Extremely Unique Pre-foreclosure Situation!
An owner in pre-foreclosure has a duplex and wants to sell the back duplex (half the property) on its own for all cash. He has to sell it for "all cash" because apparently no bank will take a loan on a property where one owner is in pre-foreclosure. He would rather just sell the back instead of the whole thing because he is very emotionally attached to the property. The amount he is wanting to sell the back duplex for is the exact amount of the loan he needs to pay off. Then he wants to keep the front duplex as an investment. First of all, is this doable in a way other than being a partner with him? Could I actually legally own half the property, even though there is a common wall or would we be partners on the whole property (which I wouldn't want; he seems a bit unstable). It's a very slight cosmetic fixer, although he has done a lot of work on it, and if he were to sell the whole thing in desperation, it would be about $50,000 less than market because he's in a hurry (he actually threw out a figure). But he is desperate to hold onto "part of the property." How likely do you think it is that someone will come up with all cash to buy just the back of the property? Is this commonly done? If so, is it definitely a partnership situation?
Was the "duplex" conveyed by 1 deed or is there one deed for each side (like A and B). If the latter, then you should have no problem. If the former you will. You will want to speak to an attorney about this. Alternatively you can re-deed the property (assuming 1 deed) to the two of you. In the new deed spell out that each of you has a 1/2 undivided interest in the property (the whole thing) and own it as joint tenants with right of survivorship. If he is married and living on one side, the spouse will need to sign off as well. I would then separately have an agreement as to the arrangements between the two of you on this (present owner lives on 1 side, you rent the other).
You will have to come up with the money to cure the default.
J[ Edited by jorge121 on Date 09/13/2003 ]
Thanks, Jorge. No, it's one deed, so I would have to do the joint tenancy thing and really don't want to do that. (Like I said, he seems unreliable and odd and I'd rather not have to be dealing with him on a business level like that). He actually doesn't live there now (has a renter), as he moved to another house (which is why he's in trouble; he has two mortgages to pay and not enough income). I'm just going to offer to buy the whole thing or nothing. Thank you for that interesting information that I can use in the future. [ Edited by mtlbs on Date 09/13/2003 ]
you're welcome. if the existing financing terms are decent you might convince you to let you take subject to the existing mortgage after you cure the default. you might even submit documentation for a repayment workout (so u don't have to come up with the full amount in arrears), pay a portion upfront (they usually ask for attorney's fees and costs and put the unpaid interest on the back end), give the seller some walking money, and have him deed the property over to you.
Obviously the easiest thing is to purchase it outright but I wouldn't be a creative investor if I didn't give you options.
You can actually convert duplex sand 4 plexs etc into condos and have different deeds for the two units. This however will take months to accomplish and is better done when the units are built.
Thank you,
Ted P. Stokely Jr
Hi, you could have him put the property in a trust, name him as beneficiary, and you as co-beneficiary. then have him sell you 50% interest to the trust. Voila, you now own half the property! But remember to ALWAYS COVER YOUR BUTT!
I tend to believe that one should never get involved with the seller, however. My suggestion to you would be too break his emotional ties to the property by using good strategic salesmanship, and convince him to sell you the property outright.
-Brandon-
YOu may very well be able to buy just the back unit.....but why? It sounds like you have a motivated seller there. He is about to be foreclosed on. Have you thought of playing hardball and offering to buy the whole thing? It doesn't sound like he has a lot of alternatives, and it would be better for you in more than one way to have both sides.
You could say that you want to help him keep from getting foreclosed on , but can only work it if you can have both units. If he wants to get his act together, and sublease the front unit from you, that may work .
...just a thought
Thanks - All good ideas. But I talked to him today and he IS now ready to sell the whole thing, as he has no choice. Selling just the back was apparently a last ditch effort that hasn't worked. It turns out he listed the property six months ago with a broker and couldn't (or didn't want to) sell it because four people were living in a two-bedroom and it was a mess (and he wasn't quite as desperate then). So now the price has dropped by about $30,000. The new problem is that I'm going to see it again tomorrow with his broker and another buyer who is offering the exact amount I want to offer (or so they say).
Newbie I have heard that one before "We ahve another offer we now want more"
Say Ok please show me the written offer and I need the phone number of the buyer.
Also offer all cash close 3 days.
SKI