Legal Question in Real Estate Law in California
Quit Claim Deed and Continued Liability
BACKGROUND-My partner and I tried to develop a small subdivision by obtaining a hard money construction loan thru a broker who pools together private investor funds. The lender (broker of loan) mismanaged funds and our funding stopped altogether in Feb. 2007 because they basically ran out of money for us to draw from to build our project. THEN- they started foreclosure because we couldn't make the payments on the loan and recently the lender went out of business- TODAY, each of the individual investors in our project, all of whom haven't been receiving monthly payments on their investment for 6 months and never agreed to foreclosure are banding together to form an LLC for the project and want my partner and I (property is held in our S Corp's name) to sign a Quit Claim Deed and relinquish our claim to the partially developed property to them to stop the foreclosure. How can I give them what they want and still reduce/eliminate my liability for the repayment of this loan? Is there a way or will we just have to file for corporate and perhaps personal bankruptcy? All of us have been vicitmized by the lender and while I feel terrible for the investors and want to help them, I don't want to shoot myself in the foot in the process.
2 Answers from Attorneys
Re: Quit Claim Deed and Continued Liability
You can enter into a settlement agreement which can provide that you sign the property over to them and they release you of all liability. Who knows, maybe you can even retain a right to a portion of the profits.
You need representation in this matter for sure.
Re: Quit Claim Deed and Continued Liability
As Mr. Berger has indicated, there is a remote possibility of saving yourself financially.
This is quite a complex situation, with many possible outcomes.
Consult with a real estate attorney ASAP.
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