Legal Question in Real Estate Law in Massachusetts

Release of Investment Property from Collateral

I am currently purchasing a business with the help of the Small Business Administration. In exchange for the loan the SBA wants to use everything I own as collateral. However, I own an investment property I would like to sell within the next year. How difficult will it be for me to receive a release on this investment property after it has been used as collateral for the loan? Currently the property is in the name of a trust with my and my daughters name on it. Do you think that there is a way I can not use it as collateral at all and maybe rewrite the trust solely in my daughters name? Or give it to her as a gift. I would appreciate a quick response since this has to be resolved this week. Thank you very much for your time and advice. I am very greatfull for your input.


Asked on 3/28/04, 9:41 pm

2 Answers from Attorneys
Len Foy NH Residential Title & Escrow

Re: Release of Investment Property from Collateral

Hi -

My name is Len Foy and I am a real estate attorney practicing in New Hampshire & Massachusetts. In addition, I am legal counsel for a title company in Londonderry NH, and we periodically encounter these SBA-related issues, when collateralized properties are sold, refinanced, etc.

As I'm sure you understand this is a complex area.

Rather than venture a guess, I'd prefer that we speak by telephone, so that I can get more information about your situation.

I'm an attorney with Gould & Gould, our office telephone number is (603) 434-3437. My mobile number is (603) 978-0421. I look forward to hearing from you.

Regards and Good Luck -

Len Foy

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Answered on 3/28/04, 10:57 pm

Re: Release of Investment Property from Collateral

It is difficult to give a precise answer to your question withoout more information. However, once the SBA or the bank lender has a lien on the property, you will either have to use the net proceeds (sale price less existing debt) to reduce your debt on the SBA loan or get their premission to use the proceeds for another investment or to pay your capital gains taxes if any.

There are some ways to deal with this in advance so they have reasonable protection as will you. You simply need to negotiate the terms carefully.

If you wish to talk further I will be happy to discuss your case. You can call my office at 508 485-1911.

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Answered on 3/29/04, 3:55 pm


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