Deeding over a commericial property???

12 Replies

I am wondering if someone simply deeds their multi unit building over to me what will the bank do? Will they call the loan due ( I know they can but will they)? What if the seller simply adds me to the deed and then removes himself a year later after I have taken over the building completely from him?

If it was in a company name, I'd investigate that very well and sign the company over, or move it in an LLC and take a clean LLC.

Commercial loans may use different security agreements, I'd read that carefully, some lenders will allow a transfer keeping the collateral position and the borrower on the hook.

Yes, taking a half interest in title with a Special Warranty Deed subject to the loan is probably less alarming, a quit claim between partners later on would work. Check with your title insurance folks as deeding can terminate coverage. You could just take the whole thing Sub-2.

Have you considered simply asking the bank to allow you to go on the note. If they guy is ill or elderly, they can be more agreeable. :)

@Bill Gulley

Thanks for the quick response bill. I did ask the bank about the seller (he is a 75 year old man) simply deeding the property over to me. They said no. However I thought that the bank really could not control weather or not the seller does that, but that they could only call the note due if they so desire.

Originally posted by @Jarrett Harris :
@Bill Gulley

Thanks for the quick response bill. I did ask the bank about the seller (he is a 75 year old man) simply deeding the property over to me. They said no. However I thought that the bank really could not control weather or not the seller does that, but that they could only call the note due if they so desire.

Place the property in trust, send a letter to the bank telling them this 75 year old borrower is doing his estate planning, letter is not from you BTW, but from his attorney. Later you can be the beneficiary of the trust which doesn't appear in RE records. At 75, that was just unreasonable just to not allow you to pay a couple points and join him on the note and title! So, there ya go.

And, at 75 he's getting to the age where his heirs need to be informed, no idea what the deal is, but they can come out screaming after the fact causing all kinds of trouble. They will be in a position to assume that note too. It's not just death but also incapacitation issues. Good luck. :)

@Bill Gulley

Thanks Bill. When I asked about the bank allowing him to deed to property to me, I meant like a quit claim. That is what they said no to. I did not consider just adding myself with him. They may consider allowing me to be added, I will ask about that. If you were me what would you do in what order.....?

1. Deed property to Trust and make me the beneficiary?

or

2. Try to simply ask the bank can I be added to the deed?

or

3. Any thing else I am not aware of???

Thanks, you have been a big help in just a couple of responses.

Why is the property being deeded to you? Are you buying the property from him? Have you asked the bank if they will allow you to assume the loan?

One thing to be aware of, most banks and title companies do not like quit claim deeds, so I would imagine a bank would always say no to a request for a quit claim deed.

@Andy B.

Yes I am trying to buy the building. I asked the bank about just assuming the loan and they said no.

@Bill Gulley

Please explain title coverage.

Jarrett,

Is there any equity in the property, do you qualify for a the loan? If there is equity that he would be willing to carry to help you purchase the loan. Does the property need repairs that can be done to allow you to raise the rent to add to the value of the property? To protect your investment from his heirs as Bill said, you need to get him off the deed or a contract that protects you. I know more questions than answers, but the more you explain the deal the more you can be helped here at BiggerPockets.

Title coverage under the title insurance policy, when deeds are made conveying interests in whole or in part, that effects the coverage, like none provided to new ownership interests. See you title insurance company and they can extend coverage.

If heirs are not in the loop and you end up being in title, they can still come after you and the property, just having title is not enough, if the claims are that you ripped off daddy. Have them involved, get the to acknowledge the deal between you and them, just as to being aware that daddy is selling the place. Ounce of prevention.... :)

@Bill Anderson

Please see link below

http://www.biggerpockets.com/forums/432/topics/120047-would-you-try-to-do-this-deal12-unit-building

Property is in very good condition and needs no repairs. Rents are already at the top of the market. We are having the building appraised in the next 2 weeks. I am guessing it is worth about $500K The seller owes about $435K on it.

@Bill Gulley

I will look in to the title coverage. He has 3 grown children that say they simply don't want it or any of his properties. He owns 2 others beside this 12 unit. I will make sure as we do this they are aware of what is going on.

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