Buying in a partnership (using only one partner's name)

2 Replies

I am starting a partnership with a friend where he found the deal and will do the work, while I put up all the money. The issue is he has to initially buy it in his name because he is doing a shortsale. How do I protect myself between the time the deed goes in his name, and the time he quit claims it to the LLC we created with an Operatinf Agreement which acknowledges my captial contribution? Do i need an interim partnership agreement which says I own 50% of the property until it is put in out LLC? Or should I record a temporary note and mortgage with my partner?

It depends... who owns the LLC and how are profits going to be distributed. If your just collecting intrest on the money i would just set up a mortgage. If you are sharing in a split of the profits and its a one time deal i would look at forming a joint venture. If this is going to become a business and you own the LLC togather I wouldnt worry about it and work with the title company or closing attorney to quit clame it into the LLC at the time he closes on the purchase. If you question your partners motives and ethics at the beginning you may want to avoid being partners in an LLC. And joint venture the projects as the come along.

Might be a little different up there, but Justin is spot on.   Depends on how well you know your friend.  I do a lot of stuff with my guys on handshakes believe it or not.

Anyway, like Justin said, if its just the one deal, pen it out on paper, let him buy it and secure it with a mortgage. You can transfer the property later into an LLC or form a JV/partnership and run it while its in his name. You arent on title as an owner, but he cant sell it without paying you off because of the mortgage you have.