Thank you for having a look. I hope someone here has been in a similar position and can offer some insight.
Background/Bullet Points:
San Diego duplex.
No debt.
Not a rental. Two vacation homes. Divided by a Co Ownership Agreement.
I want to buy out my partner’s interest.
She wants to sell her interest.
She/seller wants to do a 1031 and buy another property. (Marin County, CA)
We have looked a Structured Sale but it does not have all the advantages of the 1031.
I have cash to close.
She/seller cannot find the “right” property.
She is the manager of the LLC that holds title with her parents.
They have not set foot on the property in almost 3 years.
I live in one of the units and have managed and maintained the property for the past 6 years.
Her parents are not able to manage their affairs and she handles their $$$.
They do pay their share of property taxes and insurance. No other contributions to the property
We have a number of serious deferred maintenance issues that she does not want to address.
I would much rather buy her out than go to arbitration to force her to participate in the work for the deferred maintenance and the renovations I want to do.
It could be a couple years or more until she finds the right property. She is very picky.
We are not adversarial, yet.
I want to do something now!
Questions:
What are my alternatives?
How can we structure an open ended escrow that places the funds with a third party and allows me to do the improvements and address the deferred maintenance?
Would she/seller be able to go sign her side of the closing documents once she locates the “right’ property.
Something along these lines:
- Agree on sale price. Go to contract.
- Open escrow
- No specific close date
- Close at Sellers Discretion
- Full sale price funds held in escrow until dispersed at closing.
- Seller must close within 60 months.
- Buyer and Seller execute a lease contract that has buyer:
A. Pay all taxes
B. Pay all insurance
C. Pay all utilities
D. Pay all future and deferred maintenance
E. Lease to be for 10 years or until close of escrow
F. Lessor gives to Lessee / seller gives to buyer the unrestricted right to repair, restore or renovate the building.
G. The lease rate would be equal to that of an interest bearing escrow account. Paid monthly, simple interest. - We would need language to prevent either party from backing out or otherwise breaking the contract. Metaphorically speaking, the train is on the tracks and has left the station. No stopping or getting off until the next station. (close of escrow)
I’m open to suggestions.
Thanks again,
Don Scott