Home: Owner Finance question

[brushtrooper]

My FIL wanted out of his house, just wanted to walk away and move into a assisted living center. My wife and I agreed to take over the payments and we want to leave the financing as is. We have already got with the mortgage company and arranged direct draw. My FIL has moved into a assisted living place and is happy. I have the home rented to my youngest son and 2 of his friends.
We have rental agreements ready for the young men to sign.
.
What is the best way to do a owner finance agreement to protect my wife and myself? I am not ready to buy the house out right at this time. I can afford the payments even if we do not have it rented. My end goal would be to remodel the home and move into it and rent my current home.

[Walker]

Any other heirs involved. If there are, I would go ahead and get it financed and buy it to avoid any problems down the road.

[Lungbustr]

Any other heirs involved. If there are, I would go ahead and get it financed and buy it to avoid any problems down the road.

Something to think about, it could become a huge mess.

[brushtrooper]

Any other heirs involved. If there are, I would go ahead and get it financed and buy it to avoid any problems down the road.

Yes there are but in his Will he has left the home to us. They get other items in the Estate once he pass's.

[Mike]

Yes there are but in his Will he has left the home to us. They get other items in the Estate once he pass's.

This is a slippery slope. I have seen a lot happen, both good and bad in these scenarios. Although it may seem good on the surface, you never know what siblings (or their spouses) are thinking. I have seen wills changed on death beds, conniving siblings do underhanded things and just nasty stuff.

Just a thought, is there a death benefit on the home? I am not sure if that is even an option but you never know? If that were the case, you would be actually be purchasing the inheritance if that makes sense? Whereas the other siblings are getting assets that are free and clear, that can lead to a bad situation as well.

I would think the simplest thing to do is have your wife as executrix of the estate and she can continue paying the home note. The down side is that the rental amount that you are receiving is technically income into the estate and goes to the FIL, not your pocket. Again slippery slope. Another issue is you putting your child into the home, a sibling might have a person they wanted to rent the home, again, slippery slope.

It can get very messy, and no feelings will come out until he passes and then it will get nasty.

I've seen a thing or two in these scenarios, none are pretty.

[eradicator]

My FIL wanted out of his house, just wanted to walk away and move into a assisted living center. My wife and I agreed to take over the payments and we want to leave the financing as is. We have already got with the mortgage company and arranged direct draw. My FIL has moved into a assisted living place and is happy. I have the home rented to my youngest son and 2 of his friends.
We have rental agreements ready for the young men to sign.
.
What is the best way to do a owner finance agreement to protect my wife and myself? I am not ready to buy the house out right at this time. I can afford the payments even if we do not have it rented. My end goal would be to remodel the home and move into it and rent my current home.

Info missing for me to answer sufficiently. First of all, I would never rent a property to someone with the intent of moving in one day(family included). If you can afford two mortgages, I would think you would be able to buy the house?

[Sleepy]

Yes there are but in his Will he has left the home to us. They get other items in the Estate once he pass's.

Who is or will be the POA?

Reason I ask, my aunt and uncle owed my grandpa 1/2 a mil and that was to be taken out of their portion off the top. My aunt was POA. As soon as my grandpa had his stroke and couldn’t remember a **** thing, she took him to his attorney and had the whole will changed. They don’t owe a dime now

Something to think about.

[brushtrooper]

Ok, there is a lot of bad blood in the family/other siblings. The short version is that in the Will each sibling will be getting 1.00 each. My wife will be getting the rest of the estate. The other siblings have not been involved in their lives for 15-20 years. When my MIL passed 5 years ago they did not even show up for the funeral.
I went into the deal trying to do right by him and helping him out. It was after the fact I began running different scenarios in my head. This is definetly not my area of expertise.

[Walker]

Ok, there is a lot of bad blood in the family/other siblings. The short version is that in the Will each sibling will be getting 1.00 each. My wife will be getting the rest of the estate. The other siblings have not been involved in their lives for 15-20 years. When my MIL passed 5 years ago they did not even show up for the funeral.
I went into the deal trying to do right by him and helping him out. It was after the fact I began running different scenarios in my head. This is definetly not my area of expertise.

After reading this I double down on getting the house in . Your name now, either gifted to you(pay gift tax) or finance and buy it. Bad blood can always contest the will. Then lawyers get most of the estate.

[bbqfan5909]

Get the home financed in your name. People start coming out of the wood works once money is involved.

QUOTE=brushtrooper;13563757]Ok, there is a lot of bad blood in the family/other siblings. The short version is that in the Will each sibling will be getting 1.00 each. My wife will be getting the rest of the estate. The other siblings have not been involved in their lives for 15-20 years. When my MIL passed 5 years ago they did not even show up for the funeral.
I went into the deal trying to do right by him and helping him out. It was after the fact I began running different scenarios in my head. This is definetly not my area of expertise.[/QUOTE]

[M16]

I'd consult with an attorney. Perhaps the one who drew up the will. The assisted living or nursing home down the road could wind up with the house that you are paying on.

[mww982]

I would look at the mortgage. Most have a due on sale clause. Since you are selling the home the mortgage would be accelerated and the full balance would be due upon the execution of the sale. As others have said, consult a real estate attorney.


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[Mike]

Ok, there is a lot of bad blood in the family/other siblings. The short version is that in the Will each sibling will be getting 1.00 each. My wife will be getting the rest of the estate. The other siblings have not been involved in their lives for 15-20 years. When my MIL passed 5 years ago they did not even show up for the funeral.
I went into the deal trying to do right by him and helping him out. It was after the fact I began running different scenarios in my head. This is definetly not my area of expertise.

Prayers sent sir.

We were in the same situation with my FIL, exact same. Those siblings will show up, trust me. My wife was POA and everything went to her in the will, aside from $1K each. Her conniving sister(term used loosely), brought my FIL to the attorney's office one day and changed everything. Luckily we had time to change it back before his death. Unbeknownst to us, once she was able to see his assets and she changed the beneficiary on each life insurance policy to herself. He passed in 2004, believe it or not, the last issue with the estate was settled earlier this year, 14 years later, on a Texas DPS life insurance benefit that was still in the custody of the state.

I know you are trying to do right by him but be prepared for anything, I have seen it happen too many times. My very best friend, a lawyer and most educated out of the bunch is dealing with the same thing. FIL passes and owns a lot of land, 3 sisters can't decide on a selling price for the parcels. One sister has been in Jamaica for the last 8 years and now moved back to get her share.

Very good point on the nursing home, you may very well be paying for it and lose it to the nursing facility as payment. It's probably too late to sell it since he is already there but it needs to be in the wife's name.

[Throwin Darts]

You are essentially paying for a house that you don't own and may never own. I'd buy it and arrange my own financing.

With the home operating as a rental you run the risk of creating some tax issues for your FIL. The rental income your son and his friends are paying is taxable income to your FIL, not to you, since he owns the house. If that house operates as a rental for five years or more and then he sells it then he could have a capital gains issue depending on his cost basis vs the sales price.

I can see about 10 different ways this goes bad for you and your FIL. I'd clean it up by buying the house. If you can't swing it help your FIL get it sold.

[jer_james]

I can see about 10 different ways this goes bad for you and your FIL. I'd clean it up by buying the house. If you can't swing it help your FIL get it sold.

Unfortunately, this is what I see as well. Get him to sell you the home while he still can.