I Think Im Screwed!
Before I start let me say, I know I messed up but Id rather not hear what an idiot I was. So now that that is out of the way Ill tell my story.
I was partnering up with a guy on a good deal. I paid 50k for the house I paid cash for the property. When I bought the property I put it in my partners name. After we fixed up the house it appraised at 80k. Now here comes the problem. I was going to purchase the property from him for the higher price but now he is refusing to sell me the property. Im pretty sure im screewed because the property is titled in his name and the only proof I have that Im involved is the check I wrote for the purchase but Im not sure if that is going to be enough to save my a*@. If any of you have any suggestions or advice PLEASE let me know asap!!! Thanks
P.S. One thing I forgot to mention was that we have already started the mortgage process for me to buy it from him. He says he'll give me the original 50k back but is going to keep the overage. Am I screwed or do I have any recourse to recover my money???[ Edited by lumanchu on Date 02/04/2004 ]
Oh wow! all I can say is Some Partner! It would have been a lot better if you had at least had some kind of written deal on paper when you put in the money. The only thing I can think that you might try is to try to scare him by having a lawyer write a letter saying that he is representing you in the matter and that he has 10 days to respond or a hearing will be scheduled. You could probably get a lawyer to do that for 50 bucks. You said that he won't sell you the house. did you ask him to refinance so that you can get your money back at least? What is he thinking?
I'm confused about the details - you paid 50K cash for the house, put it in another person's name and then were going to pay another 80K to get the house from this person? If the ARV was about 80K, then why would you pay 50K + 80K = 130K?
Maybe you could clarify if I am not reading your post correctly. Regardless, if you feel inclined to pay another 80K for this property and you had an oral agreement with the other person you might be able to go after them for breach of oral contract.
This does make for an interesting story though. Curious as to why you would put a house in someone else's name that you paid cash for?
Good luck in sorting this out,
Noel
[addsig]
Did you close through a Title Company?
If so there may be something in the closing documents that enable you to at least file a lien on the property.
Did your "partner" sign a Promissory Note? That would be a great help in at least recovering your money.
I really hope that this was not a kitchen table closing with the bare minimum of documents.
Please post more details so that someone can give you some real advice.
[addsig]
Let me clarify.
When I bought the property for 50 we were going to fix it up, I was going to buy it from him for whatever is appraised for which is 80k so hypothetically there is a 30k profit here. I was to get my original 50 back plus 15k profit.
We bought this property as a foreclosure so we did go through a title company but like I said all I have for docmentation is the check I wrote but that doesnt prove that its my house. Plus if I go through with the purchase from him and then try to sue him for the balance of my profit I do believe that by me originally buying the house and then try ing to get my money back + infringes on bank fraud. I think maybe I should get my original 50 back and thank the Lord I got at least that back unless you guys know of a way that I can do this!
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" You could probably get a lawyer to do that for 50 bucks"
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When you got an attorney that will do that, let me have his email or the business phone and address. I know enough people that would pay at list double for such service. The problem is, what about if he don't bulge? Bluffing is not something ANY decent attorney would do. When you make threats, you better be ready to deliver the punishment or you are in deep ... sand.
BTW lumanchu, you got an interesting character for a "friend". Try some private collection agent/s. For 30% they will collect what yours and would keep their cut.
If you buy a house with your partner and put it in his name using your money, how is that fraud? I don't have a solution, but I wouldn't let the idea that you've committed some kind of fraud stop you from using a solution of your own, unless there is more to this story than we know. Difficult to prove, but I guess you could sue him. Your argument could be simply, "Why would I buy a house for this person unless we had an agreement?" Why would anyone? It would be obvious to any reasonable person that you must have had some kind of agreement. Z
You need to do one of the following:
#1- File a "Memorandum of Purchase
Agreement" to cloud the title.
#2-Go to a lawyer and file Les Pendence
Best Riches,
Jeff Adam
[addsig]
The best advice I can give you is to hire a RE Attorney to handle the issue. But to go into a business relationship without a written agreement is dangerous. It is even more dangerous to put up money without a written agreement.
take him to civil court and try to sue for the 80k. to me, it seems that since you paid for the house you're entitled to the current value. i'm no legal eagle, so take what i say with a grain of salt but that's what i'd do.
then i'd use putting my name on the deed as a plea if he wants the case dropped - or even signing a power of attorney form so you could do as you pleased with the place and help yourself settle this up.
dude is dirty. who did the work? maybe there's a way to file that 30k as a mechanics lien ..
