1031, Structured Sale, Creative Contract, Help me make this deal
Thank you to everyone who takes their time to offer advice on this valuable forum.
Background/Bullet Points:
San Diego duplex.
No debt.
Not a rental. Two vacation homes. Divided by a Co Ownership Agreement.
I want to buy out my partner’s interest.
She wants to sell her interest.
She/seller wants to do a 1031 and buy another property. (Marin County, CA)
We have looked a Structured Sale but it does not have all the advantages of the 1031.
I have cash to close.
She/seller cannot find the “right” property.
She is the manager of the LLC that holds title with her parents.
They have not set foot on the property in almost 3 years.
I live in one of the units and have managed and maintained the property for the past 6 years.
Her parents are not able to manage their affairs and she handles their $$$.
We have a number of serious deferred maintenance issues that she does not want to address.
I would much rather buy her out than go to arbitration to force her to participate in the work for the deferred maintenance and the renovations I want to do.
It could be a couple years or more until she finds the right property. She is very picky.
I want to do something now!
Questions:
What are my alternatives?
How can we structure an open ended escrow that places the funds with a third party and allows me to do the improvements and address the deferred maintenance?
Would she/seller be able to go sign her side of the closing documents once she locates the “right’ property.
Could we create language in the escrow instructions or a separate contract that relives her of all ownership burdens and allows me to proceed with renovations?
Not that I think she would try to pull a fast one, but I would want a contract that leaves the deal done with the exception of signing the closing documents and picking up the check. She can’t get out and would have no recourse to anything I do with the property short of re-selling. I
Obviously the 1031 facilitator will have a function in the deal I’m just not sure of what prior to the funds being received after close of escrow.
I realize I’m rambling but I hope ya’ll can see the problem I’m facing and can offer some advice or strategies that will get this deal of high center.
Thanks in advance.
dgsaz