Small Business Newsletter

Sign up for our free email newsletter

Question


★ Vag...

My attorney OWES ME MONEY, HE PUT A HOUSE IN MY NAME, SHOULD I PUT A TRUST DEED ON THE PROPERTY???

First of all, tomorrow I will be consulting with ANOTHER Real Estate attorney than the one I have been using for the past year, but hear me out. I did some work with an attorney who my father and I became very friendly with, due to many many coincidences. We ended up owing him $25,000. We were planning on doing other ventures that he would be helping us out with and he knew the money would be guaranteed on our behalf. He said, "I'm not worried about it right now, let your empire build". He knew we were good for the funds, so he did not demand it at all. It was written out however in his corporation. Well I found another real estate deal. It was a lead that for what I in business for, I could not take on. He called the owner, and that owner from out of state, an old man, ended up DEEDING the property FREE & CLEAR. HERE IS THE TWIST. My attorney put it in MY NAME, because it was a HUGE REHAB PROJECT. A HUGE LIABILITY that needed approx. 5060K (at the time an estimate). It had extreme structural damage. So to protect himself he had the old man deed it to my name, and when he were to 'demand the property back ,(when the project were finished) I am supposed to give it to him”. My father and him have been ‘all buddy buddy’ and this is how everything came out to be so odd. My father was a building contractor for over 20 years, and this attorney obviously has never got ‘his hands dirty’ when it comes to remodels. The attorney and myself never really had any professional documents transferred stating estimates for cost repairs ‘etc’. Anyhow, the remodel project went like this: My dad covered the expenses and week by week he would get draws from the attorney. Well he was lacking on the draws and now he owes us $25K. I don’t think he is wanting to pay up, because he didn’t really know that it would add up to be so much. The project is near completion. Originally the home was [as the neighbors recalled it] “a PUSH OUT” home. Fixed up in this area (2,220SQ) It would be worth about $220K, and that is a modest figure. Before home prices went down it would have been about $380K max. What’s your stance on this? PS: We saved our attorney approximately 50K in remodel fee's. The workers were under the table, and ALSO: this attorney looks inexperienced [I believe] because he never sent me any documents stating that I couldnt borrow on it. I need my money back. HOWEVER: the money I OWE HIM, is set up logged in a corp account so that is a whole other story. Thanks so much

5 months ago - 4 answers

Best Answer

Chosen by Asker

I'm completely re-writing my answer as I think I better "get" this after pondering it for a day. First off, I think the last answerer just doesn't really get what you did. You didn't do anything illegal - it was major league stupid, but not illegal. They are looking at this as a realtor but you need an investor (or maybe builders) point of view and the two points of view (investor versus realtor) are like apples and oranges. Essentially you have a 25k legal bill owed to your lawyer who is also your (and your fathers) friend. To pay the bill you identified a property you would buy and flip on the lawyers behalf. He would get the profits (which would've been way more than 25k if not for the sub-prime problems) and this would pay your bill. However, the deed was put in your name. Ostensibly it was put in your name as he couldn't cover the high renovation costs, but in my heart I suspect he just wasn't sure about the whole thing so he wanted it put in your name just in case something went wrong - a decision that turned out to be very smart for him. Anyhow, by putting the deed in your name you (and your father) essentially took on all the risk for this deal (after all the deed is in your name - if something goes wrong it is legally your property) but you get none of the reward (since you are giving him all the profits). True you would get your 25k debt paid off, but since the profits were supposed to be more (probably alot more) than 25k, this was obviously a stupid deal for you. Put another way, why not just buy the property yourself, pay for it all yourself, keep all the profits yourself, and pay him the 25k out of a portion of the profits. Since you are taking all the risk, you may as well take all the profit too - right. Anyhow, to be real blunt, you and your father got arrogant. Essentially you did so many successful deals that you assumed this one would be successful too, and you did the deal this way (accepting all the risk but only limited profit) to show your friend how smart you guys were (ie arrogance) but the whole thing turned bad due to the sub-prime problems, and you've learned a few lessons. I don't mean to be insulting as I did a very arrogant myself recently and quite frankly it cost me alot more money than its going to cost you, so hey I guess we're both learning. Anyhow, as to what to do next, its kinda meaningless whether or not you put a trust deed on the property. Your friend clearly does not want the deal anymore but then again may as well do it - it'll add a bit of safety and can't hurt. To get out of this mess I think you are going to have to take over the deal. That means paying your friend everything he has put into the deal and then also covering the loss this deal will generate (due to the value of the property falling by 160K). Essentially you took on all the risk for this deal (by letting the deed go in your name) and now you've got to pay the price for that. If you are still on good terms with the lawyer, maybe you can get him to discount or even erase his bill to you, but if not you are going to have to pay that too. I may have gotten some of the details wrong, and I really hope so, but if not - its a hard lesson, but a good one. Best luck, and sorry about how it all (apparently) turned out.

by bull_rooster_aardvark

5 months ago

Asker's Rating: 

Other Answers

yes

by brr cold- 5 months ago

sorry to say, but your question is probably WAY too complicated for most of the people who frequent this site. Consult with your new attorney, and hope that he/she knows what to do. :o) Sorry I can't help.

by Lauren- 5 months ago

Your post was extremely vague and it's hard to get a clear picture of exactly what you did...and I know why... It REEKS of illegal activity....on the behalf of all parties. First of all, you can't be placed on a Deed without your signature, and for someone that is supposedly in the business of real estate, I find it hard to believe that you didn't know that....that's Real Estate 101. Your so-called attorney, if he is in this business with you, also shouldn't be charging you legal fees. Don't be in business if you don't know how the game works and you are trying to work without contracts. Sounds to me like you and him both are trying to hide paper trails and committing not only possible loan fraud but tax evasion as well. Quit before you end up in serious trouble.

by Expert Realtor- 5 months ago