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My brother and I have a loan in our names for a piece of land.

My brother filed bankruptcy a...
My brother and I have a loan in our names for a piece of land. My brother filed bankruptcy a number of years ago, keeping his house and property. He is making payments, but is falling behind. I want to build a cabin on my portion of the land. Can the IRS ever seize the property (and my cabin) in the future, if my brother defaults on his bankruptcy terms? (The property is able to be sub-divided, but hasn't had anything done to it yet. It is merely in both our names.)
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5/28/2013
WALLSTREETESQ
WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 17,253
Experience: 14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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WALLSTREETESQ :

Hello I am a licensed attorney here to help you with your question, please review my response and do not hesitate to ask for clarificati on

WALLSTREETESQ :

If he has IRS debt that is not being discharged in his bankruptcy,

WALLSTREETESQ :

it is possible for a creditor to lien the property in his name,

WALLSTREETESQ :

what you may want to consider instead, is to create a LLC or other corp,

WALLSTREETESQ :

and place the deed in the corp name, so creditors cannot go after the property.

WALLSTREETESQ :

The creditor who has a lien, could force a sale of the property to pay the debt,

Customer:

I do have a couple of LLC's for my businesses. Can the land be placed in the name of any of those, or should I create a new LLC? How do I place the deed in the company's name? With or without my brother's name on it?

WALLSTREETESQ :

You can use any of the existing corporations, you would just have your brother sign over the deed to the LLC,

WALLSTREETESQ :

if he will not sign, you would have limited options, except to buy him out, to remove his name, from the deed,

WALLSTREETESQ :

You would create a new deed and use the LLC as the new party,

Customer:

If he readily signs over the deed to the LLC (which I think he would), it is just a matter of drawing up a legal document? Can I do it myself and have the signing notarized, or should I go to a)the bank holding the loan b) a title company or c) other?

WALLSTREETESQ :

you do not need to do anything, except file the deed,

WALLSTREETESQ :

he would still be liable for the loans, as his name is XXXXX XXXXX

WALLSTREETESQ :

the corporation would just limit the creditors in his name from going after his share of the property.

Customer:

Thank you, XXXXX XXXXX never have thought to use my LLC in this situation.

WALLSTREETESQ :

Many properties are put into a corp, to protect the assets from personal creditors,

WALLSTREETESQ :

good luck, and if you have any further questions please do not hesitate to ask.

WALLSTREETESQ :

If satisfied please provide us with positive feedback.

Customer:

The property really has nothing to do with the corp -- and that's okay?

WALLSTREETESQ :

That should not be a major issue at this point, you can create a new corp if you wish and state it is for realestate,

WALLSTREETESQ :

but it should not be an issue, at this point

Customer:

At this point? At some other point, can it have tax ramifications for my LLC?

WALLSTREETESQ :

not tax ramifications,

WALLSTREETESQ :

however if a creditor ever tries to sue him,

WALLSTREETESQ :

and he claims the property is in a corp,

WALLSTREETESQ :

the corp could be looked at to see what its purpose is, however as long as the LLC is valid, and exists, the fact the land is in its name should not void it,

WALLSTREETESQ :

If the LLC does not operate, or has no other use, it could be considered invalid, however such suits are rare.

Customer:

The LLC I'm thinking of is my main livelihood, so I would never want to jeopardize its status and seurity and legality

WALLSTREETESQ :

Than create a new corp, as a real estate corporation, and use that for the deed

Customer:

If I were to buy out my brother's share of the land (on paper, and verbally we know that he has half the land) is there any special procedure? He would have to show the IRS that he received that money from me, right?

WALLSTREETESQ :

you would need an appraisal to show actual fair value,

WALLSTREETESQ :

and the funds that were paid to him,

WALLSTREETESQ :

and the IRS would allow the sale,

WALLSTREETESQ :

however the funds given to him, could be taken for the debt,

Customer:

Thank you. You've been very helpful. Now I may have to ask a tax lawyer about LLC's and real estate :0)

WALLSTREETESQ :

You should do that, however for asset protection a corp is good.

WALLSTREETESQ :

If you have any further questions please do not hesitate to ask.

WALLSTREETESQ :

If satisfied please provide us with positive feedback, so we can receive credit.

WALLSTREETESQ
WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 17,253
Experience: 14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
Verified
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WALLSTREETESQ
WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 17,253
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Experience: 14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS

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