50% "subject To" Ownership
We have a self directed IRA that we purchase RE with. We will be buying 50% ownership in a property that has an existing mortgage. The mortgagor will be retaining 50% ownership.
What is the best way to handle this? Just have the mortgagor (seller) deed us 50% interest? Should the deed be recorded or not? I don't see a need for a title search as the sellers just bought the property and we know they have not encumbered it more other than the 1ST. Don't see need for an attorney and don't see need for a title company. ?? Thanks all!
I'm assuming that this property will be one that you will be holding onto. If you don't record the deed, what stops the co-owner from encumbering the entire property? If the deed is not recorded the lienholder can claim no notice and take entirety. Death of co-owner, assuming a real person as co-owner, entagles the house in probate, etc. Will you hold as joint tenants, in common, etc.? You can probably get this stuff sorted out but since this is (I'm assuming because of the IRA) a hold property you can't be too careful.
We will be selling it right away.
$Cash$,
Can you anser this for me here or do I need to PM you? Thank you.
What about a land trust. You can divide the beneficial interests in any percentage as you want. Just make sure you have a trustee that you trust.
Tom
What exactly is a land trust? These people are very good people and we have worked with them in the past. I really don't want to get anyone else (attorney, title co., etc.) involved if we really don't have to. Whey do you say a land trust? Thank you.
Gold,
"I really don't want to get anyone else (attorney, title co., etc.) involved if we really don't have to." -gold
If you don't know how to handle this situation without asking for opinions on this board, then I think it's time that you considered speaking to a professional in your state (an attorney/closing agent). They will be able to do it legally, and protect both parties equally.
Getting legal advise is part of the REI process. It's there to protect you. Why exactly are you trying to omit that part?
Roger
Roger makes a solid point; life offers no guarantee, which is why the insurance industry is a multi billion dollar industry. We pay to protect speculation. Our suggestion is to be wise and prudent to protect the investment with the appropriate level of attorney review.
Relationships have the opportunity to change, and a signed document/agreement is the best protection between partners.
Eric & Rosa
[addsig]
Thank you. We have a signed agreement between us and the co owners. I am very familiar with selling and buying but just not the subject to. That is why I am on this board asking advice as this will be my first subject to.
My question is..when we take 50% ownership subject to, do we do a deed and should we or should we not record it. Thanks!
Gold,
I understood your question perfectly. However, I can't understand as why you would want to forego an attorney's professional advice on this matter, especially if you're familiar with investing.
All you'll get here are opinions that won't help you a bit should things go south in the deal. That said, I believe your question has already been answered above: if you don't record your interest in the property, what is to stop the owner from selling to someone else, borrowing more against the property, etc.
Roger