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Attyadvisor
Attyadvisor, Attorney
Category: Real Estate Law
Satisfied Customers: 6351
Experience:  29 years of experience in General Practice, Real Estate Law and Estate Law.
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I co-own a residential investment property with another

Customer Question

Hello,
I co-own a residential investment property with another individual in Hudson, FL. We are both on the deed. The home is presently rented out and we each share in the rental income. Earlier this year, we BOTH signed a 2nd mortgage for the home. These funds (60,000) were used exclusively by my business partner for another business venture he has. He is paying back the 2nd mortgage on his own as he took all the 60k proceeds. My name however is on the 2nd mortgage note. We would like to create a "lien" whereby once it is sold, I have claim to the property after the second mortgage is fulfilled for the same amount that remains on the second mortgage, and then we would split 50/50 the remaining proceeds. Can such a legal document be classified as a lien?
Submitted: 7 months ago.
Category: Real Estate Law
Expert:  Attyadvisor replied 7 months ago.

Welcome and thank you for your question. I will be the professional that will be assisting you.

Expert:  Attyadvisor replied 7 months ago.

As the co-borrower there is a lien against both borrowers on the real property. I understand this was his debt and you were merely helping him out. You can actually record an agreement between the two of you with regard to how that particular debt will be handled. Once recorded it becomes part of the title liens and other clouds that would need to be released (satisfied) to sell the property. You would record a memorandum of agreement.

Expert:  Attyadvisor replied 7 months ago.

Sorry this portion did not post above:

"A memorandum of agreement is a legal affidavit which states you have an agreement with the owner for the sale of their property. When properly notarized, this affidavit may be recorded in the county recorder’s office... (In your case it is agreement between 2 owners.)

When you record the memorandum, it creates a “cloud on title” which makes it difficult for a buyer to insure title since it creates uncertainty about ownership interests in the property. A title company/settlement attorney trying to perform a closing for the property would need to cure the defect by obtaining a quit claim deed from the Affiant to “clear the cloud.” http://www.dealmakerlibrary.com/how-to-use-a-memorandum-of-agreement-to-protect-your-deal.aspx

The property can be closed without the agreement be released to your satisfaction.

  • Enforce your purchase agreement with the seller

or

  • Remove yourself from the deal, but charge the seller a fee in exchange for furnishing a quit-claim deed

You should use discretion as to whether a memorandum of agreement is even necessary for your deal. It should certainly not be used on every deal. However, you may consider using one under one of the following circumstances:

http://www.dealmakerlibrary.com/how-to-use-a-memorandum-of-agreement-to-protect-your-deal.aspx

Expert:  Attyadvisor replied 7 months ago.

Sorry this portion did not post above:

"A memorandum of agreement is a legal affidavit which states you have an agreement with the owner for the sale of their property. When properly notarized, this affidavit may be recorded in the county recorder’s office... (In your case it is agreement between 2 owners.)

When you record the memorandum, it creates a “cloud on title” which makes it difficult for a buyer to insure title since it creates uncertainty about ownership interests in the property. A title company/settlement attorney trying to perform a closing for the property would need to cure the defect by obtaining a quit claim deed from the Affiant to “clear the cloud.” http://www.dealmakerlibrary.com/how-to-use-a-memorandum-of-agreement-to-protect-your-deal.aspx

The property can be closed without the agreement be released to your satisfaction.

  • Enforce your purchase agreement with the seller

or

  • Remove yourself from the deal, but charge the seller a fee in exchange for furnishing a quit-claim deed

You should use discretion as to whether a memorandum of agreement is even necessary for your deal. It should certainly not be used on every deal. However, you may consider using one under one of the following circumstances:

http://www.dealmakerlibrary.com/how-to-use-a-memorandum-of-agreement-to-protect-your-deal.aspx

Please do not hesitate to ask me any additional questions that you may have with regard to this matter as it would be my pleasure to assist you.

If you would be kind enough to rate my service positively so I will receive credit for my time and work I would appreciate it.

Thank you for using JA. We Appreciate your business.

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Expert:  Attyadvisor replied 7 months ago.

Please let me know if you have additional questions for me.