Legal Question in Real Estate Law in California

My friend is in a process of buying a REO home and it is already in escrow. It is a cash offer. However, he currently is in urgent need of the money now and asked me to take over the purchase. His agent suggested if I agree he can continue to proceed by including my name to the contract, and before the close of escrow, my friend will then quit-claim the property to me and I will pay him the cash all at once. The reason of doing this is because the seller does not want to modify the initial purchase offer. My concerns are that my friend and I will end up getting negative tax consequences (e.g. gift tax, capital gains tax, transfer tax, etc...) other than pursuit through the standard sales procedure. In addition, is this method legal in California and what should I look into? Thank you


Asked on 2/13/11, 10:53 am

1 Answer from Attorneys
George Shers Law Offices of Georges H. Shers

Unless you really want to buy this house for you own usage at the sales price agreed to, do not takwe part in te scheme. Your "friend" is selling the house to you. What makes your certailn that he will ever buy it back from you? Do you have anything in writing signed by him? He probably wants to avoid having to pay the deposit to the seller for his breaching the contract.

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Answered on 2/13/11, 11:10 am


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