I am sorry to hear about your problem! There was no written letter of agreement or contract?? Def. talk to a lawyer maybe they can suggest how to go about doing something about it. There is nothing illegal about what you did. Hope it works out! PLEASE tell us the name of the individual!!!! My sister has just started bdgging in the SC /NC Charlotte area. I would hate for her to have to deal with the scum that you had to deal with. Was the person a friend? relative?? All I can say is KARMA... plus I am sure you will make others that might find themselves working with this person are aware of what a shady character he is....
UUUU that makes me mad when people act like that.
Good luck.
Carpe Diem and kick some bu tt K?
Veronica
Thank you for all your www.replies.T
To answer a few of the questions posted.
The way it was done was that I purchases the property with my money but titles it in his name so in escence the property is his. I then was going to purchase the property back from him with a mortgage this is where the bank fraud comes into play. Im pretty sure that since Im trying to make money on my money by trying to sidestep the system is illegal. If Im wrong then Id really like to know.
As far as any signed documents that say we had an agreement, well there arent any. I had done many deals with this guy and had never had any problems. I think the reason he is doing this is because my credit score dropped form a 700 to a 645 in the past six months and Im scared to continue doing this business with my score declining so quickly and to be honest its kinda slow going as far as the money coming in. So when I expressed my fear to him he turned. If any of you have some suggestions or info that may be useful feel free to post of message me. Thanks again!
IMO
The fraud would be more of an issue if you claimed to be buying it from him for more than the appraisal price. As it stands now, you have a situation that just looks a little off.
Could you have gone into this agreement with the possibility of fixing this up and selling to another person? Can you honestly say that if another person had offered you $81,000 that you wouldn't take it? Maybe you put it into his name because he is in a lower tax bracket, Maybe you were trying to help him raise his credit? These questions can help to mitigate your "intent".
The structure of the deal doesn't make sense to me. Why would you want to have a sale occur, which brings in the factor of a capital gains? Why wouldn't you just buy it, fix it and do a cash out refi to get your money back.
I still don't get it the logic:
* You paid $50k of your cash to buy a fixer out of foreclosure
* You put the title in his name as your partner
* The house when fixed up is worth $80k
* That $30k profit would be achieved by going $80k MORE INTO THE HOLE, to come back up $15k??? That still leaves you $115k in the hole
Plus, your $30k profit did not account for costs for fixing up a house that needed fixing up , so you could retail it. Buying a fixer for $50k with an ARV at $80k, unless it is only $5k cosmetic work, is not a deal to begin with.
You are in trouble with this one, unless you can cloud the title somehow so your guy has to come through you to get clear title and move forward.
I outlined the above to show you that you need to think about what you are doing next time.
$50k cash, then $80k more in debt, on a house to be fixed and flipped, for a profit of $15k, = NEGATIVE $115k. If you were holding and renting, with title in your name, in an appreciating market, then that is smart debt, but in this fix and flip situation it is just killing yourself for no reason.
If anybody sees I missed something, let me know. Just trying to point out some lessons for the future. You'll get there bud!!!!! - Dave
My friend, you may well have a problem!
Here's the downside of it.
This may well be a case where the apprentice outtricked the wizard.
You face a simple choice.
--- Take him to court, and you both may end up winning a free stay in that all-inclusive resort called Club Fed. Both of you then will get Graduate School level personal tutoring on the intricacies of fraud and money laundering. You may become experts, write a bestseller on the subject and hopefully after a few years come back among us and teach us here (for free I hope) at TCI how and why to avoid this path.
--- Your other option is to view this as a $50,000 fine, in which case I suggest you consider yourself lucky and go out and celebrate by buying yourself a Grande Latte at Starbucks and just enjoy being in the company of free men.
Whoever advised you to conduct your RE Investing in this way, did you a great disservice.
Avoid his company from now on.
His type of Investing gives our Industry a very bad name.
_________________
Luctor et Emergo
[ Edited by Hawthorn on Date 02/05/2004 ]
[ Edited by Hawthorn on Date 02/05/2004 ][ Edited by Hawthorn on Date 02/05/2004 ]
I think it was supposed to work as foolows:
Lumanchu puts in 50 K cash so the partner now owns the property free and clear. They fix it up and Lumanchu takes out an 80 K loan on the house to buy it. His partner thus gets a check for 80 K from the bank.
He is supposed to give Lumanchu back his 50 K cash and split the profits of 30 K minus costs incurred for fixing it up which I think he forgot to mention when he said 15 K each.
