legal advice: helping friend w/2 year loan for real estate purchase until she can finance it herself.?
Thursday, 29. April 2010
Ex girlfriend is now a friend. She recently got a good job with a large firm and wants to buy a small house instead of renting. She was laid off for nine months, so qualifying is tough. Can we purchase as tenants in common and still draw up a legal contract that protects my principal interest in a K loan from my home equity account to her savings account without future "divorce type" proceedings/ramifications over the next 24 months?
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David Beasley Says:
Yes, but beware. You CAN’T look at this situation as ‘friends". You are INVESTING in real estate here. Protect your $ interests!
You will be creating a Lease Purchase agreement that you both sign and notarize and RECORD!. You receive "rent" from her each month, you pay the mortgage (NOT her), she gets equitable interest in a house that she can’t qualify to buy. She will want you to pay for her closing costs in the end. You will take your equity out in the form of an agreed purchase price in the future (12 months) and the difference (your mortgage payoff plus nominal closing costs ~$2500) will be your profit. Perfect! Simple!
Next, get her to a professional mortgage broker (bankers have stricter guidelines) who can help her get qualified to get you out of that house as soon as possible.
This way, you will help her out and REMAIN friends!
Best of luck!
flymeawayfromhere Says:
You should watch Judge Judy! That is a very very very BAD IDEA!
First of all she is your EX…I don’t’ care if your friends, she is not family. Why doesn’t someone related to her help her?
That’s your first clue.
Second, you will, bottom line be responsible, your credit will be affected if she defaults.
What is your plan if she gets laid off again? What if she meets the "man of her dreams" and he doesn’t like your friendship and she defaults?
Don’t do it!
ChipinCA Says:
Wow! You are a nice friend, maybe too nice. Money tends to ruin more friendships! I would be reluctant if I wanted to sustain the friendship. If you proceed I would have a real estate attorney look over your paperwork and make sure you have every detail of how to get out of it worked out. It’s easier to get in than get out so always be sure you have that resolved before hand. I still wouldn’t do it.
RM Says:
BAD IDEA. BAD IDEA. BAD IDEA.
Justin Z Says:
Contact a lawyer.
Local laws may narrowly define your recourse should the situation turn sour; you need someone knowledgeable about your situation to give your worthwhile advice.