Financial Records

[music12]

why would you act as property manager if the property is not yours and you did not get paid for it??

[squeeze]

3. If you do not have a contract with the owner of the property showing that the rent is due to him/her from the tenants, then the trustee and/or the US trustee may try to state that the entire amount of rent is income, not just the portion you kept, but this could be resolved in a 2004 examination as long as you have records of each payment from the tenants and each payment to the property owner, and as long as the payments are consistent so that it is straightforward to determine why you were keeping a certain amount of the rent, etc.

I don't have this contract yet, but since this is a friend, we could have this contract created. One trouble is that we were handling this informally, so the rent reimbursement to him varied quite a bit from month to month.

[music12]

i don't think you need to have a contract with him about this. you just need a copy of his lease with his tenants, showing that they owe him the rent (and do not owe you the rent).

[squeeze]

why would you act as property manager if the property is not yours and you did not get paid for it?

I live closer to the property. Also, since my loan was being paid back via the rent, I was pretty motivated to make sure that the renters were happy. It wasn't any trouble really, the upkeep duties were minimal.

[backtoschool]

If you never owned the property in question, then you are looking at two issues: insider payments, and income as a property manager.

The more documentation you have the better, but I think you are at a pretty high risk of the trustee viewing any payments that happened in the last year as insider payments.

I think a contract, plus all the leases, would be something that you would want to have.

[music12]

if the OP can show the leases between the tenants and his friend, i don't think there will be any issue with insider payments. and, creating a contract with the friend on the eve of bk is not a very good idea.

are these payments continuing, by the way? if they are, you might as well have him stop and have the tenants pay him from now on.

hmmm, now that i wrote this, what do the tenants know? if i were a tenant and i had a contract with my landlord to pay him rent, i would never give a rent check to anybody else.