BK and rentals

[rebuilt]

Hey Everyone,

What happens if I am on the deed for a rental property that has a mortgage on it in my business partner's name only?

The house is not worth what the mortgage is.

If I file, can I be taken off of that deed, to avoid any future obligation to real estate taxes, etc.? I obviously wouldn't have an obligation to the mortgage company, but just in case it ever fell behind in taxes, or someone got hurt their, etc.

I just don't want to be on the hook for something forever, if it can be released in BK. Everything is current, but if I need a fresh start, I want a fresh start.

Thank you

[tobee43]

your business partner would have to buy your share prior to the bk...or work out something with the trustee to buy you out someway or another. your partners interest is really not potected under this type of situation.

the trustee can force the sale of the property, even though it is owned by both or you....if it's 50/50...the property could be sold and he or she would get their percentage and the balance would or could be distributed to your creditors.

made no sense to me since the property had no value....however, remember the depreciation etc through the years...and there is capital gains etc to deal with...

even if you did a quick claim deed it would not relieve the situation and you would have to disclose the filing of the deed, if this act was a year within your filing date.

i do know someone this happened to, and the partner had to buy them out. those funds were taken by the court to pay back creditors. it appeared the court really didn't care that the property's value was underwater. i think it depends on the trustee, and what your attorney figure out.


speak to an attorney and see what can be done, if anything else is possible.

[rebuilt]

Thanks for the quick response. Makes no sense they would have to buy my share of an asset that is underwater, that I couldn't just get an appriasal, and quit claim deed it to them now, or during the bk.

We've only had it for a year or two, and not a huge investment ($150k) or so, so I don't think tax implications would be too big, especially with the losses I am showing everywhere else.

[tobee43]

exactly, i would think if the trustee would see it has no value it should work as a wash.

that's good it's been only two years....the other person i knew co-owned with someone for over 20 years so it was a more complexed tax issues involved.

hopefully you can just quick claim deed the property over to them with no problems...however, i would still run it by your attorney....just to be safe.

[rebuilt]

Would I need the partner's consent to do so? If I just dont want it anymore? I am respobsible for all the tenant issues, building problem issues, etc. and it is one more thing to be free of if I go BK

[tobee43]

well, you said it was a partner...but you never said what percent each of you owns.

yes, i would think he or she would have to work with you on this situation, if you want it to go smoothly...otherwise, if you don't care about the relationship, it could leave him or her holding the "bag". is that something you are prepared to deal with?

you need to chose on what's important to you.

[rebuilt]

it's 50/50. Most likely if one of us files, so will the other, since we have other business deals together, but just wondering what happens if I want out, and he doesn't for some reason. And since he is on the mortgage, and not me, I wasn't sure if I would eventually be able to just hand over my portion of the investment, since it is worthless, and probably will be for a long time.