Basic JV Question

[Nir]

Hey All,

Is it true that the person taking the mortgage (or owning the company who is taking the mortgage) must also be the one on title?
so in a JV if both investors want to be on title both must also be on the mortgage(?) in other words if investor #1 can not qualify then he/she can NOT be shown on title and will not be shown on mortgage although they can still have an agreement defining their business relationship?

I know.. really basic question, just trying to clarify something..

THANKS,
Neil

 

[lanedry77]

Hi Neil,

That`s right - the banks want the people/company on the mortgage to be the same as the people/company on title.

If one party cannot be on mortgage or title for some reason (which would typically be that they cannot qualify for the mortgage, but may also be for tax reasons, or is an out-of-country investor), then a caveat would be registered against the property defining that the non-titled party has an ownership stake in the property, thereby ensuring their ownership is safe.

Be sure to advise your mortgage broker *and* lawyer of all of these details very early in the process, as it can have an effect on the work required and possibly even the lender you will use.


David.

 

[PeterKinchMortgageTeam]

QUOTE (investmart @ May 25 2008, 11:23 PM) Hey All,

Is it true that the person taking the mortgage (or owning the company who is taking the mortgage) must also be the one on title?
so in a JV if both investors want to be on title both must also be on the mortgage(?) in other words if investor #1 can not qualify then he/she can NOT be shown on title and will not be shown on mortgage although they can still have an agreement defining their business relationship?

I know.. really basic question, just trying to clarify something..

THANKS,
Neil


Hi Neil,

All parties on title must be on mortgage. You can however have someone on the mortgage (acting as a guarantor) who is not on the title. Some lenders will allow a corportation to go on title, with only one of the principals signing a personal guarantor though in most cases, that has to be a very strong principal.

The individual (s) not on title, need a JV agreement and/or caveat in place to protect their interests.

Hope that helps,

 

[Nir]

Thank You Peter and David,

I learned something today.

The answer to the following EXAMPLE will help understand Peter`s explanation:

Investor# 1 can not qualify for a mortgage. Investor #2 can qualify and is willing to act as guarantor.

Is the following scenario possible?

- BOTH Investor# 1 and investor# 2 (as guarantor) on mortgage
- ONLY investor #1 (who could not qualify alone) on title

Regards,
Neil

 

[PeterKinchMortgageTeam]

QUOTE (investmart @ May 27 2008, 08:16 AM) Thank You Peter and David,

I learned something today.

The answer to the following EXAMPLE will help understand Peter`s explanation:

Investor# 1 can not qualify for a mortgage. Investor #2 can qualify and is willing to act as guarantor.

Is the following scenario possible?

- BOTH Investor# 1 and investor# 2 (as guarantor) on mortgage
- ONLY investor #1 (who could not qualify alone) on title

Regards,
Neil

That`s right.

 

[lanedry77]

I didn`t know that specific detail either.

Thanks Peter.



David.

 

[EdRenkema]

What is the advantage to this?
I may very well be the investor #1 on one of my next deals so the way I see it #2 provides down payment funds and acts as guarantor and myself being on title and managing the property - yes?
Thanks,
Ed R