Buyout nightmare - Posted by DiMaggio

Posted by max-Va on January 14, 2007 at 18:29:19:

This is a mess-Consult an Attorney Now

“My mother and her brother owned a property that was deeded to them from my grandmother. They held title in joint tenacy with rights of survivorship”
“The brother passed in September of '05 with no will and his half was inherited by his wife and two adult children”

This could not happen when the brother died your mother owned the entire property. The wife and kids could not inheiret something that the brother did not own

Buyout nightmare - Posted by DiMaggio

Posted by DiMaggio on January 12, 2007 at 09:00:57:

They say you can pick your friends, you can pick your nose but…
Here’s the situation;

My RE acumen is amateurish so please bear with me.

My mother and her brother owned a property that was deeded to them from my grandmother. They held title in joint tenacy with rights of survivorship. My mother has resided in the property taking care of my grandmother until her death she now resides there alone. Her brother owned his own property nearby.

The property was appraised at $575K in 2005 property held no mortage or liens. the proerty is located in the NYC metro area.

The brother passed in September of '05 with no will and his half was inherited by his wife and two adult children. Some time had passed and they approahed my mother to seek out their half of the house. It was agreed at the time that no one wanted to force mt mother to sell being she did not have the funds to buy them out. So a verbal agreement was made between both sides to settle their interest in the property for $200K. At which time my mother sought out financing, she looked into a reverse mortgage, 1st motgage, and decided to go the route of a 30 year home equity loan, due to its low cost fee structure. As this financing was being processed the wife and children had themselves added to the deed. Several months passed in trying to acquire the loan, my wife and I decided to co-sign. One of my aunt’s children was intrepid as to signing any documents that would make her liable for payment or show up negatively on her credit report as she would soon be getting married and seeking to buy property of her own. “She happens to be in the RE business”. After months of hassle, which included my wife and I being added to the deed we were finally approved for the loan and a closing date offered. When we told my aunt and her children that we were ready to close the daughter of my aunt balked and said that although she would not be signing the note she would still be signing the mortgage, simply acknowledging that the house (which she is presently on the deed of)would be held as collateral. She said that it still could jeopardize her credit standing. After a heated dispute I told her that we should get our attorneys involved and seek out resolution. I offered that we have them quitclaim out of the property and give them a promisory note using the house as collateral and stipulating a specified period of time to reapply and attain the neccessary funds. This way we avoid her signature being recorded and the promissory note would guarantee them the money in a short period of time. Now the daughter is claiming that she “just today” talked to her accountant and found out that they would have a 35% tax liability once they recieved the money from selling thier interest in the property due to the fact of some tax discount associated with estate taxation has expired. Hence they would like to look into other ways in which to structure this. Hmmmmm she had nearly 7 months to figure that one out. Needless to say the amount of frustration and expense (lawyers, fixing the upstairs to accomodate a renter) assoicated with this situation has reached a boiling point and I feel that we are likely to be headed to court.

Can someone shed some light on their tax liabilty and advise on other ways in which to make this deal happen?

Also the daughter is saying that this is a short sale, I looked it up and that term doesn’t seem to pertain to this transaction, can someone confirm?

If they try to renegoiate a higher price for their interest can we lean in any way on the verbal agreement and some emails I have showing acknowledgment of the orginal $200K.

Thanks in advance to anyone that’s willing to offer advise let alone read through this nightmare.

Kindest regards,

Joe D

Re: Buyout nightmare - Posted by Natalie-VA

Posted by Natalie-VA on January 16, 2007 at 15:37:39:

Joe,

Please let us know how this plays out. As the other posters mentioned, the property should have just conveyed to your mom. You also mentioned, “the wife and children had themselves added to the deed”. This is not good. If your mother deeded the property to them at some point, she may have made a big mistake.

–Natalie

Re: Buyout nightmare - Posted by Frank Chin

Posted by Frank Chin on January 16, 2007 at 04:40:15:

You mentioned “joint tenacy with rights of survivorship”, which seems to me mom owns it all after the death of the brother. I have JTWROS ownership with a relative to the property, and the whole idea here is the survivor owns all, without having to probate. Heirs to the first who died is out of luck.

As to estate tax consequences, check with CPA.

Re: Buyout nightmare - Posted by Bill Jacobsen

Posted by Bill Jacobsen on January 15, 2007 at 11:58:00:

First, I am not an attorney nor a CPA. I also don’t know the laws in your state. Get a good estate attorney.

IMO, your mother owns the property because she survived her brother. The property is not part of his probated estate.

Whether there are taxes due or not depends on the size of the estate. Who inherited the rest of his estate (not your mother’s house) is dictated by state law since there was no will.

Again, get an attorney. This should not be causing difficulty for your mother.

Bill