nominee agreement/tenants in common

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nominee agreement/tenants in common

Does someone have to be vested in title, in order to refinance, if there is a nominee agreement?

Asked on May 19, 2009 under Real Estate Law, Michigan

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Typically, if a buyer ("Principal") wants to remain anonymous he must set up the transaction by purchasing the property through a nominee.  There are two basic structures for nominee transactions.  In one, the nominee enters into a contract to buy the property and then assigns the contract to the Principal, and the Principal, not the nominee, closes on the purchase and takes title ("pre-closing assignment").  With the other structure, the nominee takes title to the property and later conveys title to the Principal ("post closing transfer").

I don't undertand then why the Principal does not have vested title by now.  If this is a refinance, that means that there is already financing in place.  How was that accomplished?  No lender that I know of will lend to someone against property they do not own.

There is obviously something that I am missing here.  Perhaps if you could give more details of the specific transaction I could be of more help.


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