What Can I Do When Real Estate Partner Backs Out Of Agreement ?
Hi,
I have a messed up situation I need some expert advice with. In 2006 I purchased some property in Florida through Norada Real Estate. I now know it was a very bad thing to do, other friends did it also and they were very good at investing but not this time.
The problem is Norada Real Estate was to go half on all payments until the property was sold. At the beginning of 2007 I was told by Norada Real Estate he was having financial problems and would not be able to pay his share. I have a contract he signed stating partnership and emails showing when he said he would not be able to hold up his end.
I am now in a position where I cannot make the payments myself especially since the property value dropped but not the loan amount. It was a construction loan that would be turned into a normal loan. I live in Nevada, Norada Real Estate is in Laguna Niguel, California and the property is in Florida. The Mortgage Company now wants to come after me. I have had perfect credit all my adult life and do not want to file for bankruptcy. What are my choices here ?
I called the California and Florida Department of real estate and they told me Marco Santorelli or Norada real estate have a no real estate license in there states. I will file a complaint in those states. I have just learned Marco Santorelli of Norada has filed for bankruptcy.
[ Edited by sherm5150 on Date 09/19/2007 ]
[ Edited by sherm5150 on Date 09/19/2007 ]
You will probably need to contact an attorney especially because you have multiple states involved.
Here is what I found about this company:
Corporation
360 ENTERPRISES WHICH WILL DO BUSINESS IN CALIFORNIA AS NORADA REAL ESTATE
Number: C2612370 Date Filed: 5/7/2004 Status: active
Jurisdiction: NEVADA
Address
30251 GOLDEN LANTERN STE E-261
LAGUNA NIGUEL, CA 92677
Agent for Service of Process
MARCO SANTARELLI
30251 GOLDEN LANTERN STE E-261
LAGUNA NIGUEL, CA 92677
Hope this helps
John (LV)
I am in the same situation. Thank God my property is rented and I am running about $1000 negative each month. The Bankruptcy meeting date is 10/15/07 in Santa Ana. In my case I was thrown a curve ball of when I purchased the property from 360 Enterprises "Marco". 360 Enterprises purchased the property on 1/31/06 for $53,000 then Marco sold it to me on 3/30/06 for $68,000. A $15,000 increase in two months, I will need to have someone look into this. This is just wrong all the way around.
The lot was $68,000 then build home, loan amount is $284,000.
The time line of our contract is as follows: 1/17/06 I signed contract with Norada, 1/31/06 360 Enterprises (Norada) purchased lot for $53,000, 3/30/06 360 Enterprises sold it to me for $68,000 once I got approved for construction loan.
Let me know what you think.
Thanks,
Mike
OMG. I used to get e-mails from Norada. (No idea how they got my e-mail address--probably one of RE clubs or meetings in CA).
Even in Jan 07 I was still getting an e-mail offering:
NEW LUXURY CONDO CONVERSION
2 Year Rent Guarantee
2 Years of FREE Property Management
Includes Cash Discounts and Cash-Back
Prices start at only $136,000
The price was $160,444 in their e-mail of 9/06.
The market had already turned south in 06 (we have rentals in FL) so I was wondering what the catch was. Maybe they were going to walk once an unsuspecting "speculator" signs the contract?
Some people are suing Marshall Reddick.
http://www.biggerpockets.com/renewsblog/2007/07/17/marshall-reddick-real-estate-network-sued-for-fraudulent-home-sale-investment-enterprise/
Maybe you can get together with other people who are in the same situation with Norada?
I am in the same boat, except I have 2 properties which will each run $1,100 per month negatives WHEN they are rented. Prior to renting I am looking at over $4k per month negative for both properties.
As stated, Norada has filed for bankruptcy but if we can prove criminal acts we could get around that corporate bankruptcy and get to Marco personally, although he is likely to file personal BK soon. I believe we have a case on the grounds that he took most of the $7k per property for personal profit rather than using it for down payments and "hard" costs which is what the contracts stated.
How can we all band together to pursue this as a group?
It would be useful to know which bank has your mortgage and who your builder is.
Did you manage to modify your loan with Market Street or did you have to refinance with someone else?
Did you pay Marco $7k to get into this deal? Did you sign a release with him when he backed out of paying his share of the mortgage?
[ Edited by kjmatthews on Date 10/15/2007 ]
I did modify the loan with Market Street, then they sold it to IndyMac, I gave Marco $6,000 for the deal. I did not release him from the agreement. That is why I went to his bankruptcy hearing. Basicly he gets away scotfree. On my deal no money out of his pocket and I am stuck with a house 3000 miles away.
What happened at the bankruptcy hearing?
Have you consulted an attorney because per the contract he is liable to you for half of all costs so you (and the rest of us in the same situation) are significant creditors.
Up front did he tell you that your $6k would be used for the down payment and do you now know that he took that money as his profit? The builder told me that Marco also got a commission from him so he took cash from both sides. If we can prove a criminal action in the mis-use of funds then we can get around his corporate bankruptcy....
kjmatthews - we should contact each other off of this form. How would you suggest we do this with out spreading our phone # and email to everyone. Thanks,
Mike[ Edited by Bass4JC on Date 10/18/2007 ]
For accuracy and clarity, it must be pointed out that any reference to “Marco” is in fact with “360 Enterprises” – one of the corporations under the Norada brand that held the Management Agreement related to your investment.
Two additional points of clarification related to the last post from ‘kjmatthews’:
1. If you reference your Settlement Statement (line #704) you will see that commissions were only paid to J. Roberts Realty in Fort Myers, Florida.
2. If you reference your Management Agreement you will note that the initial funds were never a “down payment”.
I can truly empathize with your situation. It has been an unfortunate time in the market for many people. The slow markets, rising interest rates, and lack of lender confidence have created increasing difficulty for real estate professionals at every level.
Market conditions turned quickly and there was no way of contemplating the effects the softening market would have. 360 Enterprises did everything it could to service the management agreements up until the point where it could no longer continue, and after struggling for 12 months was forced into bankruptcy.
[ Edited by Norada_Real_Estate on Date 10/23/2007 ]
Wheelsy,
What stage is the probate in?
Q. I know that there is an "application to sell or mortgage property" that most probate courts will need before allowing the property to be sold.
A. Are you referring to a court petition?
Q. Is there anyway to skirt the probate court?
A. NO, but why would you want to? Probates are no big deal.
Q. Can I put the house into a land trust and THEN fill out the application to sell or mortgage myself?
A. How you hold title, whether in or out of a trust, will have no bearing on the probate. This is THEIR probate, not yours.
Q. Does the probate court care what happens to the house?
A. YES as long as the probate is still opened. Once completed then the probate is closed and the administrator can do as they please as directed by the beneficiaries.
John (LV)
[ Edited by jfmlv1950 on Date 10/04/2007 ]
UPDATE:
Ok, I received a call form the homeowner today saying she just supplied the probate court with the inventory list and a "restriction on assets form" which is used to open an account where all the proceeds from the estate will go to pay off any lienholders on the property.
There are several liens on the property, sewer, tax, car notes, credit cards etc...
So again I ask: How do I put this property into a trust without raising flags to the probate court?
Certainly, The probate court will not allow me to transfer title, sell the property in my name and collect the lions share while the estate only collects a small portion.
jfmlv1950, You said "How you hold title, whether in or out of a trust, will have no bearing on the probate. This is THEIR probate, not yours. "
So does that mean I can take title now while the property is still in the probate process, market it, sell it and THEN pay out the estate/lienholders/beneficiaries etc..?