Singer: Transferring house within the family
Q: I co-own a house with my mother. My brotherwants to buymy half of the property, andwe agreed on a price, but hewants to payme over time. He will inherit the rest fromour mother eventually. Is there any reason I should be concerned?— Grace
A: Yes, there are several issues you should consider.
Whenentering into any agreement, especially one with a family member, you should have a written contract. Not only will this help resolve problems that may arise, but it will also cause you both to think of issues nowthat youwould not have otherwise.
You need to address what happens if your brother stops paying you, if he lets the hazard insurance lapse, or fails to pay the property taxes.
You should also consider whatwould happen if he passes away unexpectedly before paying you off, files for bankruptcy or gets a divorce.
Because allowing your brother to pay you offover time for the house is essentially a mortgage loan, you will need to check state and federal lawand do it by the book.
Also, every person has a unique financial position, and this salemay have tax consequences, so speak with your tax professional beforemoving forward. This information will help you structure the transfer appropriately.
This transaction ismore complicated than itmay seem and should be set up to fit your family’s unique needs. The three of you should consult with an experienced attorney to help you structure this properly.
Most of the time, everything willwork out fine on its own.
But having dealt with family disputes like this inmy lawpractice, this is a situationwhere an ounce of prevention isworth five pounds of cure.