Buying house with a friend

Question

Help.. Just looking for thoughts.

About 4 years prior to our marriage, my husband bought a home with a good friend of his. At the time they had a verbal agreement that if one wanted to sell then they would sell the house.

Flash forward.. my husband and I get married, he wants to sell his half of the house so we can buy another. His friend doesnt want to. So the friend offers to give him his downpayment back. But not right away, in a year. No, increase in equity (though he could sell the house for more) no interest. My husband agreed to it, because he's just desperate to be off the mortage.

Also, my husband found out at that time that the friend had taken an equity loan for the 65K that they put down on the house. The whole downpayment, not just his half.

So they went to a lawyer, had a contract drawn up and the contract stated that the friend would #1 take my husband off the mortgage, and #2 pay him his downpayment back. This was to happen as of May 31, 2008.

My husband hasnt heard from him and cant get ahold of him! My husband is so stressed out... Any advice on what to do??

To make things more complicated. The friend owns the company my husband works for and my husband's sister lives in the house.

Thanks

Answer 1

who is the "they" that went to the lawyer?

hire your own lawyer!  Seriously.

get out of the frustration mode.

or....sit back and live.  IT will all work out.

Your choice.

sorry about the inconvenience[s]!

Answer 2

Real estate does involve some of the weirdest twists and turns.  2 friends have a handshake deal that seems perfectly fair. A few years later there are lawyers and equity loans and disappearing money and disappearing friends.  Wow.  You have very few options and they are all bad.  Of course, you could sue the bank that put a loan on without your husband's signature. You would win and get some money in 5-6 years. You could go on Judge Judy but could only win $5,000 plus the $15,000 for being on the show.  You could move into the house so it was being used.  /

Answer 3

A couple things in your recounting don't ring true. So, either you have the facts wrong, or you're being scammed. Note: I'm not a lawyer, so what follows is not legal advice. For legal advice, consult a lawyer.

First, as already noted, if your husband is a co-owner, the "friend" would not have been able to get an equity loan on the property without your husband's signature. So either the "friend" forged your husband's signature, or your husband actually signed.

Second, you say the contract drawn up by a lawyer stated that the friend would take your husband off the mortgage. Nope. Not possible. And a lawyer would know that. No lender, especially in today's market, is going to allow someone to be taken off a mortgage. No way. No how. The only way that could be accomplished would be for your friend to refinance the property. No lender is going to simply remove one of the co-signers to a loan. Like I say, a lawyer knows that.

Next, a contract of the sort you describe would have a penalty clause in the event the friend didn't comply. What is the penalty clause? And how is it enforced?

You need your own lawyer. A competent lawyer.

Also: Check the tax records. See who's listed as owning the property. It's entirely possible that, as part of that equity loan activity, your friend somehow removed your husband from the deed. Or possibly your friend had your husband sign some document--could be as simple as a 1-page quit claim deed--that resulted in your husband giving up his interest in the property.

So you immediately have to verify ownership of the property. You can do that today, probably online, without a lawyer. If your husband's name has been removed, contact your state attorney general immediately. And contact a lawyer.

Next, order copies of your credit report. If your husband's "friend" forged your husband's signature for the equity loan, then that loan will show up on your husband's credit report. If that's the case, contact your state attorney general immediately. And contact a lawyer.

Next, contact the lender--the mortgage holder. Have your husband determine whether payments are current. Now, the "friend" could default on the equity loan, and that could result in a foreclosure. However, do what you can by checking the mortgage that you know your husband's on.

And your husband should look for a new job.

One thing your husband should not do: If he's still on the deed, he must not quit claim the property to his "friend" in return for some assurance of payment. That would be relinquishing his ownership interest...but he'd still be responsible to the lender for payments.

I'm only guessing here, but this is what I think is happening: Your "friend" has run into significant financial problems. He probably forged your husband's signature (though such signatures are supposed to be notarized) in order to get the equity loan. He doesn't have enough money to buy your husband out, or even to repay your husband's share of the downpayment. The "lawyer" or so-called lawyer was, at best, paid by your "friend." At worst (based on your description of the contract) he wasn't a lawyer at all. My guess is that the payments are behind on the property--either on the first mortgage, which your husband can check, or on the second. Now, again, that's just guesswork and speculation on my part. But please either confirm or deny it by checking the tax records, the credit reports, and your lender's records.

Finally, again, you need a lawyer.

Good luck.

Answer 4

Go back to the attorney and sue over the contract violation, and look for a new job because it’s hard to stay employed when you’re suing your boss.  

Answer 5

Never, never, never go into any business deal with a friend or family member without a written contract.  I don't care how well you know this person, for this very reason, stuff like this happens.  That being said, i am surprised that your husbands friend could actually get an equity loan without the consent of your husband because he is co owner of the property. I would have your husband take a look at the contract to make sure his signature wasn't forged.  Who's lawyer did they see?  I would tell your husband to seek his own counsel.  This doesn't sound right.  If this guy got an equity loan, then your husband should get half, $30,000.  See another attorney, preferably a real estate attorney.

Answer 6

You are about to lose a friend and that is the first thing you will lose.  Moreover, you are going to lose money, and your job and health is going to suffer over the stress of it all.  

How do I know?  I am involved in a family business gone bad which now involves a lawsuit, bad feelings, and a family feud.

If you can sit down and work something out, now is the time to do it.  Maybe is is too late, judging from the phone call avoidance. I am so sorry, I would wish this on no one!

Answer 7

First, I don't understand how the friend could take out an equity loan without your husband's signature.  Something doesn't smell right.

Go back to the attorney (assuming it is not one associated with the business.  If so, get a new attorney.  This doesn't look like it is going to resolve itself without intervention.

Your husband may need to look for another job.

Answer 8

I'm really not sure what to do. I'm sorry for the problems your having. I think I would take this issue to court. The main thing is that the payments are being met. I can't understand how his friend got a loan on the equity, especially if your husband's name is on the deed. Unless he forged your husband's name. This issue may help your husband!