Legal Question in Real Estate Law in Oregon

We had been renting our business property for 8 years when it came up for sell. There is a house but this property is zoned Industrial. We approached our nephew to see if he would be interested in purchasing this property with us as an investment in his future. He agreed. However, the seller wanted to keep the agreement between my husband and myself rather than multiple buyers. Nathan contacted his trust and asked for assistance in the down payment amount as well as the monthly mortgage amount. We agreed to My husband and I being 51% owners and our nephew 49%. The property is made up of two 6400 square foot lots. The first has a small 3 bedroom house and the second has a small shop. We share the easement with the neighbor so no separate access has been created for each property. The asking price was $250,000 (approx. $25,000 higher than the assessed amount). We put down $12,750 and our nephew put down $12,250 (to represent the 51/49 % split. Things were fine for the first year. However, our nephew has since been dealing with drug problems. In addition, he has been smoking in the home which is a direct violation of the purchase agreement. We have asked to sit down and meet with our nephew on several occassions letting him know this arrangement isn't working out. I met with a realtor that explained since we have the majority share in the property, we can ask him to leave at any time. We would only be obligated to giving him 49% of the equity in the property. Since there is going to be obvious negative equity in the property, we don't owe him anything but he would owe us. We don't want any money from him but we want him off of the property. There is simply too much liabilty with how he is living his life and our business cannot afford this.


Asked on 6/29/10, 2:04 pm

1 Answer from Attorneys
Daniel Meek Daniel W. Meek

And what is your question?

Assuming you are asking how to terminate this relationship, you would file an action in court for a partition of the property. The preferred method is in-kind partition, where each party gets a piece of the real estate equal to his ownership share. If that is not practical, then the court orders the real estate to be sold and divides the proceeds. You imply that the value of the property is less than the mortgage. In that case, the proceeds would all go to the mortgage holder (perhaps a bank). If the proceeds do not cover the amount owed to the mortgage holder, then all of you would owe the difference to the mortgage holder, unless the property is residential.

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Answered on 7/06/10, 12:16 am


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