All Forum Posts by: Tyson Wade

Because there is no operating agreement governing this situation, you may consider entering into an agreement with your partner wherein the both of you agree to transfer the property out of the entity and into your respective names, as 50/50 tenants-in-common. This agreement should also address assumption of the debt, if your lender provides for this as an option, so you can transfer the debt to your partner, or at least add them as an additional borrower if possible. 

Holding the property as tenants-in-common will allow you to sell your individual 50% ownership of the property to a buyer, while allowing your partner to retain their 50% ownership. If you maintain 50% of the debt after the change in ownership to this tenant-in-common structure, then you may consider including your 50% of the debt in your sale (again, if your lender allows for this). Ultimately, the lender may require the note to be paid off, which would require a refinance and change of borrower from yourself to your partner and/or the new owner of your old 50% share. 

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

 Correct, it would get recorded with the County Recorder. If you have a title company or attorney draft it for you, they can typically get it recorded for you as well.

 Love this recommendation. Only thing I would add is that if Subject A uses a Lady Bird Deed of TOD to transfer the property upon death there is less flexibility for planning. Subject A passes, the properties go to Subject B. In some cases, Subject B may not be ready for such a large asset, in which case the revocable living trust is the better option here. In either case, the step-up in basis remains, but the living trust allows for you to plan around Subject B's strengths and weaknesses to ensure they receive the property when they are ready for it, and in the way that Subject A would like (rather than simply being made outright upon death). 

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

It can potentially create a cloud on title if you deed it directly from the old deed into the trust, which can cause issues with title insurance. Generally, to avoid a cloud, you can file a corrective deed, which is a deed that serves to provide public notice of the name change, but indicating that the two names are one-in-the same person. Then, you can record the deed into the trust. This can clean up the chain of title. While you're not legally required to hire an attorney to prepare the corrective deed, it is a bit different than your typical deed, so if not using an attorney you may need to find a local title company that can help prepare it.