Equitable Title Contract

[Kristi Nunes]

Hi All,

We are looking to purchase a home using a 1031 exchange and keep the seller's financing in place. We will have equitable title and the seller will retain legal title. Does anyone have a template of a contract we could use for something like this? Are there real estate lawyers who can help us structure this to ensure we are not putting ourselves at risk?

Thank you!

Kristi 

[John Clark]

Quote from @Kristi Nunes:

Hi All,

 Are there real estate lawyers who can help us structure this to ensure we are not putting ourselves at risk?

No.

Leaving aside the question of whether the IRS would agree that there was a sale to you if there is no risk to you, you have the problem of only having a non-record, equitable, lien on the property at best. That means that you would always be at risk of losing your interest because of something that your seller -- still in legal title -- does.

Equitable liens work as to those who know about the claim for an equitable lien and against whom the equities work, meaning that it is fair and just that that person comes behind you and your interests. If that is not the case, then you lose; you come second. So when your legal-title-holding seller gets drunk and broadsides a car full of children, leaving them lifetime paraplegics, do you think for one second that your whining about a secret "equitable lien" on the house will keep the courts from disposing of it as part of the seller's assets, with ALL of the proceeds going to the children?

Didn't think so.

Here's a good rule of thumb: If your deal can only make sense by concealing facts and piggy-backing on the seller's current bank financing terms, then it's not a "deal."