Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
I have a lot under contract that the seller can not sell until July 10. Seller bought the lot last summer before things picked up, and now realizes he can make a small gain by selling on long term capital gains. He currently has no mortgage on the property. Is there a legal way to structure this so that all three parties (buyer, seller, and lender) all are safe? I would like to start the build asap. Thanks.
Bryan A. - I assume the seller does not want to sell until July 10 so as to keep things as long term capital gains, as opposed to the seller can't sell because of some deed restriction (or redemption period); is that correct?
If so, then you also have to be certain that whatever approach is taken does not fall under "disguised sales" to the IRS. I think this is where it may get difficult.
Rich Weese, just to be clear, the property you're referring to, did the seller subordinate his lien place, taking a second position behind your private lender but still selling to you? Or did he allow for you to put a loan on his property but you hadn't transferred title into your name yet? I'm not trying to circumvent anything. The seller doesn't want to sell until July 10 for tax reasons -that's his right. I can very well wait until then to start. I'd just like to start earlier if possible.
If you don't need the financing to get started you don't need a subordination agreement, you need a sale contract to buy in July and a build contract, as if it were an owner build job, with the owner, that is sufficient to protect you until you buy. :)