Balloon payment due on building

[Greg W.]

Hi,

A few years ago I purchased a 7 unit building with seller carrying the mortgage with 2% interest for 3 years that ends with a balloon The price was $310,000 and I put down $30,000. I made a mistake of not getting an inspection and took the sellers word on the condition and age of things. Immediately after I took over, tenants complained that there has been roof leaks that the owner attempted to fix himself, without good results. I paid for many repairs but water kept getting in. I eventually ended up replacing the whole roof.

At the end of last year, I talked to him about extending our agreement because I spent a lot more money than expected and had credit things to get in order. We verbally agreed on 18 months if I pay an extra $5,000 towards balance when original agreement expires. I sent him a written agreement, which I got my notarized signature and emailed over to him. It's been months and he hasn't gotten it back to me signed. I emailed him about this and he says he agrees to it but we have a few months before we need to sign. I didn't want to wait until last minute and don't feel good about this.

My question is, what are my options to get out of this situation the best I can? I know I can go refinance but do have the credit challenge. an I request the contract be voided for not disclosing the roof situation? What would you do?

Thank you

[Ray Harrell]

You can't back out of the contract now. It was up to you to have an inspection done. Hopefully you will be able to refinance. Rates are MUCH higher now, and you will have to get a commercial loan. The value of the building will have to be more than what you owe on it, and the mortgage company WILL do an inspection. If you have credit challenges, and are unable to get refinancing, I'm afraid he may be able to take back ownership of the building and you lose your $30K. Check the terms of your contract. Contact me privately about the credit issues.

Word to the wise for future reference, NEVER fall for the old "you can refinance" trick!!!