Pulling equity out of a shared inherited property

7 Replies

Hi All,

I am asking this question on behalf of my Mom. Last Year my grandma died and left her home (worth 2 million) as an inheritance in a trust for my mom and her brother. My mother personally took care of my grandmother for the past 10 years so her brother agreed in writing (lawyers wrote everything up) to take $600k in exchange for my mom getting the property exclusively. Now my mom needs to figure out how to get him the 600k without selling the home (she wants to keep it as an investment and not sell because my grandma bought in 1916 and the taxes are only $1000 per year compared to similar properties which have taxes of 30k per year). Is there a way for her to access the equity in her current portion of the property to pay him off without having to do a hard money loan? Her personal residence does not have enough equity in order to pull out 600k. Thanks in advance for your advice.

-Jessie

What you need is a private money fiduciary mortgage to the trust. 

The trustee/successor trust borrows in their fiduciary capacity using equity in the trust-owned real estate as collateral. 

If the property were in California I could help you and your Mom but you are on your own for Idaho. Sorry. 

I would check on the taxes. Grandma probably had a "senior freeze" on the amount. It will probably be increased to the same amount as the houses around it.

I just noticed "in a trust"... is it still in the trust or does she and her brother have title in joint tenancy?

Thanks all for the feedback. Yes, the property is in a trust and her real estate lawyer said something along the lines of it had to stay in the trust in order to maintain the lower property tax rate. The property is in California and I know she looked into just doing a cash out refi but for some reason that was not going to work. She also looked into a hard money loan, but with 50 pages of paperwork and the lender having the power to default the loan and seize the property for a myriad of reasons beyond that which conventional loans have, she just didn't feel comfortable doing it. She is a person who reads every line of a contract and will not sign if she feels uncomfortable with anything (which is good but makes this sort of process slow).

Originally posted by @Jessie Huffey :

Thanks all for the feedback. Yes, the property is in a trust and her real estate lawyer said something along the lines of it had to stay in the trust in order to maintain the lower property tax rate. The property is in California and I know she looked into just doing a cash out refi but for some reason that was not going to work. She also looked into a hard money loan, but with 50 pages of paperwork and the lender having the power to default the loan and seize the property for a myriad of reasons beyond that which conventional loans have, she just didn't feel comfortable doing it. She is a person who reads every line of a contract and will not sign if she feels uncomfortable with anything (which is good but makes this sort of process slow).

 I'm not an attorney, and have limited knowledge, but it is my understanding that Lenders can do what you are requesting, but it will depend on whether it was set up as a Revocable or Irrevocable Trust and who the Trustee is now.  I believe only the Trustee could apply for the loan regardless.  

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