How to get my money back?

7 Replies

Hello everyone,

Here is my situation:

I bought my house about three years ago. After living in it for almost a year I was able to build a nice chunk of equity so I decided to take a Home Equity Line of Credit. After being approved, I decided to invest that money by giving it to my friend who also happened to be my realator who I purhased my first home from. I would say that I did not approach the situation in the most appropriate manner but long story short, we signed a promissary note which gaureented me getting my money back in three months. Well it's now been 10 months and everytime I ask about my money they either ignore my calls or tell me it's going to be very soon. What's the best way to approach this? How can I get my money back? I will definitly say that I learned my lesson and going forward, I will handle this situation a bit differenlty. 


If you have a signed contract, then court is usually the only way to handle someone that wont pay!

Getting a court pay you back...!  that is the reason you signed a contract to be paid back...let them know that is your only recourse if you do not see the money by the end of the month...

Did your friend then reinvest in real estate or was it for personal reasons...?  doesn't matter really a contract is a contract take them to court....!

@Carmen Severson he used it to reinvest in real estate. He even has an LLC. Would a promissory note suffice as a legitamite contract? Would taking then to court, I feel like that would delay my return wouldn’t it? My understanding is that they may have him pay me back over a period of time?? Thank you,

@Nadir M.   You should consult a reputable attorney versed in business and real estate, they will be able to formulate a game plan for you.  They need to review your written agreement and go from there.

Whatever the reason for the delay, it is not acceptable for them to not call you back and/or not detail what the trouble is and give you some kind of expectations and plan on when your funds are being returned.

Most likely your cheapest first option is to ask your attorney to send a formal letter asking for repayment.  If that doesn't generate a favorable response then your attorney will likely look to file something and have the other party served.  Usually gets their full attention.  Short of that you may be able to get your attorneys assistance to renegotiate your note and get a mortgage recorded on one of the properties instead, that would tie it directly to a specific property and put you in better position to force repayment via foreclosure.

If you do end up in court and you win you'd most likely get a judgement which your attorney can then have recorded on the title of any (or maybe all, depends on your state law) of the debtors properties.  That would ensure you are repaid when a property sells.

In the end it might not be so bad as I assume judgements there are similar to my state where 12% interest is normal, so at least your capital is earning while you wait.

Side note: this is also your chance to improve your promissory note so be efficient and pay attention when your attorney reviews your note, get their critique of it so you can make it better for next time.

Let me know how it turns out for you, good luck.

*not an attorney, not legal advice

Tyler Mullen, CFE

@Nadir M.

If you lent to someone with a RE license on a written agreement I think the chances are fairly good you can get your money back.  Right now there's a whole range of scenarios that could play out because you have no idea what's really happening as communications have broken down.  There could be fairly benign circumstances in play and it's just a lack of experience/communication, or the complete other end of possible is it could be potential fraud.  Either way it's important to find an attorney and get active on this so you can surf the wave rather than continue to be hit by it.

In general it's been my experience most people that go through the trouble (read "time, money and back ground checks and CPE") to attain/maintain any credential or license are keen not to have it revoked due to ethics violations, acts of moral turpitude, criminal convictions, as that can have a permanent deleterious affect on their future career prospects.  And of those, many less would borrow money on a written note in their own name, for not enough money to leave town, then wait around for 10 months to get caught...  however, there are unfortunately the next Bernie Madoffs and Allen Stanfords out there.

Where it would get interesting/unfortunate real quick is if you find out there was never the intention to perform on the note from the beginning.  I'm rooting for you and keen on everything anti-fraud, hence, why I'm following your discussion.  I hope you get a favorable outcome and everything works out with as little stress and cost as possible, good luck.

Tyler Mullen, CFE

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you