CA Real Estate

California Real Estate Law Questions? Get Answers Online Now.

Ask a Lawyer,
Get an Answer ASAP!

I’m doing a refinance loan on investment property that is in…

Customer Question
I’m doing a refinance loan...
I’m doing a refinance loan on investment property that is in a Corporation. The bank asked what is the reason for the large cash-out? I stated to have large liquidity cash balance for the future. I have inserted this reason for all my refinance of investment proper in the Corporation. Historically, I have taken some cash distribution to pay for my children’s college education. The last Refinance I took out about 25% for personal. The next refinance loan I just took out distributions equal to the profit. This new refinance loan I’m planning on leaving all of it in the Corporation…of course I will still take out distribution equal to the profit of the Corporation and to pay Federal and State Taxes. Since this is my Corporation, and there is so much equity in the Corporation, the Corporation has never been at risk in my taking Cash Distribution.QUESTION:
1. In taking out this refinance loan this is inserted in the Loan Documents: This new loan stated: Borrower represents that the Loan Evidence by this Note and secured by the Security instrument is solely for business or commercial purposes, and is not for personal or family.
What happens if I need to take 10% out for personal emergency?
Submitted: 4 months ago.Category: CA Real Estate
Show More
Show Less
Ask Your Own CA Real Estate Question
Answered in 13 hours by:
3/23/2018
Lawyer: Irwin Law, Attorney replied 4 months ago
Irwin Law
Irwin Law, Attorney
Category: CA Real Estate
Satisfied Customers: 7,569
Experience: Lawyer & Real Estate Broker, 30+ years, foreclosure, land contracts, inheritance, probate.
Verified
It means that money withdrawn from the corporation for personal use or salary should be from other assets of the corporation not the loan proceeds. Please rate this answer. Thanks for using Just Answer.
Ask Your Own CA Real Estate Question
Customer reply replied 4 months ago
You did not answer this direct questions; What happens if I need to take 10% out for personal emergency?
1. Therefore, I would still be in compliance to the agreement if I did Cash Distributions equal to the profit of the Corporation.
2. I would also be in compliance if the S- paid me a Management Fee via K-1?
3. The Management Fee would be subjective so how is this viewed?
4. I would also be in compliance if the S- Corporation did a Cash Distribution to me to pay for the Profits of the S-Corporation?
Lawyer: Irwin Law, Attorney replied 3 months ago
ALL money that comes into the corporation is segregated on the books. Your methods 1-4 sound correct. Be sure that the loan proceeds are always directed to a business use.
Ask Your Own CA Real Estate Question
Customer reply replied 3 months ago
You did not answer the direct questions asked any nothing was in detail. I do not want to continue this session with you.
Lawyer: DamienJD, Attorney replied 3 months ago
DamienJD
DamienJD, Attorney
Category: CA Real Estate
Satisfied Customers: 5,151
Experience: Attorney. Well versed, understanding, friendly
Verified

Hello: This is Damien. I am an attorney. Are you still looking for help on your question?

Ask Your Own CA Real Estate Question
Customer reply replied 3 months ago
Hello Damien, Yes still looking for help. If you could follow the question of this tread you will get an understanding of what I'm asking. If you need me to re-post the questions let me know. Really Appreciate your help.
Thank You,
Lawyer: DamienJD, Attorney replied 3 months ago

I understand that the bank concerns is that you are not going to borrow or use the money for personal reasons but are using the loan for a business reason.

Consequently, an employee/owner can still get paid a reasonable salary as an employee as per the market rate, and also take a distribution of the profits as long as the payments are being made on the loan. Once the employee/owner receives the pay or profit, the employee/owner can use the money for any other purpose.

We can discuss this more if you want to do so.

If you have further questions or you need further assistance, just let me know.

If not, please remember to rate my answer between 3 to 5 stars without any additional costs to you. That is how I get credit for answering your question. Best regards.

