| My father put my name on the title of his house. Bad idea? |
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K997
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| My father put my name on the title of his house. Bad idea? |
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Hello all,
I'm new to the forum and have a question that I've been trying to seek an answer to. Let me provide you with the necessary background and hopefully you all can provide me with some guidance. I'm not much of a financial guru ...
So my parents have a lovely home - unfortunately, they have a mortgage on the house worth $1,000,800. No equity really, as the value of the home has dropped below the value of the mortgage (or equal to it at best) and it's an interest only loan for the time being.
I'm not associated with the mortgage in any way. My father placed my name on the title of the house however. As it stands now, the property taxes for the house come in all three of our names, which means I'm on the hook for them if they don't pay the taxes on the house every 6 months. I've already been stung once by this. This of course makes me uncomfortable, however he claims that it's in my best interest to have my name on the title. He says that in the event of his or my mothers death, the house will automatically be mine, mortgage free.
This doesn't seem to make much sense to me. How is that possible? What other financial pitfalls am I not aware of. Should I, in fact, leave the house in my name or is that just a bad idea? Any insight you folks can provide will be much appreciated.
Thanks all
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Fri Jul 29, 2011 4:57 pm |
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coaster
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Interesting question. One I don't recall being asked here before. So I did a little research and came up with a few articles that might apply:
http://www.nonprobate.com/q&a.htm
http://en.wikipedia.org/wiki/Concurrent_estate
http://www.ext.colostate.edu/pubs/consumer/09101.html
http://kansasstatutes.lesterama.org/Chapter_59/Article_35/
A couple notes of caution: the terminology has very specific legal definitions. For example, there are different kinds of shared ownership, and each type has different benefits and consequences for the co-owners. Furthermore, laws vary from state to state.
It appears that upon the death of both of the other co-owners, you'll be responsible for the mortgage; whether it's assumable or becomes due immediately upon probate settlement probably depends on the terms.
There is much here that "depends on the terms" and the consequences of not understanding your obligations could be very, very expensive. I suggest you spend several hundred dollars for the advice of legal counsel. It'll be money well-spent if you have your questions answered with specific and certain answers.
If you don't mind, keep us updated on how this all turns out. Thanks..... 
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Fri Jul 29, 2011 5:58 pm |
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kate032
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| Re: My father put my name on the title of his house. Bad ide |
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quote:
Originally posted by K997
He says that in the event of his or my mothers death, the house will automatically be mine, mortgage free.
This is probably true -- after you pay the million-dollar mortgage.
I don't know where your dad got his information, but unless you are independently quite wealthy, it seems like a lose-lose situation for you all around. If your name is on the title, then you are responsible for all the taxes and the mortgage, just like they are.
We only have the information you gave us, but from the sound of it, I'd get your name off as quickly as possible, or at the very least, ask your dad for legal proof that you will not acquire his debt.
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Fri Jul 29, 2011 6:01 pm |
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K997
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Yikes, this is scaring me. Thanks for the responses. Based on the links that Coaster sent ... doesn't look to great. It just sounds too good to be true to have a mortgage disappear upon death/inheritance.
I'm going to keep digging around. Any info I'm able to find, I'll be sure to post back.
Thanks all
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Fri Jul 29, 2011 6:38 pm |
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oldguy
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The term 'putting your name on the title" is often a Southern notion, a way to avoid probabe. But technically, it is 'gifting', ie your parents gifted half (or a third) of the house to you. If done within the Law, they would have had to file the gift tax form.
Usually that is a mistake - it is better to inherit the property, that way you get the stepped up tax basis. When it is gifted to you, you hold the original cost basis.
As for the mortgage being forgiven upon death - no, that is completely false. The estate will have to pay off the mortgage, the house will be sold to satisfy the loan if there aren't enough other finds in the estste.
It would be best for the family to meet with an estate lawyer and get this sorted out while everyone is alive and well - this could grow into a real mess after there is a death (and things get irreveocable). At this point you can probably gift your part of the house back to them and get it re-recorded. And then bring the Will up to date so that the house will go where the family wants it (and with no legal encumbrances).
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Fri Jul 29, 2011 8:03 pm |
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K997
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Thanks oldguy ... that makes a lot of sense. Again ... scares me. I asked a buddy of mine that runs a titling/escrow company and she told me (actually screamed at me) the same advice ... I absolutely would be responsible for the mortgage and that it's better if my parents get a Will put together so I can inherit the house. She also said it would be easier to sell the house later if given to me via the Will...
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Fri Jul 29, 2011 8:12 pm |
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SirGeist
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Even more effective than a will, your parents should establish a trust which includes ownership of the house. That way it won't have to go through the probate process if/when they die, and ownership would immediately transfer to you. I believe the mortgage would still transfer, however.
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Sun Jul 31, 2011 2:30 am |
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K997
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Thanks SirGeist ... I wouldn't mind inheriting a house, but I would not want to inherit a million dollar mortgage!
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Tue Aug 02, 2011 7:05 pm |
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eastmn
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My in-laws had life insurance on the mortgage. He died, and the spouse came out with the home paid, free and clear. However, keep in mind that his medical bills could still wipe her out.
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Thu Aug 04, 2011 3:55 am |
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eastmn
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Just wondering. Is there any possibility that the realtor or mortgage originator may have (secretly) needed your name as a means to get the loan approved?
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Thu Aug 04, 2011 6:40 am |
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K997
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quote:
Originally posted by eastmn
Just wondering. Is there any possibility that the realtor or mortgage originator may have (secretly) needed your name as a means to get the loan approved?
That's a good question - so initially, they needed my name to get loan approval. Then after a year, they removed me from the mortgage, refinanced into their own names. My name is still on the title though.
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Thu Aug 04, 2011 8:17 pm |
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kate032
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quote:
they needed my name to get loan approval.
This is just appalling. I don't know the details, but using your child to get a million-dollar mortgage almost seems like child abuse, regardless of the age of the child. You weren't helping them with basic necessities; you were helping them with a luxury item.
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Thu Aug 04, 2011 9:41 pm |
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eastmn
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Kate,
That's one hell of a realtor's commission check, plus fees all the way down the line. Parents could have been misled.
Edit: My own brother was able to walk away from a home mortgage back in the 80s. Century21 had forged his name on some apprai$al document.
Last edited by eastmn on Fri Aug 05, 2011 9:56 pm; edited 1 time in total |
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Thu Aug 04, 2011 9:59 pm |
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K997
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quote:
Originally posted by kate032
quote:
they needed my name to get loan approval.
This is just appalling. I don't know the details, but using your child to get a million-dollar mortgage almost seems like child abuse, regardless of the age of the child. You weren't helping them with basic necessities; you were helping them with a luxury item.
I can understand your frustration but it wasn't done with any malicious intent. They are doing fine fortunately and aren't dragging the system down with them.
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Fri Aug 05, 2011 5:50 pm |
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oldguy
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quote:
I can understand your frustration but it wasn't done with any malicious intent. They are doing fine fortunately and aren't dragging the system down with them.
Good. But while everyone is still doing fine and is of sound mind, get thee to an estate lawyer and straighten this mess out. It could be a real horror show after someone passes - or gets Alz - life happens. IMO, it would be good to make the first visit solo - that way the lawyer can speak freely to you w/o the presence of your parents. Take whatever paperwork that you might have, jot down your story so that you don't leave anything out - and get an opinion on your options and what action is recommended. Then bring your parents for a second meeting and let the lawyer make the presentatrion.
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Fri Aug 05, 2011 6:38 pm |
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