1st Deal prebigger pockets nightmare

9 Replies

 Bare with me I am very new to this community. So before I found bigger pocket i entered into a deal with a friend.  His credit would not allow him to get financing so I cosigned for a 25% position in the property.  Because we are friend we did not commit this agreement or any terms to paper. It has been a littler over a year and he has already been 30 days late one time. Ive since notified the lender to inform me of missed payments in the future ASAP. So now I am on red alert in case I need to set in in to protect my credit. Obviously in the deal he is responsible for the monthly payments and we have one other side benefit for me, I get the tax benefits from the mortgage interest. Since entering the deal he has been giving me less and less feeling of confidence in him has a business partner.

So this is my situation.

 My question is in 2 parts:

1.  How can I get out of this deal?

2. If my partner has a late payment again can I leverage the entire property from him?

I am note sure you can get out unless he will sell his interest to you. Ask him if he is willing to sell.

If you can't get out of the deal, is there a way for you to make the payment and work with your friend to get the money (or collect the rent from the tenants in order to pay the bills)?  It might be less than ideal, at least you won't have dings on your credit score/report.

Originally posted by @Jimmy Cole :

 ...so I cosigned for a 25% position in the property. ... he has already been 30 days late one time. ... Obviously in the deal he is responsible for the monthly payments 

 Uh, you now have one 30 day late payment on your credit.  Between the two of you he may be responsible for the payment, but as far as the lender is concerned YOU are equally responsible.

My advice would be to convince your friend to sell since its clear he's having a hard time making the payments.  And, in the mean time, you take over making the payments and have him send you the payment, if he can actually make it.

I see a lawsuit in your future.

@Jimmy Cole You might talk with your friend and see if you can get a partnership agreement down to writing.  It may not be too late, and it will more clearly delineate what you should expect from each other.

As the others have said, you might also ask about buying him out.

First, speak to a lawyer and they'll help you with an advantageous way to move forward. It doesn't matter if he's your friend for 40 years, he's your business partner first. Treat your relationship as a business and protect your interest. Like the others have posted you could ask him to sell, but if he refuse you'll need to take him to court for partition. Let this be a lesson, never do business with friends and family. A spouse is the only exception because they have no other choice.

Wow...! Thank all of you for getting back to me concerning this situation. looking at the comments it sounds like basically I am at his mercy to get out of this deal.  Lesson learned. I believe I will get him to commit to a written agreement to proceed with going forward. Somthing that has some terms and consequences.

@Brandon Raeburn What is a partition?

Originally posted by @Jimmy Cole :

Wow...! Thank all of you for getting back to me concerning this situation. looking at the comments it sounds like basically I am at his mercy to get out of this deal.  Lesson learned. I believe I will get him to commit to a written agreement to proceed with going forward. Somthing that has some terms and consequences.

@Brandon Raeburn What is a partition?

He meant Sale in Lieu of Partition. You can't partition a house. You would ask the court to order the property sold, if it came to that.

@Tom Gimer thanks for sharing you insight. Hard won lessons are lessons not quickly forgotten.  I’m he future I will definitely have a written agreement and a exit strategy before I go into any deal!

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