Help me with this deal

[MarkTorgerson]

Hello

I have come to a verbal agreement to buy out my partner on a property of many years. He wants to sell. I do not.

We have agreed that I can purchase his interest in the property for $20,000 cash. That is the easy part.
We are both listed on the mortgage as well as a line of credit registered against the property. I don`t want to make things more difficult than I have to and would rather not go through the whole qualification process with the bank. He is OK having his name stay on the mortgage as long as we have a signed agreement saying that I am fully responsible for all future payments. Any suggestions on how to structure this without making it more painful than it needs to be? Do we need to go through the bank and change the names on the mortgage and LOC?

Thanks in advance!

 

[GaryMcGowan]

QUOTE (MarkTorgerson @ Nov 23 2009, 04:56 PM) Hello

I have come to a verbal agreement to buy out my partner on a property of many years. He wants to sell. I do not.

We have agreed that I can purchase his interest in the property for $20,000 cash. That is the easy part.
We are both listed on the mortgage as well as a line of credit registered against the property. I don`t want to make things more difficult than I have to and would rather not go through the whole qualification process with the bank. He is OK having his name stay on the mortgage as long as we have a signed agreement saying that I am fully responsible for all future payments. Any suggestions on how to structure this without making it more painful than it needs to be? Do we need to go through the bank and change the names on the mortgage and LOC?

Thanks in advance!

I`m not sure what the 20k represents to the investment. I`m sure it is a fair buy out. The fact that your partner is willing to say stay on the mortgage documents is a great opportunity for yourself.

 

[Thomas Beyer]

QUOTE (MarkTorgerson @ Nov 23 2009, 02:56 PM) Hello
I have come to a verbal agreement to buy out my partner on a property of many years. He wants to sell. I do not.

We have agreed that I can purchase his interest in the property for $20,000 cash. That is the easy part.
We are both listed on the mortgage as well as a line of credit registered against the property. I don`t want to make things more difficult than I have to and would rather not go through the whole qualification process with the bank. He is OK having his name stay on the mortgage as long as we have a signed agreement saying that I am fully responsible for all future payments. Any suggestions on how to structure this without making it more painful than it needs to be? Do we need to go through the bank and change the names on the mortgage and LOC?

Thanks in advance!
you sign a "mutual indemnity" agreement with him. It means that if you default on the mortgage, and the bank comes to him for $s, he can turn around and has reason to collect from you. Any lawyer could write this up for $500 to $1500 ...

Next time the LOC or mortgage gets renewed in your name only, the agreement gets canceled !

 

[Nir]

Hi Mark,
I believe you got great advice above (and do not have to contact the bank...yet) because:
- Prior to renewal: the bank will just continue to take the money from the same bank account whether it is joint or just under your name now.
- At renewal: you present your agreement to the bank who will probably have no issue with you simply continuing to pay on time! (or you negotiate even better conditions with another bank or through broker if you can and/or want)
Good luck!
Neil

 

[MarkTorgerson]

QUOTE (ThomasBeyer @ Nov 23 2009, 04:29 PM) you sign a "mutual indemnity" agreement with him. It means that if you default on the mortgage, and the bank comes to him for $s, he can turn around and has reason to collect from you. Any lawyer could write this up for $500 to $1500 ...

Next time the LOC or mortgage gets renewed in your name only, the agreement gets canceled !


Thanks Thomas

Would I also write up a basic offer to purchase between the two of us? That would give me a paper trail for my accountant (and his) showing how my cost base has changed and also will show his accountant what he needs to pay for capital gains.

 

[Thomas Beyer]

QUOTE (MarkTorgerson @ Nov 23 2009, 07:31 PM) Thanks Thomas

Would I also write up a basic offer to purchase between the two of us? That would give me a paper trail for my accountant (and his) showing how my cost base has changed and also will show his accountant what he needs to pay for capital gains.
yes