3 guys, 2 with bad credit, everyone wants a good rate and protection.
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3 guys, 2 with bad credit, everyone wants a good rate and protection.
I am looking to purchase a modest vacation home with 2 family members. I have really good credit but the other 2 investors do not have great credit. One investor has bad credit and the other investor would cause the interest rate to jump up 2%. I can afford the house on my own if I had to and we would all like to get a great deal on interest. If I had to put the loan in my name, what options do I have to protect the other investors? I’m not keen to put my name on the loan but everyone’s name on the title. How can we all be protected in this deal?
Asked on May 11, 2009 under Real Estate Law, Illinois
Answers:
N. K., Member, Iowa and Illinois Bar / FreeAdvice Contributing Attorney
Answered 14 years ago | Contributor
The initial suggestion I have is for the three of you to explore on the possibility of binding the three of you into a common agreement, say, by expressing your interests in form of creating a new legal entity like a partnership, corporation or association. Then, you may apply for mortgage under this new entity, which the three of you are co-owners. Then, all three of you may be entitled for some protection and beneficial interests. But that would depend on the terms that you would all agree on and about.
Another option is to scout or look for other financing companies who would agree to your proposal. But if such would cause delays and takes too long before you could get the property you want, you may assume the loan and execute a notarized agreement between you and your two partners. You would need to sit with your lawyer/s to forge this agreement between you and your partners.
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