Hi All!

So I have a complex (at least I think so), situation I need help with. There are multiple items at "play" so I may need to provide more detail to fully resolve the issue.

Quick Background:

Bought a rental property in March 2010 with financed alongside two friends/partners. Have an informal partnership agreement we all signed, but no LLC or partnership really formed. The mortgage is 100% in my name and it shows up 100% on my taxes alone. One of the guys gives me the numbers at the end of the year to use for tax purposes and I really act like an absentee partner. For my own reasons I want to now get out of this investment.

One partner has proposed the following and I want to make sure that from legal and tax perspectives it all makes sense and is legit..

• 1.Form an LLC where three partners would each have 1/3rd interest.
• 2.Transfer the property (title) to the LLC via quit claim deed for some price/consideration
• 3.He would buy our shares/interest in LLC so he ends up with 100% ownership
• 4.Mortgage would continue in my name and I would remain the Garantor (he will pay me some fee each year to keep it in my name). I know this appears risky and it is, but due to our financial and other investment situations, we do not want to incur the cost for getting a new mortgage under another name or the LLC. But for this situation let's say I'm good with keeping it my name. He will pay down the balance in the next 3-5 years for which I will probably create an agreement.

Questions:

Without the transfer of the mortgage from my name to another entity, can I remove this off my books(taxes) and realize the suspended losses?

Would I be able to generate a legal/legit Sales contract and/or settlement sheet for the "sale" to the property? We do not plan on actually exchanging any money for the "sale" to the LLC.

Is this really a “sale” or is it a transfer or is something else?

At the end of the day, I would be out of the LLC/partnership but mortgage in my name for which I will be compensated for the risk.

What type of agreement/document can I draft up to protect myself and make him commit to the arrangement?

If the property is sold for a loss and that loss is combined with the suspended passive losses, which have accumulated over the years can we now utilize them when this comes off my taxes?

Are there any long term or short-term ramification to my personal finances and/or taxes that I need to be concerned about?

I know this is a lot and you may have some questions, but I need some advice and guidance.

Thanks for your help in advance!