Ask Your Own CA Real Estate Question
Customer reply replied 3 months ago
1. My Question is in regards ***** ***** is the red line where a bank could call the note and also charge a prepayment penalty of $50,000. Historically, the wording of being told by a lender what I could do with the Cash of my being 100% stock owner of the Corporation was never in my agreements. They said it is a function of Dodd Frank. The Amount borrowed is only 30% of equity of the property in the Corporation and they have my signature as a personal guarantor of the Note (Bank is 100% protected). Does the Cash just sit in the Corporation for the next 100 years; since there is no need to use cash because the profits are so large it offset and extraordinary expenses?
2. You are saying there should be no risk in taking out profits of the Corporation through Cash Distributions as long as the monthly note payments are made?
3. Let say the profits of the Corporation for the year is $100,000 and I do Cash Distributions of $105,000 for the year and all payment for the Note has been paid; will the Lender foreclose on the note because of the $5,000 over the profits and make me pay $50,000 prepayment penalty? A court/Judge will allow this overreach of a Bank cause a major problem for me personally and for a Corporation that is financially strong to me harmed for a De-minimis $5,000? Note; I have always taken for the past 20 years distributions equal to profits and sometime a little over the profits.
4. I receive a Management fee of $15,000 a year. What if I raise the amount to $20,000 a year? As a result of my experience/Knowledge as years go by my self-worth has increased and will continue to increase; this is normal for everyone in the work force as years of Experience/Knowledge continues to increase…no one works for the same pay for 30 years. My direct question is my Salary is subjective and anyone could argue what is reasonable….will the Bank, even though I make my payments and have always made payments to many lending institutions for the past 30 years; foreclose on the note because the bank wants to make $50,000 in prepayment penalty income? Look what the Banking Industry unethical Business Practices did in year 2008…
5. Do you have any Experience and/or knowledge of my direct question in what Banks are doing with these types of conditions on a note that has not been there historically?I hope you understand that owning my own Company for the past 25 years has given me peace of mind in how to operate my business and as long as my note payments were paid there was no External Risks; now I have this unknown factor.
Thank You
Lawyer: DamienJD, Attorney replied 3 months ago

If there is a red line, it would be in the agreement. If the agreement allows the bank to call the loan at its own discretion, then there is no red line and the agreement could be considered ambiguous or the court would have to determine whether there was a breach by you.

Ask Your Own CA Real Estate Question
Customer reply replied 3 months ago
I never stated that I signed a Note that a Bank can Call a Note at their own discretion. As disclosed the agreement states personal distribution as related to the Loan. There are no other conditions in the note to discuss.
The questions asked above is to understand what is allowed and not allowed based upon Legal Accounting Practices when there is the inserted clause. I’m trying to determine based upon each penetrating question asked in my previous posting to you. Please answer each question posted above in detail.
Thank You.
Lawyer: DamienJD, Attorney replied 3 months ago

I will open your question for other experts to see if they can assist you. No need to respond now because that will delay the process. Another expert who believes they can assist you will reply.

Ask Your Own CA Real Estate Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a lawyerLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask DamienJD Your Own Question
DamienJD
DamienJD
DamienJD, Attorney
Category: CA Real Estate
Satisfied Customers: 5,151
5,151 Satisfied Customers
Experience: Attorney. Well versed, understanding, friendly

DamienJD is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises!

Gary B.Edmond, OK

My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer.

EricRedwood City, CA

I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight.

MichaelWichita, KS

PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent.

Three H.Houston, TX

Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!!

ElaineAtlanta, GA

It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem.

TonyApopka, FL

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

< Previous | Next >

Meet the Experts:

LawTalk

LawTalk

Attorney

188 satisfied customers

I have nearly three decades of legal experience, including Real Estate Law, and have held a Real Estate Broker's License.

legalgems

legalgems

attorney

181 satisfied customers

Just Answer consultant at Self employed

Richard Price, Esq

Richard Price, Esq

Attorney

59 satisfied customers

Attorney at The Law Office of Richard Samuel Price

N Cal Atty

N Cal Atty

Attorney

30 satisfied customers

attorney at self

Roy Hadavi

Roy Hadavi

21 satisfied customers

Attorney at Law Offices of Rosenstein & Associates

Bruce Schreiber

Bruce Schreiber

Attorney/Realtor

15 satisfied customers

Attorney At Law at SELF

Attorney2020

Attorney2020

Lawyer

23 satisfied customers

I have significant experience in real estate law.

