Purchased a Home from a Family Member-Advice Needed

6 Replies

Need advice: In 2012, my mom no longer wanted her house that she bought 30 years ago. She took out a second mortgage and has been making the bare minimum payment, therefore, taking her a very long time pay it off. She gets discouraged an wants to sell it. I decided to buy it from her just to help her out an the home has sentimental value to me. I was not thinking about making money from the deal at that time. We made a verbal agreement (not a lick of paperwork except receipts on what I have paid and balance due every month) that I would pay her 10k for the home including a lot next door. I moved in the home to save money on rehabbing, found a contractor and made the repairs(with my own money, luckily only cosmetic). I moved out, hired a property manager, and it is currently occupied. The house is still in my mothers name because of that second mortgage an I do not want to be responsible for her portion. I take care of the home an I pay the property taxes because its my home, right?? I know now that I made an investment deal but did alot of things wrong. I  need advice on what I should do now that my agreement with her will be fulfilled in October 2015? Thanks a bunch BP

Originally posted by @Andrea Johnson :

Need advice: In 2012, my mom no longer wanted her house that she bought 30 years ago. She took out a second mortgage and has been making the bare minimum payment, therefore, taking her a very long time pay it off. She gets discouraged an wants to sell it. I decided to buy it from her just to help her out an the home has sentimental value to me. I was not thinking about making money from the deal at that time. We made a verbal agreement (not a lick of paperwork except receipts on what I have paid and balance due every month) that I would pay her 10k for the home including a lot next door. I moved in the home to save money on rehabbing, found a contractor and made the repairs(with my own money, luckily only cosmetic). I moved out, hired a property manager, and it is currently occupied. The house is still in my mothers name because of that second mortgage an I do not want to be responsible for her portion. I take care of the home an I pay the property taxes because its my home, right?? I know now that I made an investment deal but did alot of things wrong. I  need advice on what I should do now that my agreement with her will be fulfilled in October 2015? Thanks a bunch BP

Its not your house because you didn't have any legal documents on the house recorded in your name at the county clerks office. You said it was a verbal agreement only so you need to have secure the title / deed in your name.  However, the second mortgage is an issue and there is likely a due on sale clause in the agreement between your mother and the lender. If you want the house you may have to take over that payment or pay it in full before you are able to secure the deed / title.   Maybe you and your mom can schedule an appointment with the bank/lender to determine what's needed to handle that second mortgage. Afterwards, you will have better insight on the timeframe and costs for you to become the legal title holder of the properties(house and lot). My coin.

Kudos,

Mary

In addition, it may be in your best interest to hire a Real Estate attorney to walk you through this process.  Typically speaking, contracts for the sale of property *must* be in writing. This general rule may be subject to change in your jurisdiction. For more information on how to transfer the Deed of Title properly and assume the mortgage, get an attorney to finish the job or find a guide at your local law library.

Originally posted by @Mary B.

Its not your house because you didn't have any legal documents on the house recorded in your name at the county clerks office. You said it was a verbal agreement only so you need to have secure the title / deed in your name.  However, the second mortgage is an issue and there is likely a due on sale clause in the agreement between your mother and the lender. If you want the house you may have to take over that payment or pay it in full before you are able to secure the deed / title.   Maybe you and your mom can schedule an appointment with the bank/lender to determine what's needed to handle that second mortgage. Afterwards, you will have better insight on the timeframe and costs for you to become the legal title holder of the properties(house and lot). My coin.

I knew that the house was not legally mine because of the lack of documentation. That is a good idea for us to sit down with the bank and see what can be done. I know by not being the legal title holder I'm missing out on some tax benefits as well. Thanks for the input Mary B.

Originally posted by @Matthew Kreitzer:

In addition, it may be in your best interest to hire a Real Estate attorney to walk you through this process.  Typically speaking, contracts for the sale of property *must* be in writing. This general rule may be subject to change in your jurisdiction. For more information on how to transfer the Deed of Title properly and assume the mortgage, get an attorney to finish the job or find a guide at your local law library.

Thank you for the advice Matthew, yes I do need to get contract in writing.

Originally posted by @Andrea Johnson:

Need advice: In 2012, my mom no longer wanted her house that she bought 30 years ago. She took out a second mortgage and has been making the bare minimum payment, therefore, taking her a very long time pay it off. She gets discouraged an wants to sell it. I decided to buy it from her just to help her out an the home has sentimental value to me. I was not thinking about making money from the deal at that time. We made a verbal agreement (not a lick of paperwork except receipts on what I have paid and balance due every month) that I would pay her 10k for the home including a lot next door. I moved in the home to save money on rehabbing, found a contractor and made the repairs(with my own money, luckily only cosmetic). I moved out, hired a property manager, and it is currently occupied. The house is still in my mothers name because of that second mortgage an I do not want to be responsible for her portion. I take care of the home an I pay the property taxes because its my home, right?? I know now that I made an investment deal but did alot of things wrong. I  need advice on what I should do now that my agreement with her will be fulfilled in October 2015? Thanks a bunch BP

Its not your house because you didn't have any legal documents on the house recorded in your name at the county clerks office. You said it was a verbal agreement only so you need to have secure the title / deed in your name.  However, the second mortgage is an issue and there is likely a due on sale clause in the agreement between your mother and the lender. If you want the house you may have to take over that payment or pay it in full before you are able to secure the deed / title.   Maybe you and your mom can schedule an appointment with the bank/lender to determine what's needed to handle that second mortgage. Afterwards, you will have better insight on the timeframe and costs for you to become the legal title holder of the properties(house and lot). My coin.

Kudos,

Mary

I knew that the house was not legally mine because of the lack of documentation. That is a good idea for us to sit down with the bank and see what can be done. I know by not being the legal title holder I'm missing out on some tax benefits as well. Thanks for the input @Mary B.

Originally posted by @Matthew Kreitzer :

In addition, it may be in your best interest to hire a Real Estate attorney to walk you through this process.  Typically speaking, contracts for the sale of property *must* be in writing. This general rule may be subject to change in your jurisdiction. For more information on how to transfer the Deed of Title properly and assume the mortgage, get an attorney to finish the job or find a guide at your local law library.

Thank you for the advice Matthew, yes I do need to get contract in writing. That's why I'm glad I found this site to avoid making the same mistake in my future investments.

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