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Barrister
Barrister, Lawyer
Category: Real Estate Law
Satisfied Customers: 33714
Experience:  15 years real estate, Realtor. Landlord 26 years
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The purches price of a Townhouse $ 39.500.00, Rehabe $

Customer Question

The purches price of a Townhouse $ 39.500.00, Rehabe $ 18.000.00, I financed both for a total of $ 57.50000. My partner holds the Title to the Townhouse, I hold the Deed. Price after Rehab $ 80.000.00, the profit is to be spilt after sale. How can I protect myself for the amount spent above the one listed on the Deed. Thank you, ***** *****
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Barrister replied 1 year ago.

Hello and welcome! My name is ***** ***** I will try my level best to help with your situation or get you to someone who can.

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Are you asking how you would account for the $18K so as to not have to pay capital gains on the roughly $40K over the purchase price?

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thanks

Barrister

Customer: replied 1 year ago.
no , right now I am not worried about Taxes. I want to know how I can secure all money coming to me right now only by verbal agreement since the Deed I'll hold only shows the purchase price of $ 39.500.00, so as I understand in the deal I only control the Purchase price.
Customer: replied 1 year ago.
Should I be named on the title as well to have more say so and control over the price of sale and the proceeds from the sale
Customer: replied 1 year ago.
My question is, the way I see it right now, after the sale of the Townhouse legally I am only owed $ 39.500.00 since this is the only amount shown anywhere on paper
Customer: replied 1 year ago.
Please send me some kind of an answer
Expert:  Barrister replied 1 year ago.

I apologize for the delay, but I had to log off to get some sleep for work this morning...

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If you are on the deed, then you are a legal owner of the property so you would have to sign off on any closing in order for it to proceed. If you paid the additional $18K for remodeling the house, then that is not something that is reflected on any closing statement and doesn't have anything to do with the division of any money received from the closing.

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So the title company or attorney doing the closing will just pay off any existing loan for the property out of the proceeds and then forward the rest to whoever is listed as the legal owners of the property. If you only owe $40K on paper for it and sell it for $80K, then the closing agent will give whoever is the legal owner a check for roughly $40K (ignoring commissions and fees).

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So it would be up to you and partner to determine how to divide up that $40K according to any agreement that you have between both of you. If the check is made out to both of you, if you both are on the deed, then you can refuse to cash it until a written agreement is signed by partner agreeing to reimburse you for your $18K, then you split the remaining $22K.

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The bot***** *****ne is that any division of money after the closing depends on whatever agreement you had with partner about this when you initially went into this investment partnership.

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thanks

Barrister

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