Hello, This is my first post here and it's kind of a unique situation. I will try and give as much info as possible.
My father in law has owned a small/medium size grocery store in Ill. for the past 30 years. He has leased the building/property from the same owner during most that time with an impeccable on time payment record. (he owns everything inside for the store and only leases the building as shell making his own improvements.)A few years ago he entered into an agreement with the owner to start making the purchase of the property. Both him and the owner entered into a promissory note for the purchase price of $750,000 USD. He put a hefty down payment on the property (I think about 150k or so) using his paid for home to pull equity out of to make that payment. There terms from there on out were interest only payments until 2014 from there they would re-do the terms or he would buy outright. Take into consideration this was done in 2006/2007 when property values peaked in that area. He assumed he would be retiring around 2014 or so and would just sell the property and close out the remaining balance on it. My father in law entered into this agreement personally between he and his wife as the owners. Not the business as the owner/debtor. The business would pay him rent directly as he was now the owner on paper of the business. The terms of the contract where secured by the property itself and not any personal property of his as he had a 25 plus year relationship with the owner of the property.
Let's jump ahead to present day. The original owner of the property has since passed away and his daughter has inherited that note as well as a few others her dad had accumulated through the years. She is an absentee owner and lives in California and Hawaii full time and is retired. Long story short a new Wal-Mart and several chain grocery stores have recently moved into town and forced him to close the store and retire early. Since my father in law is the owner of the store on paper he put the property up for sale about 1 year ago with the hopes that it would sell and he could clear out the remaining balance of his loan with them and maybe put some of the extra money from the sale back in pocket. Well obviously with the market the way that it is he has had several offers but has yet to close any deals. He of course is still making the payments for the note to the daughter now as he left a large sum of money in the business after closing to keep paying it if the property did not sell. (he also pays the property taxes on this as per his agreement. Approx. 20k a year on top of the interest only payment)
Now the money set aside to carry the property is starting to dwindle. He has enough to carry it another 8-12months before he will have to start paying out of pocket for it. He has asked to the daughter to lower the interest, give him a few months of smaller payments and work with him until the store sells. He has also offered to give her the property back and let her keep all the down payment money and everything else that he has given her and her father. She has flat out said 'No" and that she lives on that money as part of her income.
My question to you all is what recourse will she have if he simply stops paying for it rather than keep carrying it with the business and personal money and then still not have the property sell? As I said earlier the property is secured with the property itself and not any of his assets or personal property other than the promissory note. He owns another vacation home that is paid for, retirement, and I believe he has paid back his home equity loan from the initial down payment for the property. Can she go after his personal money? His other homes? Saving/retirement etc?
Any help or guidance would be helpful. (I know that he should speak with an attorney but I figured I would start here)
Thanks
My father in law has owned a small/medium size grocery store in Ill. for the past 30 years. He has leased the building/property from the same owner during most that time with an impeccable on time payment record. (he owns everything inside for the store and only leases the building as shell making his own improvements.)A few years ago he entered into an agreement with the owner to start making the purchase of the property. Both him and the owner entered into a promissory note for the purchase price of $750,000 USD. He put a hefty down payment on the property (I think about 150k or so) using his paid for home to pull equity out of to make that payment. There terms from there on out were interest only payments until 2014 from there they would re-do the terms or he would buy outright. Take into consideration this was done in 2006/2007 when property values peaked in that area. He assumed he would be retiring around 2014 or so and would just sell the property and close out the remaining balance on it. My father in law entered into this agreement personally between he and his wife as the owners. Not the business as the owner/debtor. The business would pay him rent directly as he was now the owner on paper of the business. The terms of the contract where secured by the property itself and not any personal property of his as he had a 25 plus year relationship with the owner of the property.
Let's jump ahead to present day. The original owner of the property has since passed away and his daughter has inherited that note as well as a few others her dad had accumulated through the years. She is an absentee owner and lives in California and Hawaii full time and is retired. Long story short a new Wal-Mart and several chain grocery stores have recently moved into town and forced him to close the store and retire early. Since my father in law is the owner of the store on paper he put the property up for sale about 1 year ago with the hopes that it would sell and he could clear out the remaining balance of his loan with them and maybe put some of the extra money from the sale back in pocket. Well obviously with the market the way that it is he has had several offers but has yet to close any deals. He of course is still making the payments for the note to the daughter now as he left a large sum of money in the business after closing to keep paying it if the property did not sell. (he also pays the property taxes on this as per his agreement. Approx. 20k a year on top of the interest only payment)
Now the money set aside to carry the property is starting to dwindle. He has enough to carry it another 8-12months before he will have to start paying out of pocket for it. He has asked to the daughter to lower the interest, give him a few months of smaller payments and work with him until the store sells. He has also offered to give her the property back and let her keep all the down payment money and everything else that he has given her and her father. She has flat out said 'No" and that she lives on that money as part of her income.
My question to you all is what recourse will she have if he simply stops paying for it rather than keep carrying it with the business and personal money and then still not have the property sell? As I said earlier the property is secured with the property itself and not any of his assets or personal property other than the promissory note. He owns another vacation home that is paid for, retirement, and I believe he has paid back his home equity loan from the initial down payment for the property. Can she go after his personal money? His other homes? Saving/retirement etc?
Any help or guidance would be helpful. (I know that he should speak with an attorney but I figured I would start here)
Thanks
Last edited:
