Subject to Purchase & Terminal Illness / Death

[Donald Hendricks]

i have a acquaintance that was diagnosed with cancer this week, prognosis is terminal, life expectancy 6 months. He purchased a home 3 years ago, so there is little equity in the property, likely around $20,000.00. The property is worth about 140k. It is on a 30 year 3.4% fixed rate loan. Original loan was 122k. The monthly PITI is $743.00. The home could rent for 1100-1200 a month.

He is not working because of illness and is pretty much broke, although the mortgage is current and has never been late.  It is not likely that the next payment will be made unless someone steps in to help him.  He has asked me for advice and help.  He has a minor child and an ex-wife.  Both his parents are still alive.   As I understand it, none of them are in a position to help.  

If he stops making payments, he will likely have passed before the bank gets too excited and eventually they will take the property.

If he puts the property on the market to sell at retail, any profits will be eaten up in costs and he will be homeless.

My thought is to suggest that he sell it to me subject to, I will then let him stay in the property until his passing at no cost to him.  I don't want him to feel like I am stealing his home and I know he needs cash, so I am willing to give him some cash, but there really isn't a lot of equity and I have to carry the house until his demise.  In the end, this is a business transaction.

I am aware that in subject to deals, that a lender can call it due at any time, but is this more likely to be triggered by the death of the original borrower?  

If he transfers the property prior to death, does the estate have any claim?

I am not looking for a legal battle and would walk away from one if it should arise, as there is not enough to do battle over. There really is no estate to probate after death, it will just be his personal household property that his Ex will likely take for the child.  He does have life insurance with a trust for the child as beneficiary. 

Any other pitfalls or advice?