Nope, that appears to be a pretty clear cut case of fraud unless he fully disclosed everything to the lenders.

Like I have several condos that I rent in Lowell and I could get a similar unit in a highly regarded border town that is identical to some of mine and get maybe $100-150 more in rent, but it would cost me $30-50K more easy to buy it.

In the end, he'll probably get hit with tax fraud besides that imputed interest, interest and penalties.

We certainly have some good companies represented here but don't assume that because anything here that might be advertised has any endorsement you need to do your due diligence on anything you do in RE.Turn key operations can be ripe with fraud or scams, there are those that have picked up very cheap properties, put lip stick on, put a partner type tenant in at higher than market rates to justify a much higher price to sell the package.

You can also use your tax assessor's site and secretary of state's site to identify which attorneys are being used by other active LLC investors.Take steps to shield the identity of the members.

Some people just make a bad decision once in their life and then they are labeled and treated like they will forever be the scum of the earth.Just do a search for a list of felonies:Issuing a false certificate 175.40Sports bribe receiving 180.45Tampering with a sports contest in the first degree 180.51Rent gouging in the first degree 180.57Unlawful possession of a skimmer device in the first degree 190.86Promoting gambling in the first degree 225.10Possession of gambling records in the first degree 225.20Gaming fraud in the first degree 225.60Possession of unlawful gaming property in the second degree 225.75Use of unlawful gaming property 225.85Obscenity in the second degree 235.06Eavesdropping 250.05

Many times in court it comes down to who the judge believes, if you were caught doing a fraud your credibility will suffer.Good insurance and good management practices are very important.

Even if you somehow convinced the investor not to record a lien, when you sign the disclosures you would be committing fraud by not informing them of the lien.

The first thing I would recommend is to establish your investor identity.

That is Florida law and falls under the Statute Of Frauds.