Getting a loan for commercial property in a partnership

[jlc614]

What is the name of your state?NY

My brother is currently renting a garage and is now considering buying into the property and has some questions. I am a mortgage processor but I work with residential so I wasn't sure of the guidelines for a commercial property.

The property is currently owned by 2 gentleman who have an Limited Liability partnership. Partner A has a loan against his half of the property and Partner B owns his half free and clear. My brother would be becoming partners with Parner B. How do commercial loans work, since my brother would only own half would the loan be the primary lien? Would the partner have to sign the loan paperwork since he is part owner? Any help would be appreciated.

 

[nextwife]

Well, he NEEDS an attorney. No ifs or buts, He is entering into a business partnership in addition to acquiring a partial interest in real estate and possibly equipment. If he is becoming a business partner, he may also (if he's being smart about this) want to pay a good accountant to review the books.

AS to mortgage priority, we can't know if the loan you reference is real estate only, or real estate and equipment (which can be the case in such commercial ventures). But mortgage priority is the same for residential and commercial property. A mortgage already in place remains primary to a subsequent mortgage until it is either released or subordinated.