Hi there - thought i would ask the bigger pockets community in case there is someone who has done this before - I own a 4plex with my sister and ex-brother-in-law. they want out, so I want to buy their shares. they each own a quarter. i will assume their portion of the mortgage loan, but they also have some equity, i'm thinking about 40k to each, and they have agreed to carry that loan with seller financing over 10 years. but my question is, in this scenario, can the loan to them be secured by the property? if i stopped making payments to them, but kept them up on the official mortgage, how would they go about foreclosing on me, if they each only own 25%?
tricky. wish i just had a bunch of cash to pay it off right away.
any ideas, let me know. Thanks,
Rose, not difficult, you buy Subject-To with them under a contract buying the property and they carry back the equity in a note with a deed of trust filed as a second mortgage. You can name each "lender" in several ways, separate notes, a note assigning different parts of principal, they can both hold a divided or undivided interest, divided is probably better after a divorce.
Another point, your sister can assign her interests and your x-brother in law arising from a divorce, being family you can avoid the due on sale issues, to do that Sub-To safely you need to see your attorney. I suggest that your attorney gives notice to the lender about the matter and the disposition of the case in this matter and you can have a smother sale transaction, changing insurance and tax records. Good luck :)
They have every right to foreclose on you if you dont pay. Effectively they foreclose on you and win. They now have the right to pay off the first mortgage and take over the property completely. It doesn't matter that they have equity. They could have zero equity and they still have foreclosure rights. They could also sue you and go after your wages to pay the second mortgage through garnishment.
thank you both!
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