< Previous | Next >

Related CA Real Estate Questions
I need to talk to a lawyer who is familiar with residential
I need to talk to a lawyer who is familiar with residential real estate. … read more
socrateaser
socrateaser
1,452 satisfied customers
I have a Reverse Mortgage and I have an SSI income of
I have a Reverse Mortgage and I have an SSI income of $1050.00, the housing prices have risen and I tried to apply for a line of credit on my reverse and they denied me, isn't there a way I can get th… read more
legalgems
legalgems
attorney
Juris Doctorate
181 satisfied customers
California Constitutional Law:. 1. How was it legal for the
California Constitutional Law: . 1. How was it legal for the California legislature to amend its constitution to bestow 'sovereignty' on the corporation of the Regents of the University of California?… read more
N Cal Atty
N Cal Atty
Attorney
JD
30 satisfied customers
I have a large /duplex in Oakland CA that I live in with my
I have a large triplex/duplex in Oakland CA that I live in with my girlfriend. The monthly mortgage is $4300, property tax $1562, insurance $325; ~$6,200 a month. There is a separate unit and two room… read more
Maverick
Maverick
Doctoral Degree
6,146 satisfied customers
My mother in law owns a house in northern CA. Due to health
My mother in law owns a house in northern CA. Due to health reasons, we had to move her to Virginia to be closer to my wife and our family. She was almost complete with a major renovation to her home,… read more
Barrister
Barrister
Attorney/Landlord/Realtor
Doctoral Degree
86 satisfied customers
I guess this is a combination of CA Real Estate law and
I guess this is a combination of CA Real Estate law and Business Law. Pardon my being brief: Farmworld is a Ca registered LLC owned by three entities. Entity A a person has a 14.75% share, Entity B, c… read more
Irwin Law
Irwin Law
Attorney
7,569 satisfied customers
Do you have legal precedence in California to show a
Do you have legal precedence in California to show a commercial real estate developer has a legal duty of care to disclose material information relating to the development to private citizens interest… read more
Legal Eagle
Legal Eagle
Attorney
Doctoral Degree
13,358 satisfied customers
In 2009 I made a second loan. The borrower has made payments
In 2009 I made a second loan. The borrower has made payments infrequently. The balance is essentially unchanged. What legal alternatives do I have? Thanks Patrick… read more
Irwin Law
Irwin Law
Attorney
7,569 satisfied customers
I live in Ventura CA. First my question. I own a townhouse
Hi, I live in Ventura CA. First my question. I own a townhouse which my brother in law had to co-sign on because I was in a bad situation about 6 years ago. Both our names are ***** ***** but his name… read more
LawTalk
LawTalk
Attorney
Juris Doctor
188 satisfied customers
My wife and I are starting the process of looking for a home
Hi there,My wife and I are starting the process of looking for a home and I am also looking for a new job at the same time. She brought something up that I wanted to check on. She indicated that if yo… read more
legalgems
legalgems
attorney
Juris Doctorate
181 satisfied customers
I am asked to sign a SNDA agreement and just want to be sure
Hi, I am asked to sign a SNDA agreement and just want to be sure there is nothing in the document that puts me in a difficult situation. I read a quick article about subordinating to the lease but not… read more
Ray
Ray
Lawyer
Doctoral Degree
33,407 satisfied customers
I have a Power Of Attorney Question - my husband and I have
Hi, I have a Power Of Attorney Question - my husband and I have a power of attorney from another person who wants to remove herself off our property but doesn't live in town and doesn't want to go to … read more
LawTalk
LawTalk
Attorney
Juris Doctor
188 satisfied customers
This is a mortgage assumption question. My husband and I are
This is a mortgage assumption question. My husband and I are in the process of assuming the mortgage from my father. The bank told us we need an agreement between us that says we are assuming the mort… read more
Ray
Ray
Lawyer
Doctoral Degree
33,407 satisfied customers
I want to return to & help my son stay in the San Francisco
I want to return to & help my son stay in the San Francisco Bay Area. I have a 50% down payment for a (no land) mobile home loan of aprox. $185,000 - $200,00 to be co-signed with my son. My son is gai… read more
socrateaser
socrateaser
1,452 satisfied customers
Background to question: I have a corporation that flips
Background to question: I have a corporation that flips houses. A person I met loaned the corp 150k at 15% because that's what I offered. At a later date she said she needed 17% and the money was tied… read more
Attorney2020
Attorney2020
Lawyer
23 satisfied customers
Ok, following up to our last conversation about the person
Ok, following up to our last conversation about the person breaking usury law on the 150k loan and note getting the usury exception: Can I get a refund on the money I paid over the 10%? For example, I… read more
Attorney2020
Attorney2020
Lawyer
23 satisfied customers
I recently was sold a commercial loan in second position on
I recently was sold a commercial loan in second position on my prinary residence. Was it legal for the broker to sell it or do I have legal grounds to have it stricken from title.… read more
LawTalk
LawTalk
Attorney
Juris Doctor
188 satisfied customers
A recently married couple are going to refinance in the name
A recently married couple are going to refinance in the name of ONE of the couple only. The title will be in both names shortly after the refinance. As only one person will be on the loan what would h… read more
CalAttorney2
CalAttorney2
Attorney
Doctoral Degree
8,845 satisfied customers

DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

Show MoreShow Less

Ask Your Question

x