When forclosing investment properties, is it a good idea to create a small business to hide behind?
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When forclosing investment properties, is it a good idea to create a small business to hide behind?
My mother own 5 residential investment properties. They are all underwater. Her credit is important to her because of her other businesses. I want to help her but am afraid of my assets getting seized. Is it a good idea for me to make a small business and buy the units from her then foreclose them all?
Asked on November 29, 2011 under Real Estate Law, Illinois
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
I suggest that you consult further with a business attorney about your question. If the 5 investment properties that your mother owns are underwater and presumably have mortgages on them, for her to be able to sell them to you she would have to short sale them.
Lenders typically do not allow short sales between family members for the simple fact that there is the possibility of collusion in such a transaction. If you buy the properties from your mother you most likely will be buying the properties subject to the existing loans where you would be required to service the existing debt loads on the loans that your mother obtained or you would lose them in a foreclosure.
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