All Forum Posts by: Eric C.

 Both of those ideas are what YOU would do.  What if your partner doesn't agree?  What if the partnership sours (which can happen in ANY partnership) and your partner decides to stop paying the mortgage, but won't sign off on a sale?  Spiteful people can do crazy things.

The solution may seem simple to you, but if you have an unwilling partner that you are REQUIRED to work with because they are on title, you may find your hands tied on a ship that is going down.

 Hold on here.  I am not making any judgments about your partnership.  I prefaced my comments that way.  I understand that you feel defensive because of the many posters focusing on your marital status instead of your question.  But I am not doing that.  So, please go back and really read what I wrote.

You are right in some regard, it IS no different.  I mentioned the default scenario, as that IS an issue in ANY partnership structure, where the capital is in different forms.  If 1 person comes in with cash, but the other is loaned, that provides an issue in the case of default because the entire asset would be collateralized.  So, how will you save your interest in your half if it is foreclosed on?

This IS, however, different in that you are adding layers (as I mentioned) that complicate partnerships.

Look at the syndication model.  This is a good one for comparison.  A bunch of investors go in on a deal together with a syndicator managing the decisions (you will see why this person becomes an important role).  The investment is held for 3 years (can be any length of time, but usually is a 3 year or 5 year average), and then sold.  Of course if the market shifts, or the rents shift, there could be cause to sell sooner or later, but the point is that the syndicator decides, not the group of investors as they may all have different opinions about what to do.  NOW, IF all but 1 investor came in with cash, and the 1 came in with a loan that tied up the property and then defaulted, it would put the other investors in a high risk position.  You would NEVER get an investor to buy into that deal.  

So, as an investor, I am telling you that what you are proposing has flaws that you need to consider.

The pink, blue and purple is great for when things are going well.  However, you need a solution for when they don't (and let's hope you never have to use it).  So, when you can answer the question, "What do I do if she defaults on the loan" to a satisfactory result, then you may be able to find a solution.

You could sign a contract stating that all equity buildup that accrues after signing the TIC contract is split 50/50 and that's a way to make the transaction easier. Really you can contract just about anything and if it's reasonable (and courts are liberal with "reasonable"), then your contact terms will be upheld and you can avoid potential litigation over the purple share of the equity.

What if one of you doesn't want to sell the property?