Seller-financing inherited property within the family

[Travis Beatty]

Has anyone ever done seller financing with an inherited property within your family? 

My grandfather passed last year, and I have inherited 1/3 of his estate, my parents have the other 2/3. I told my parents that I want to buy them out of their 2/3 ownership of the home, and eventually use the house as a rental property. My parents have proposed the idea of me paying them a monthly mortgage for the next 10 years until they get their 2/3 value of the house. Their only stipulation is that I don't rent the house because they don't want to have to worry about the house being in their name with a renter in the home. 

If I own 1/3 of the home based on the will, is there some sort of a contract that I can do with my parents that does not make them liable for anything that might happen once a renter is in the home?

I have also considered taking out a mortgage and buying them out, but I'm thinking that if I can do some seller-financing type deal then I can get it for zero down and they don't have to worry about being legally responsible once I get the house rented. 

Thank you for reading my long post, any input is appreciated. Have a great day!

[Ian Murray]

Maybe do a quitclaim deed transfer, putting the house completely in your name, and have your parents hold a first position lien on the property.  That would make you the owner and them the bank.  They wouldn't be liable for renter issues anymore than a bank would be.  

Double check with an attorney for the exact mechanism, but something like that could work.

[Travis Beatty]

Thank you Ian, I'll look into that.

[Beth Johnson]

As Ian mentions, if you do a seller-financing deal with your parents, they will be on title as a lienholder and not a vested owner. This would require them selling the property to you and then having legal paperwork drawn up with them as the creditor and you as the 100% owner of the property. Sounds like they would want a loan that is principal and interest so that they receive their money sooner rather than later. If they structured it with a high principal payment and a low interest rate, this would allow you to pay down the loan quicker and still cashflow when you want to rent it out. 

[Chris Seveney]

@Travis Beatty

You could buy the home from them and have them give you a note and mortgage

That way their name is off the house so you can rent it and they are just the lender (bank).

That would be cleanest way to do it. You also would have full control over the property