Expert: Dick Dennis - 12/28/2009

Question
My sister owns a beautiful home in Maine on 11-1/2 acres. With the depressed economy and need to sell, she's discounted the sale price by $75K. Potential buyers want her to drop her rock-bottom asking price by $20K or more. This is creating heartburn for her. I am wondering if there's a way she can partner with the buyers, and retain ownership rights to 8-9 acres? Is there a partnership or other legal buy-sell arrangement that can help her?? (Note: she can't subdivide because of a pre-existing "covenant".)  

Answer
If there is some kind of covenant connected with her property that forbids your sister from dividing it, April, then there is not much she can do in a buyer's market.

You don't say if she has a mortgage on the property, but if she does, the lender is supposed to be secured by the WHOLE property. Assuming your sister does indeed have a positive equity (property's value is more than any mortgage on it), she could offer a buyer an interest in the property and delineate the interest on the title.

That would skirt around the covenant that forbids subdividing. However, be aware that a buyer most likely would demand a majority interest in the property so he can have control. She could also protect the "partner" by giving him a second mortgage if she already has a first mortgage on the property.

Again, the partner would most likely want more security than what a second mortgage would offer.

If your sister has no mortgage on the property, then she can sell the property and express the buyer's interest in the property by delineating his interest in the new title. She would have to create a separate agreement to define how the property is to be used by her and the partner. That would mean she should see a good local REAL ESTATE attorney to do that.

I do wish you and her well.

Dick Dennis
dixiedee13@gmail.com
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