Real Estate Question... "Lawyer Maybe"

Joe OKC

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I have a question, but have to set the stage.

Bob has 3 acres of land and on it sit 3 buildings. An Auto Shop, a Tire shop and a Bar/Grill. Each building sits on it's own acre.

Bob sells all three acres and all three building to Billy for 250,000. Billy has to puts 50,000 down and has 10 years to pay the rest.

4 years into it Bob dies and Mrs. Bob takes over and Billy now starts paying Mrs. Bob. Another year passes and Billy is now 1/2 way through his contract with Bob.

Can Billy Sell 1 acre with the Bar on it to Joe?

Billys doesn't want Mrs. Bob to get the money. He wants to pocket the money and continue on with his contract.

Possible?
 

Saint_Ward

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Does Bob / Billy's contract address selling during the payment period? Who has the deed?

Otherwise, hmm... if Billy pays in full within 10 years he meets the contract, but if he doesn't, now Mrs Bob can invalidate your sale, because ownership would revert to her. Really depends on their deal.
 

buzd

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Unlikely. Assuming all the proper mortgage paperwork is in place, the entire property will be liened to the mortgage holder, which means any cash from sale of part of the property (particularly one that diminishes the value of the property) will be due to the mortgage holder first.

It may be possible to break the property up into individual lots and split the mortgage between the 3 new properties, but this will like involve appraisals, some level of cooperation from the mortgage holder, and probably a complete refinance of the existing debt.


Short answer: Split the property (legally), refinance and payoff the existing $125K debt to Mrs Bob, using the new properties as collateral against the new debt. Hopefully with the increase in value of the property, you can collateralize the non-bar properties for the full new debt and sell the bar free and clear.
 

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