13. Related Party Transactions

Until March 11, 2019, the Company leased office space, on a month-to-month basis, in a building owned by Union News of New Haven, Inc., an entity that is controlled and 20%-owned by Jeffrey Villano, who served as the Company’s co-chief executive officer, president and treasurer until his resignation in November 2019. Rent and other facility related charges paid by the Company to Union News for the years ended December 31, 2019 and 2018 was $4,500 and $18,000. On March 11, 2019, the Company relocated its operations to a new location, which is owned by the Company.

Prior to the Company’s initial public offering in February 2017 (the “IPO”), JJV, LLC, the managing member of Sachem Capital Partners, LLC (“SCP”), which was controlled by John L. Villano and Jeffrey C. Villano, acquired certain troubled assets from third parties who were not existing SCP borrowers. In such instances, JJV borrowed money from SCP to finance these acquisitions. In connection with the IPO, the Company acquired the notes evidencing these loans from SCP. The principal balance of the loans to JJV at December 31, 2019 and 2018 was $-0- and $879,457, respectively. The real estate purchased was held by JJV in trust for the Company. The Company accounted for these arrangements as separate loans to JJV. The income earned on these loans was equivalent to the income earned on similar loans in the portfolio. All underwriting guidelines were adhered to. The terms of the mortgage allowed JJV to sell the properties in case of default with proceeds in excess of loan principal and accrued expense being returned to JJV. The Company did not make any loans to JJV in 2019 or 2018. During the years ended December 31, 2019 and 2018, JJV paid $43,597 and $148,171, respectively, in interest to the Company.  During 2019, JJV assigned its interests in these loans to the Company.  As a result, they are no longer characterized as loans to an affiliate on the Company’s balance sheet but are included in mortgages receivable.

In the ordinary course of business, the Company may originate, fund, manage and service loans to shareholders. The underwriting process on these loans adheres to prevailing Company policy. The terms of such loans, including the interest rate, income, origination fees and other closing costs are the same as those applicable to loans made to unrelated third parties in the portfolio. As of December 31, 2019 and 2018, loans to known shareholders totaled $6,159,002 and $4,412,742, respectively. Interest income earned on these loans totaled $528,712 and $375,552 for the years ended December 31, 2019 and 2018, respectively.

In 2018 the Company sold two notes, having an aggregate original principal amount of $1,717,000, to a shareholder at par. In 2019 the Company sold a third note, having an aggregate original principal amount of $500,000, to the same shareholder at par. All three notes were secured by commercial properties. The Company continued to service the notes on behalf of the purchaser until paid. In December 2018, the Company reacquired one of the notes, having an original principal amount of $1,200,000, and in 2019 reacquired the other two notes, having an aggregate principal amount of $1,017,000. The balance owed to the purchaser for the notes, $1,200,000 at December 31, 2018, is characterized as due to shareholder in the Company’s balance sheet for the relevant period. On July 26, 2019 all principal and interest due to the shareholder were paid in full.

At December 31, 2019 and 2018, the total amount owed by JJV to the Company was $11,397 and $22,794, respectively, and is reflected as other receivables on the Company’s balance sheet.

During the years ended December 31, 2019 and 2018, the wife of the Company’s chief executive officer was paid $100,000 and $80,532, respectively, for accounting and financial reporting services provided to the Company.