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Family Real Estate Matters Require Written Agreements

BY Richard Montgomery TIMEMarch 16, 2022 PRINT

Dear Monty: I live in a two-family house that my sister and I inherited. It was free and clear of a mortgage. A few years back, my sister wanted out and wanted her half of the value, so I needed to take a mortgage on the house to pay her. At the time, I could not take out the mortgage in my name, so my son took it in his name. He does not live in the house. I have a tenant who lives on the second floor and myself on the first. I pay for the mortgage even though it is in my son’s name. I also pay for all the bills and repairs for the house. My son claims the place because the mortgage is in his name. There are only two years left on the mortgage. What rights do I have after the mortgage is fully paid for when I make the last payment? How do I make the house solely in my name?

Monty’s Answer: It is not clear in your question whether you transferred title to your home to your son. Were you able to obtain a mortgage using your son as a cosigner? Two methods depend on how you and your son originated the mortgage with the lender.

Method one: If your son was given title to the property or made a co-owner to obtain a mortgage, the retitling of the property interest back to you should take place. The title company will prepare a deed to retitle the property. The title company will record the deed and the mortgage satisfaction correctly.

Method two: It will be easy if your son used your home as collateral or cosigned a mortgage. Just record the satisfaction at the courthouse. The lender typically will have the mortgage satisfaction drafted, and the title company will record the satisfaction.

Is there a written agreement? The problem with oral contracts, even between family members, is that the details are sometimes remembered differently with time. The further back in time, the greater the chance of a misunderstanding. I mention this only because you could have asked your son instead of asking Monty.

If the two of you are not in agreement, the time to resolve the issue is now. You may want to contact a local mediation group to learn how they can help. My experience is that mediation is faster, more private and considerably less expensive than litigating. Here is a link to the Academy of Professional Family Mediators, a website with a directory to locate a mediator in your area. This link is not an endorsement as I have not used this site, nor would I receive compensation if you were to connect with a mediator.

If you are unsure whose name the title is in today, you can call the title company, the lender or your son, or order a title search to learn the answer. The cost of a title search varies around the U.S. In my county, the price of a title search is $75.

Once you pay off the mortgage and resolve any title issues, it will be your home again.

 

Richard Montgomery is the author of “House Money: An Insider’s Secrets to Saving Thousands When You Buy or Sell a Home.” He advocates industry reform and offers readers unbiased real estate advice. Follow him on Twitter at @dearmonty or at DearMonty.com. Email him at monty@dearmonty.com.
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