Home Sign Over & Siblings

No Source ^ | 7/29/2006 | Chris_AB

[chris_ab]

Hi guys,

That internet link above is not my situation but does show and illustrate a situation that I want to chat about - that is, the brewing of a possibly bad deal in my family.

Help me if you can with some advice.

Here is the situation, my wife was told to go in with her sisters on a "home purchase". It is the house of their father, my Father-inlaw. He doesn't want to pay on it anymore and he doesn't want to have the responsibility. There is $50K left on mortgage.

He wants to sign the home over to them - all three; keep his financing for the house - and just continue paying down the mortgage. It's a rental property.

The sisters, my wife included, want to save some $300 monthly as a slush fund for repairs. If we don't all go in on the deal (i.e. manage the property - deal with repairs outside of those not kept by managment co.) then it might be "Lost" and sold. They want to keep the house in the family.

I'm young so I don't know much about home purchases myself.

1.) I wonder if there is a risk in keeping my Father-in-laws financing on the house but having the house under the "collective name"? Is there a legal arrangement for this type of deal - i.e. semi-estate or something?

He has recently remarried and is not too stable/financially stable. Would his new wife be completely disjoint from this deal?

2.) Do I have valid concerns - confusion, suspicion, annoyance, indifference, etc.? It seems I wish that my Father-in-law would just sign it over to one (1) sibling, not necessarily my wife. I sometimes think the house should be sold by him.

I think that in the future - this thing will come to a head and the sisters will hate each other over the deal. I've seen one situation like this already in my extended family. I.e. 2 to 3 parties fighting about what to do with land and home.

Thanks

[teenyelliott]

I'm with you. Doesn't sound like a good idea. But you give very few details.

Are they actually going to buy the house from him, like a contract for deed, and he keep his mortgage, or are they just going to assume payments?

And with a new wife in the picture, I would be very wary of getting into a four way real estate deal.

[CatoRenasci]

You don't say what state you're in, and that could make a difference as real estate law varies from state to state. You need advice from a professional, preferably a real estate lawyer in your jurisdiction, or at least a very save real estate broker/appraiser. Problem is the most competent advice, from a real estate lawyer, is expensive. But, there's real money involved here, and it strikes me as worth the $250-500 you'd pay a good real estate layer for a consultation. If you're going to do the deal, you'll need a lawyer in most states anyway.

[chris_ab]

Hey, thanks for the reply.

It seems like they want to go with signing over the home and assuming payments at his interest rate and all.

It seems like he will just be disjoint from all "landlord" responsibilites, he won't have the home in his name, and we would keep paying the mortgage via the Renters.

Yeah, sorry for the lack of details but I don't have many; also I have yet to purchase my own home. I hope to do that in one or two years max.

We just bought a new car and I had a mildly difficult time controlling my wife emotions; glad that is over with...

*******

So back to the house - I just wonder what happens if the house is problematic with mold or something god awful. Then will I be apart of some legal action?

Also what happens if the home is, maybe, condemned for some natural disaster or what-not. Then we will have to keep paying the Mortgage without Renter assistance.

Also, one of my wife siblings is a financially instable single mom, this would be my sister-in-law. What happens if she can't pay for the upkeep or her future share of the Mortgage should we all have to pay?

The ideas is that the home would be kept as a retirement place for my Father-in-law should he lose his mind and not take care of himself...

Or any poor soul that is in our family that wants/needs a place to stay (rent).

I've seen family burn one another on these "Let me rent your house" deals.

Anyhow, any advice, suggestions, information shared would be helpful. - Thanks.

[chris_ab]

Hey thanks,

The property is in Texas - Corpus Christi which is along the Gulf of Mexico Coast. I live in Maryland.

That city has not been hit with a big hurricane in decades but it's always possible.

I agree with you about getting consultation. I always do things myself but then I pay big or create more problems. Thx.

I think I will tell my wife no; I will tell her that more needs to be done if my name is going to be on anything.

It's just that they want to move fast on this deal as the Father in Law is ready to sell.

I guess I'll tell them to sell. This itself might create discord in the family

So my visits to Tx may turn interesting. : )

[teenyelliott]

It seems to me as though you know the answer to your own question, and are simply looking for someone to validate your opinion. : )

Without knowing the specifics of the deal and actually looking at the paperwork, there is no good way to get a solid answer to your question.

And, the other response that you have gotten about all real estate laws differing from state to state is true, also.

Generally speaking, as the spouse you would be liable for the debt and property as well.

Money can tear up the closest of families. Make sure you get sound legal advice on this deal before your wife does anything.

The way you describe the situation, it sounds very precarious.

[Valpal1]

He should sell the rental property if he doesn't wish to be a landlord anymore.

Do not go into business with your wife's siblings and that is exactly what you would be doing. Don't go there!

That gut feeling you have..... yeah, the one that led you to post this thread is trying to save your life, your marriage and your finances. Listen to it. Put your foot down, just say no, then duck and cover.

[chris_ab]

Hey thx.

"to duck and cover" - eh...

That is price less... lol

You guys have been helpful; if only after a few comments.

Here is a flash-back to the 50's - via You Tube

http://www.youtube.com/watch?v=jitctNWozxY&search=duck%20and%20cover

[pax_et_bonum]

...my wife was told to go in with her sisters on a "home purchase".

There's your first huge red flag.

Your wife is an adult and she shouldn't allow anyone, including her parents, to tell her what to do.

[Lil'freeper]

I agree with the suggestion to get professional advice on the matter - especially legal advice. Families, plus sentiment/emotion, plus real estate is a high-risk proposition. If the deal goes bad, it will go very, very, very bad*.

If I were in your situation, I'd get all the terms of the deal in writing. You should outline who is responsible for what, how the rental income is managed, and how the property will be disposed of eventually. If the sisters can't agree to drafting a watertight, legally binding agreement, agree on the terms, or agree to sign it then you should take that as a portent of the future.

* The number of very's in 'very very bad' is equal to the number of sisters/women involved. I say that as a woman who has learned a few family real estate lessons.

[TheOracleAtLilac]

the situation is just too complicated to deal with.

If the sisters take over payments there are tax implications
what's the value of the property for depreciation ?
How much has been depreciated already & must be recaptured for gramps taxes ?
what's the benefit of of the sibs pursuing other than as a (low probability) housing hedge ?

How much for a R.E. attorney (& possibly a contract law attorney) to draft papers covering the transfer & proportionate ownership (based on mo'ly contributions) ?

upside vs. downside...sell the shack !