Client and his partner bought investment property and only my client signed the mortgage personally. Not the property is going into foreclosure. Client and his partner do not have an operating agreement between them. Is client's partners automatically liable on the mortgage because he is a partner or should a separate agreement be drafted to bind the partner? It looks as if the client's LLC will fold but my client is still on thehold personally while his partner is not on the mortgage. My client feels as if he is gonna get nailed along with his credit while his partner walks away without the damaged credit or personal guarantee.

Florida law applies. Recommendations?

If the property is in the name of the LLC, then the members should have an operating agreement whereby both partners assume responsibility for debts of the LLC. In your case, only one of the members has his name on the LLC so it looks as if that member is on the hook. I would draft an operating agreement or amendment to the existing operating agreement whereby both partners share the responsibility for the debt equally.

The other option is to have the mortgage company amend the mortgage to include the other member.

If the un-included member doesnt want to sign the operating agreement or the amendment to the mortgage, them Flordia law will control the rights/duties/and obligations of the business owners. Florida has adopted most of the Model Business Code Act.

An agreement including the other member is easier than a law suit.

Off topic, but I wanted to ask: When you purchase a house in foreclosure, assuming you are getting a substantial discount becuase you are buying in foreclosure, how are your property taxes calculated? Are your property taxes calculated on the purchase price, or the assessed value, again, I am assuming the assessed value is higher?

Property taxes are based on the taxable value of the home. The taxable value gets reset when there is a transfer, i.e. a sale of the property. So, when a piece of property is sold or a title is transferred, the property's taxable value becomes equal to the amount of its assessed value for the tax year following the year in which the sale or transfer took place. This is called "uncapping" a property's taxable value. After this has taken place, the lesser of the city's stated percentage (say 5%) or the Consumer Price Index applies to future increases in taxable value, until there is another sale or transfer of ownership of the property.

So, if you buy cheap, the taxable value should also go down. If it does not then you have a right to a due process hearing to contest the taxable value. Look out for the notice of assessment.

I would also go to the city assesser and discuss the same with them.

Is it true that in order to appeal property taxes, you have to pay them first? I believe I read that you must pay the full amount in order to have standing.