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Updated over 6 years ago on . Most recent reply

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50
Posts
6
Votes
Danielle Scott
  • Houston, TX
6
Votes |
50
Posts

LLC Title Related Issues

Danielle Scott
  • Houston, TX
Posted

My family and I purchased a house in 2010 in Arkansas and put the original mortgage and title in my name solely. We decided to start renting it out, and all agreed to transfer the title to an LLC. The LLC was supposedly supposed to be split evenly in thirds, but the paperwork they had me sign (I was 23 and didn't know better or had any reason to think my parents would trick me) did not have me as a party of the LLC. I signed it not knowing any better, I believe it was a quitclaim deed. The mortgate remains in my name solely yet I am not a member of the LLC so I do not technically have ownership of the home. I was tricked. Over the years, there have been many fights about who is financially responsible for what and who has to pay for repairs/maintain tenants. I pay for half of repairs and maintain the tenants because if the mortgage is not paid on time and in full it's MY credit that's affected. My father made payments for two years while I was in school but the rest of the time I have made the payments or have had renters that I manage make them.

Fast forward to 2018 and I am living in a different state wanting to buy something here in TX. I can't because all my money is tied up in this house in a different state that I don't technically own. They will not add me to the LLC and will not sell the house, nor are they in a financial position to buy me out. I have consulted with a lawyer who suggested I gain access to the LLCs articles of organization or tax returns, which I can not get access to since I am not a member. The only LLC docs I can access are the ones on public record at the secretary of state. The lawyer looked at these with me and needs something different than what's available there. There HAS to be something I can do or a point of reference without paying a lawyer $250/hour which I can not afford. I am ready to begin my life without this house and financial obligation hanging over my head.

Any advice would be greatly appreciated.

Most Popular Reply

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11
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20
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Paul Younger
  • Professional
  • Fayetteville, AR
20
Votes |
11
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Paul Younger
  • Professional
  • Fayetteville, AR
Replied

@Danielle Scott

I am an attorney in Arkansas, so let me attempt to clear up a few things in this thread.  Bear in mind this is all based on the info you provided, so if you are miss remembering things or the other side of the story is substantially different, then my opinions might change.

First, lets deal with the 'no consideration' theory.  Not going to work.  Consideration applies to contracts, not to deeds.  There is no requirement that a deed transfer be based upon consideration.   I am transferring 4 parcels into a family trust this afternoon for a client, and there will be no consideration for the transactions.  So voiding the transaction simply based on a lack of consideration is not going to work.

Second, your liability on the note. One commentator felt that if you had transferred the property to an LLC then you would be no longer liable on the note. That is absolutely, unequivocally not true, for several reasons. First, you are liable on the note if you signed the note. The note is a negotiable instrument between you and the bank. Only the bank can relieve you of liability on the note (through refinancing for example). Second, the property is subject to a mortgage. No subsequent change in ownership will defeat the mortgage (unless the mortgage is paid off at the time of transfer). Changing the property into an LLC or a trust does not affect the mortgage at all. First in time, first in right.

Third, there was mention of legal aid.  I don't want to speak for legal aid since I don't work for them, but, in my experience there are requirements to qualify.  Poverty requirements, veteran status, domestic abuse, etc are all some of the requirements that I have heard people say are required.  I highly doubt your case would qualify.  Maybe though?

Fourth, getting the docs you need, like the operating agreement, etc.  Typically, a client in your position would hopefully have retained a copy, if not then hopefully the other side would send us one as a courtesy or as part of a good faith effort to resolve the situation.  But if they won't, then we can demand copies and they must comply; but we can only do that as part of the lawsuit.  So you have to start the lawsuit before you can demand those documents.  

Fifth, finding a lawyer to take this on a contingency fee.  Not impossible, but unlikely.  First, most contingency fee cases are personal injury cases that pay out high dollar amounts in damages, thus it is profitable.  Second, lawsuits take money besides attorney's fees.  If I am 'investing' my money in your case, I need to know from the beginning that I am going to win, how much money I am going to win, and most importantly that the person we are suing has the ability to pay me when I win.  A judgment against a bankrupt person is useless (to me trying to collect a fee anyways).  So it would depend upon damages amount (of which 1/3 fee is the minimum), likelihood of winning, likely out of pocket costs, likelihood the people we are suing can pay us, etc.  Based on what I read in the thread, that does not sound like something that I want to invest my time and money into on a contingency fee.  Maybe another attorney would, but without more information, I doubt it.

Finally, your best cause of action is probably fraud.  There maybe other options out there to pressure your parents into a settlement, and we could explore all of those before we file a lawsuit.  But at the end of the day what you have is a fraud claim, with maybe a breach of contract back up (although we don't have copies of the contracts so that's unknown).  Give me a call if you need  more info.

PY

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