she would follow the path you vote on.

    As I've said before, the wealthiest families in the world use such trusts, and one never reads about their financial situations in any public records, all being kept very private inside their trusts.

  • Tedjr13th September, 2003

    A partnership works good too and that can be set up by typing up a one page agreement and deeding the property into the partnership which by agreement would take both partners to sell the property. I have also deeded the property to both the partner and myself. Ilike the partnership first and then the trust idea. You can also copy other trust agreements and set up the trust.

    Ted Jr

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