Legal Question in Real Estate Law in Florida
House sale
I am selling a house that I have owned and lived in for 5 years.
The people that want to buy it have a LLC (L & B Properties I.)
The sales price is $132,000 as is.
The remaining mortgage is $52,000
What they are proposing is:
They give me a down payment of $50,000
I carry a 10 year note for them at 5% on the $82,000 balance to balloon to 7.5% after 2 years. Or if they get it fixed up and sold before 10 years they have to pay off the remainder of the note on the day of closing.
They told me they don�t want to take out a mortgage because of the costs involved. And I can be the bank and make some interest too.
To eliminate costs of filings, fees and inspections as well as me having to pay off the $52,000 remaining mortgage right now, they suggest we put the property in a Trust and make the LLC the manager of the trust.
I continue to make the mortgage payment on the $52,000 at 5.5%
They will pay on the note and I will use that money to continue to pay on the original mortgage plus pocket some gains.
Is this a realistic strategy?
In the unlikely event that they can�t pay on the note, can I get my house back when the house is put in the Trust they manage?
What do I need to set up, legally?
1 Answer from Attorneys
Re: House sale
NOTE: This communication is not intended as and should not be interpreted as legal advice. Rather, it is intended solely as a general discussion of legal principles. You should not rely on or take action based on this communication without first presenting ALL relevant details to a competent attorney in your jurisdiction and then receiving the attorney's individualized advice for you. By reading the "Response" to your question or comment, you agree that the opinion expressed is not intended to, nor does it, create any attorney-client relationship, nor does it constitute legal advice to any person reviewing such information, nor will it be considered an attorney-client privileged communication. If you do not agree, then stop right here, and do not read any further.
This is not legal. Without reading your current mortgage, I am sure it is due upon sale of the property. Secondly, you currently enjoy a 3% cap on any increase in real property taxes due to the homestead status. Upon the transfer to the trust, you lose that status and the property taxes can increase each year.
Frankly, in my 25 years of practice, I have always believed in the "smell test". If something does not smell right, then it probably is not.
Be careful of strangers bearing gifts. You must immediately meet with a local real property attorney who can advise you of the proper way to structure this or any transaction and protect your interests.
Scott R. Jay, Esq.
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