Here's the situation: My father has owned a home since 2001. It has been rented by the same couple for last 9 years. This couple is moving out in the next month and my wife, daughter and I will be moving in. The reality is I would not be able to afford the home if I wanted to purchase it on the open market. Therefore, my father is going to supplement the mortgage. I will be paying approximately 75-80% of the monthly payment. He would prefer that I be in the house, as I will take fantastic care of it and it presents an opportunity for us to both profit off of the house down the road if we decide to sell. My parents split over 15 years ago, and he married his second wife. They divorced and remarried, so needless to say it worries me. I'm not sure if she is on the title, but I will find out tonight. My father and I have a great relationship and always have. He suggested this move as a way to better myself and my family. It is in a fantastic area with some of the best public schools in the state, which I look forward to my daughter attending. I am very thankful for the opportunity he is giving me. What should I be worried about legally? We are meeting tonight for dinner, just the two of us, to go over a few questions I have: -Who is currently on the title? -What happens if he dies? Transfer on death deed? -What happens in case of his divorce? -Should we have a rent to own contract in place? -When would ownership transfer? -How much of the mortgage is currently paid and when would he like his capital investment back? Family and business are always sticky, and I've avoided it like the plague until now. I'm really looking for some advice from anyone who has been in a similar situation, or knowledge about how to handle it. Thank you in advance.
Your father can dispose of his assets while married. If his wife is not on the current deed, he can sell it himself. If she is, both will need to sign. Have him sell you the home now on a vendor's lien, contingent on the existing mortgage. Sign a promissory note for a set purchase price and terms. You pay him. He pays the original note. You have the privilege of satisfying the original note if he fails to do so, deducting those amounts from your own note. The house is yours from day one. No inheritance worries. If he dies before you pay him off, continue to pay his estate. His estate is responsible for the original mortgage. He can release you from your debt at any time he wishes.
All good questions and SOME good answers. ALL STATES have different statutes, some DRASTICALLY different. Consult a qualified, LOCAL real estate attorney.
Thank you for the responses. I appreciate the input you guys have given. I just want to make sure we are both protected.
I don't know about Michigan, but here in Illinois, this would be an excellent candidate for a Land Trust. In any case, I strongly suggest that you consult with a real estate attorney and structure the transaction so that everyone is protected. it will cost a few bucks to set up, but if things go sideways, everything will be planned and there won't be any sudden surprises.
Michigan is a "Dower Rights" state, so even if the wife is not on the deed she will most likely need to be involved.
The collective members of the BBS know a lot, but in matters of law, always consult an attorney. (Even if a beeb member is an attorney, they are not your attorney!) MGarret50 said it best. Get someone local experienced in that area of the law.
Get an attorney. I'm a real estate broker and have been a long time and sell a ton of houses every year. GET A REAL ESTATE ATTORNEY. Too many moving parts to this. Simple to figure out but needs to be structured the right way with all check boxes scratched through.
