COMMUNITY FORUM

mikekris

08:51AM | 03/28/05
Member Since: 03/27/05
1 lifetime posts
Bvrealestate
My husband and I want to buy my father-in-laws house. Is it possible for us to just take over the payments and somehow put our name on the deed? Could the house be a gift and we just make the payments on the mortgage? Or could he sign over his mortgage to us? What are our other options besides going to a finance company and actually buying the house from him? I am clueless and dont know who to go to about this subject. Thanks for any help!!!

Jim D

12:16AM | 03/29/05
Member Since: 01/06/01
345 lifetime posts
MikeKris - hi, you definitely need to find a real estate attorney and ask these questions of that person. I've heard the term "Quit Claim Deed" that seems to apply to your case, but I believe you have to already be on the deed for this to work. And, you need to protect yourself against any hidden problems (liens, encroachments, etc.) including those that a title search could reveal. So, plan to spend some money to explore the best and most secure way to pursue this. Good luck! Jim D/West Point, VA

MistressEll

05:52AM | 04/24/05
Member Since: 01/30/05
361 lifetime posts
The simple answer is probably not, as most Mortgage documents and Mortgage NOTES have a "Due on Sale" clause.

A certified financial planner and an "elder care" Attorney experienced in Real Estate and Trust Laws in your state, may be able to fashion an irrevocable Living Trust for the property, which could possibly name your husband as survivor beneficiary, or fashion some other kind of structured trust that may be able to be protected from catastrophic medicade spend-down provisions, but generally there are waiting periods before one can be "in the clear" and the laws vary from state to state.

Unless the "mortgage" is an older one (pre-1988) it is highly UNLIKELY that there are "simple assumption" provisions, and that the mortgage note itself, and the recorded mortgage document as well may repeat the "Due on Sale" language. If so, unless a Formal Assumption is agreed to by the financial institution, AND they accept your credit worthy-ness, AND the appraisal is good, AND the title insurance is updated, no. By the time one endeavors for a Formal Assumption, one generally has already spent the same, if not MORE to maintain an older mortgage. Also..unless the interest rate and provisions are such that make this better for the institution to keep (higher than market rates versus your credit worthiness)..they wouldn't agree to it anyway. However the Due On Sale clause most-likely contained in Dad's original Loan documents would preclude this possibility.

IF MOM was on the original documents and is now deceased, it also matters what kind of "tenancy" status they held. If "joint tenants in common with rights of survivorship" then it could be possible to add parties via quit claim deed after her death certificate was filed ON the property an INTEREST, i.e. Dad to DAD plus son, but that can invoke the DUE ON SALE clause in some states.

A carefully structured trust for DAD may work in your state without invoking the due on sale, but it would remain in the trust until Dad died, and you would have no titled interest in the property, only upon his death as a beneficiary of the trust and again the mortgage would be due and payable upon his death.

Also keep in mind that your paying that mortgage is essentially a GIFT (gift tax kicks in from son at $10,000 I believe) to DAD, unless its RENTAL INCOME to DAD, both of which are taxable, and could pre-clude his ability to get financial help like medicaid. furthermore, if he is RENTING his home, it can be invoked for spenddown purposes, if he lives in it, it cannot.

MistressEll

05:58AM | 04/24/05
Member Since: 01/30/05
361 lifetime posts
Dad's "gift" of the property would be based on the current appraised value less his original "basis" (purchase price plus non-depreciated "improvments"). Something tells me that this would be more than 10,000 dollars in value, and would be taxable (Gift tax) by the IRS and possibly your local tax authority.

Gift taxes are a tricky issue, so also be sure to consult a Certified TAx specialist (not just that seasonal employee of one of the tax prep offices like H&R, and the like). A REAL CPA licensed or Tax Attorney is what you need to consult with. Gift Tax and Real Estate Transfers are tricky buisness and quite complicated issues are involved. Trusts and Will documents invoke the rules for perpituities, and MOST attorneys FAIL this part of the Bar Exam, and are totally clueless as to how they work, so you'd need EXPERT help in that area as well.

Of course if "Dad" has already become chronically Ill, or "has lost his marbles" the entire discussion is Moot.


johncleeut

08:57PM | 07/08/09
Member Since: 07/08/09
2 lifetime posts
There are situations where due-on-sale provisions are legally not enforceable (legal loopholes):

This can be found in the US Code, Title 12 (Banks and Banking), Chapter 13 (National Housing Act), Section § 1701j–3. Preemption of due-on-sale prohibitions. Mainly subsection D.

Some examples are transfers to relatives upon death, transfer to spouse/children in general, or certain family trusts. Should consult an attorney to discuss the loopholes, make sure you bring with you the reference info for the law.
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