Lumanchu ends up with - lets say 10K profit in his pocket and a fixed up house at market value, ready to be rented out
Steeler19 you got it right
if you helped to pay for or you did the fix up work yourself put a mechanics lien oon the house for the 30k. then if he wants to settle have him give you power of atttorney over house sell it and deduct all your legal costs from his share of profit.
You have gotten all but a helpful opinion here. You are not in that bad of a position. Not the best but not a fatal one.
The first thing you need to do is cloud the title so that your "partner" cannot sell the property, etc. This can pretty simply be done. You are a lender in this case and have the right to record a mortgage. There are some tricky things that may come about not having the mortgage signed by the homeowner. Your attorney can easily help you with a solution. This is the easy part.
The hard part is that you may have to wait to get your 50k back. In some states there is statute and common law that dictate agreements that are not spelled out in writing. In iowa there is a minimum percentage of interest that must be included in every loan.
You can file a mechanics lien in the amount of the services and/or materials related to the fixup of this home. You can do this extremely easy and this is a pretty quick way to cloud the title!
Basically your first call should have been to your lawyer. It may cost you some money but not as much as your $50,000.
Don't worry....this one is an easy one![ Edited by myfrogger on Date 02/05/2004 ]
How can I cloud the title if I dont have any proof of a mortgage? This was done strictly verbal. ALso, the work that was done was by both of us. I tried one time to place a mechanincs lien on a property and I had to have receipts and estimates and all theese other things to do it, is there some other way aaround that?[ Edited by lumanchu on Date 02/05/2004 ]
if he is willing to give you the 50k back without any hassle, do it...hiring an attorney can be costly....at best the court will determine that this was a non-secured loan.. if you pursue it your 15k profit can turn into a nightmare....chalked it up as a learning lesson...the only loss is your time fixing up the place, and your interest free loan to him...[ Edited by lp1 on Date 02/05/2004 ]
Couldn't that 15k lost be used as a bad debt right off????? I made a personal loan to a friend who shortly after lost his job. Tricky thing is that we rented a house together at the time. Then I moved out and after 1 yrs still not payment. I wrote and called him, but he was never able to get back on his feet. We were still friends and I was not desperate for the $ so I let it go. Later my CPA told me I could write it off as a bad debt. My proof was my cancelled check and proof (like certified letter, emails etc.) I also wrote a letter to him stating that I intended to write off the loss as bad debt. I got the letter notarized and had a return receipt letter sent to him. I got my write off and he got to breath easier. I could have pursues the issue taken him to court or reported him to the credit bureaus, but I have a heard and did not.
I am still known to lend $ to friends/family along with a signature from them. That way if anything happens I don't have to get confrontational..just make sure I have proof of the personal loan and that I send them letter "requesting" payment. And prove that I did my best to get the $ back. No use in getting nasty. Although the $ I lent my friend is the only time that I have had to do that. Check with a CPA.. there might be some limits the IRS puts on this. The loan I made was only for 500 buck it may not work the same for larger amounts.
Don't know if this will apply to the 15K since it was a verbal agreement (maybe putting your verbal agreement in writting and mailing a notarized letter requesting the 15k due) etc, but it is worth running by your lawyer and CPA...
Carpe Diem,
Veronica[ Edited by vlynn007 on Date 02/05/2004 ]
Have you spoken with an attorney yet? If not, why not and what are you waiting on?
You can cloud title, and you can sue him if you want. IF he is an active investor AND investing in his own name, it may even be worth it. However, NC is a NOT garnish state, which means that you may or may not ever actually collect even if you win a judgement.
If he is willing to give you back your $50K, do and be done both with him and this "deal." Personally, I still don't understand your logic in this type of investing, especially if you can put $50K down in cash. You should've had no problem doing this completely on your own. As it appears, this other investor brought nothing to the deal. However, it's not really for me to understand. If it normally works for you, okay, though more legal papers may help.
On a different note, how's the ol' WCU holding up?
Roger
*Sorry if this seems out of order, I wrote it before I saw the second page
I still don't see how any of this is really fraud. Why can't someone use his money to buy a house and put it in someone else's name??? Partners do it all the time, we put property in trusts, make the property belong to a company,etc., so what? All this talk about going upstate and this and that, I think some of our well-meaning posters are blowing some aspects of your situation way out of proportion. Since when is it against any law to partner up with someone and one guy use his money and the other does the work? Or maybe they split the work, whatever, in exchange for some other compensation - who cares? What's all this fuss about fraud? Am I missing something obvious? It seems to me you had a perfectly fine deal going for you and you were going to save 15k, except that you had no contracts and your partner decided to bail with your dough. Z[ Edited by Zach on Date 02/05/2004 ]
Lu,
It doesnt look like your getting much understanding here.
