partner in BK - Posted by holderinvestor

Posted by holderinvestor on January 12, 2010 at 09:27:58:

I am in FL. My TIC partner/non-partner is in CA.
Reason she filed bk13 is her CA primary home went up for sale. I guess they can do that in CA. In FL there must be hearings (for summary judgement, etc.) before sale date is made.
I will gather her BK docs and study them. I apprecaite your input. Will email further correspondence.
I hope our dialog helps others.

partner in BK - Posted by holderinvestor

Posted by holderinvestor on January 08, 2010 at 14:10:46:

I have 2 sfh rentals that I bought with a partner 5 yrs. ago. My partner overleveraged her primary home. To stop it from being seized by the bank and sold, she filed for bancruptcy. On her BK filing she had to include one of the properties we own together because we are not current on the loan on it (she is on the loan for both properties, I am on the title only).

Questions to seasoned investors who are effective with what’s going on in today’s financial climate: 1) can we leverage her BK to better negotiate with the bank/Wells Fargo on the one property? 2) if her bk judge has that property foreclose… what are my/our options.

Thanks ahead of time to those in the know who provide information.

BK locked up ALL her RE? - Posted by John Merchant

Posted by John Merchant on January 09, 2010 at 14:39:28:

If she is a true partner and if she has filed a Ch 7 or 13, likely ALL her RE is now locked up in that Bk filing and that Bk trustee.

If she held out in her filing of the Ch 7 or 13 and did NOT report her ownership interest in ALL RE owned she’s committed Bk felony fraud.

FYI, in a true P’ship, all ps are liable for all the other ps debts so hope you’re NOT in such a legal entity/entanglement.

I’ve seen some p’ships wreck a bunch of financial lives and would never knowingly let a client or acquaintance do business that way.

Define the term Partner - Posted by JT-IN

Posted by JT-IN on January 09, 2010 at 09:36:00:

Partner is often used for true Partners in a “Partnership” business structure, but it is also often used for shareholders or members of an entity; (Corp or LLC). So to be able to offer specific advice above it is imperative to know precisely what type of business structure you have between the two of you.

Based on what you stated about the properties; (she is on the loan for both properties, I am on the title only), you don’t appear to have a partnership at all. Merely a Guarantor situation, where she was also on the loan as a responsible party for repayment of the loan, but holding no equity since the property seems to be in your name personally.

The business structure is critical as to how this will likely shake out and what latitude the Trustee will have in the matter. Did the person you are referring to as a “Partner” ever invest any of her own $$$ into either of these properties or was her involvement strictly signatory on a mtg loan…? What written agreements do the two of you have that states what her payout or remuneration is supposed to be…? (when, how and upon what event)

Re: partner in BK - Posted by Ken

Posted by Ken on January 09, 2010 at 24:19:46:

Not sure but I believe she would be relieved of the responsibility of the debt but as long as you keep making payments bank would not foreclose

Re: Define the term Partner - Posted by holderinvestor

Posted by holderinvestor on January 11, 2010 at 17:59:23:

We purchased the properties and put equal down payment. She got the financing. We are both on title, she is the only one on the loan. So there is no legal “partnership,” we just own the properties together.
She has a hearing on 01/28 for “motion of relief” and she will have to turn one of the properties over to Wells Fargo.
I’m trying to find out the timeline on this, how soon our tenant will have to vacate. I have heard that loan servicers are often not having reps. show up at hearings because they are so overwhelmed with foreclosures.
Any feedback you can provide is welcomed.

Re: Define the term Partner - Posted by JT-IN

Posted by JT-IN on January 12, 2010 at 06:29:27:

So you own the properties “Tenants in Common”; there is NO Partnership.

One property is in default with Wells Fargo. She will not be surrendering a property owned by you in Bk; just doesn’t work that way. The property may go to foreclosure once her Bk issues are resolved, either the Bk is discharged or the lender receives “relief of stay”. Then they can foreclose, but not before. I assume that there is NO equity in the property.

What state is the property located, and with this info we may be able to expound upon how the TIC ownership can be dealt with from a collection standpoint, def judgments, etc. So there is a 2nd property too; what is the status of it as to the mtg being current or not. Is there any equity in that property…? The answer could be important as to the Bk… also your (non-partner/partner) must include the 2nd prop into her Bk regardless of whether the loan is current or not. it is all about what she owns and any equity, for the Bk Trustee to determine how to repay creditors, if possible.

Based on where the property is located, we should be able to give guidance on the timeline of foreclosure and how this may effect your tenant/yourself. Are you still collecting rents and not paying the mtg pymt…?

Re: Define the term Partner - Posted by holderinvestor

Posted by holderinvestor on January 12, 2010 at 07:37:16:

Thanks for your dialog. The Wells Fargo mortgaged property is in FL. It is a condo that today has market value of about half of what the note is. We have a tenant in it. My bk’d partner/non-parnter has a hearing on 01/28. The judge will release the “stay” and Wells Fargo can foreclose. I’d like to keep the tenant in there for as long as we can legally… which I assume is until title goes to Wells Fargo. I welcome your input on this. Also any guesses on timeline. In FL foreclosures are backed up and sale dates aren’t happening immediately.

The second property we’re just a couple months late and she will call the lender and try to work out having the last 2 pmts. put at the end of the loan, modifying the rate, etc. We just got a tenant in this property. It has about $20K equity in it though. I also graciously welcome your input on this property. It is in Georgia. Here’re her comments on this property:
“Bottom line to my bk is that I only included the Georgia house for protection because it was the only one that wasn’t delinquent. However, when the tenants moved out in October, I had to remove it from bk protection because it would have messed up my entire process if I failed to make any payments on properties scheduled. They are VERY strict about not missing any payments…no exception. Because we are only 2 months behind, I should be able to call the lender and work something out on the two missed payments…hopefully putting them at the back of the loan since this is the first time we’ve been late on this account.”

How can she leverage her BK to get as good a deal as possible on the loan mod?
Thank you ahead of time for your feedback.

State of residency for each of you? - Posted by JT-IN

Posted by JT-IN on January 12, 2010 at 08:27:45:

What state does your co-owner (non/partner) reside?
What state do you reside? The answer to which will determine the protections offered to each for Tenants in Common property.

So your co-owner has filed a Ch 13 Bk reorganization, not a Ch 7 liquidation…? When you mention keeping current on pymts this is synonomous with Ch 13 Bk, reorg. The fact that the property with equity is owned via TIC makes it difficult, if not impossible, for Trustee to access this equity in order to distribute equity to other creditors.

Has Trustee delved into who controls the rents for each property and how that is being distributed?

FL foreclosure timeline is 1 yr or more from filing. Although I am not that close to the FL foreclosure scene these days, this is just what I hear or observe from print media. Also depends on which county the property is located, as some are slower than others due to backlog.

Some of what you write about the Bk of co-owner doesn’t make complete sense to me. Could be due to limited info here or some loss in the translation from SAtty to debtor to you, then to forum… If you wanted more detailed info I would be willing to check the Bk case (off forum). If so, email me off forum and we can go from there.

BTW, the Georgia foreclosure timeline is much faster than FL; 90 days or so. Even though the Ga property may not be named in the Bk, the fact remains that a Bk stay is in place. This applies to the lender of the Ga property too which would keep them from perfecting a foreclosure w/o filing in the Bk case and getting disposition from Bk Judge to do so. Again, much detail to know and understand here and more than can be digested in a public forum, as a general rule.

Good luck on this.