Please advice; Ok here is the scenerio. I have a notarized agreement with a very close friend to spit profit 50/50 on a property I got us at auction. We used his credit to get us financed and have closed on the property. The mortgage and deed are in his name. We have both invested 50 percent each on the deposits and closing costs and carrying costs as they come about. We plan on flipping the property within the coming months.
I know I’m not fully protected with a notarized agreement, and want to know if recording a quit claim deed or any other type of deed is the best approach. Please advice.
FYI: my friend and I are life long friends and I’m confident he is not going to pull a fast one, but I need to protect my interest. Also for tax purposes I would assume it would be best for us to both report the gains.
Thanks in advanced
I have had a few deals of this kind in my years of flipping properties. Here is just my personal oppinion on this type of situation. The worst thing that can come out a deal of this nature is that for one reason or another it damages or destroys the friendship.
My suggestion is that both parties should sit down in an open and honest manner and clearly define the roles and contractual rights of each party. If you are able to do that in a manner that doesnt end up negative for either party then you have a very specific road map as to all issues of this particular deal. If anything the contract will help eliminate personal and legal issues that could come up later.
As for myself, I would draft the full contract, and record a quit claim putting you on title. If thats the agreement, then state it in a contract and then take the necessary steps to fulfill the requirements of the contract.
Keep in mind that anyone listed on title could also bring with them any judgements either now or in the future as well as any issues with the IRS, so just be aware of the potential pitfalls as well.
Rastusracing,
Thank you very much for the advice. I agree and believe the best approach would be to sit and draft an agreement then file a quit claim deed. I believe we would file a quit claim deed which transfers title from an individual to two individuals, correct?
Thanks
Yes, in essence your correct. A quit claim deed whereby your claimed on, does not remove that person from title, it purely puts you on title along with them. Thats not to be confused with a quit claim that removes a person that is currently on title.
A quit claim is a mechanism to either add a person to title or remove a person from title, it just depends of the way it is written.
I hope this helps.