The bottom line is that you were the money and he was the credit. The only part that got jammed is that your goal was to force a sale amongst yourselves to max out the loan to the value of the property and he is holding your 50k hostage under the guize that title is in his name only.
That being said: I do not know if that can be construed as fraud or not it doesnt matter. I will say NO because there hasnt been any loan fraud yet. There is no law that prevents anybody from paying cash for a prop and then trying to get a max loan on it.
First you have to establish if he is trying to take you for the full 50k or not. If he is then lets proceed.
You do need an attorney no doubt. most people will crack when the pressure is high. He knows he is wrong. Call his bluff.
Just because title is his name does not mean he has no responsibility to you. If you have done other deals as you say then there can be what is called "implied partnership" this is very powerfull and can be used to your advantage.
Just because title is in his name doent mean there wasnt a chain of events. The most important one would be where the 50k came from in the first place. You didnt pull it out from under your mattress did you? NO you mostlikely wrote him a check or got a cashiers check from the bank in witch you have the stubb and can order a copy of that cancelled check with his signature on it.
You need to get an atty to draw up a demand letter with heafty penaltys. Use words like "intent to defraud" "malicicious intent" "pain and suffering" "deceptive trade practices" "attatchment of real assets"
In the mean time find out if you can get your 50k and give him the deal.
If you guys have done some shady things together that makes you afraid that he might tell on you, remember he would be blowing the whistle on himself too. So dont be afraid, BARK loud.
[addsig]
I had to go and reread just to make sure the advice i gave was good.
It was. However
You said that He was willing to give you your 50k(out of your loan proceeds,though) but was going to keep the other 30k wich puts you on the hook for the full 80k even though you have drawn your cash out. Thats bad. As a worse case you could do this but you would be looking at losing holding costs sale commisssion etc. This would be a hassle for you but not impossible. I do not rccomend that you go this route.
The property is free and clear, if you get a loan on it and he doesnt give you the money then you would be out the 50k + have a 80k liability. that would SUCK!
He is trying to extort 30k out of you as it stands (the profit, as you call it, is not because you were only splitting loan proceeds) He is obviously trying to turn a 15k laibility into a 30k real profit deal for himself.
So sneak in the back door,
Tell him you are going to go through with the loan so he can get the 30k, but you want to secure your interest first. Have him sign a loan with you for 50k with a short ballon with the max interest rate and file it.
The only part is that you do not uphold your end of the deal. Max out all your credit cards apply for several more. Max out all your lines of credit. Understate your income on the app.
You will get turned down for the loan to him. But guess what you got the lein on the property. Foreclose.
_________________
B.G. & Wheeler D. LLc Inc. and Trust
(A division of: Half Vast Enterprises)
"Most american millionairs today (about 80%) are first generation rich"
[ Edited by WheelerDealer on Date 02/06/2004 ]
Follow the prior advice of Jeffery Adams he is right on.
Then, try and settle and recapture your original investment. You have not done a fraud cause that time never arrived.
You have learned a lesson. I learned such a lesson a long time ago. I put up the money and bought a lovely house above Sunset Blvd in the hills of Hollywood. I used an actor friend to go into title. We would split the property sale profit. He moved in and fell in love with this lovely tudor house with pool. Actors heaven. He came to me and said "Lucius I really feel bad about this, I have no money and I have moved in and it is everything I have ever dreamed about so. I am staying. I feel bad about defrauding you and the only excuse I can give you at this time is. I am Irish, you flew for the British and accordingly you bear a part of the responsibility for the 800 years of fearfull oppression that Ireland has suffered."
Well I was floored. I got laughing, fell down he pounded me on my back to cure the hic cups that followed. I wiped my eyes and left.
Moral: Never trust an actor with money and never let an Irishman that has just defrauded you tell you a funny story.
The End. Contrite Lucius
I'd suggest quit claiming the property to a trust or LLC. Just to make sure the property has a clouded title.
Next there must be some people you talked to about this? For those who have never been in a civil deposition it gets nasty. Even this guys poor mother, for example, will give him up out of fear of the penalties of perjury.
I'd file the quitclaim and concentrate on getting my 50K back. The 15K that may be yours in the deal will end up going to the lawyer in legal fees and you'll have a million dollars worth of stress to boot.
Do not get a "I'll sue this guy" attitude. There is not enough money in this deal to make it worth the time, effort and stress of a lawsuit. If you get the fifty back you'll have the benefit of being a sage advisor for those who follow.
Welcome to the U of Hardknocks.
Good Luck and sorry for your trouble.