Legal Question in Real Estate Law in Florida
If I use money from private sources to purchase and rehab houses, I have to provide the investor with protection should something happen to me during the course of the transaction. What is the legal term or contract name for someone who uses someone else's money for such a transaction, but the person putting up the money owns the property. If I buy the property in cash under my corporate entity, what sort of contract do I have drawn up so the investors money is safe and he ultimately owns the property?
By the way, I live in Florida.
1 Answer from Attorneys
Hi. There are a number of different ways you could structure your deal, depending on the preferences of your investors. One common way to do it would be to form a new LLC and give the investors an interest in the LLC. You would also have a good operating agreement put together defining how and when the investors could step in and take over management of the LLC.
If you don't want to give them an ownership interest, you might record a mortgage against the property, which would give them the right to step in and foreclose. But if I were your investors, I'd want some power over the LLC owning the real estate.
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