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baquerd posted:On paper, this deal doesn't look that bad really. Basically, it seems you have agreed that in consideration for the $100k down payment and presumably actually getting the house loan in his name, you have exclusive right to use it and an ownership interest increasing from 33% to 60% over time. Try getting any other 100k loan without repayment needed on the presumption of future appreciation of a primary residence and I bet you the terms would not be as good. Actually, I think I heard about something like this in the news recently - this was a mortgage lending strategy in the 80's, and the homeowners were whining about it (not saying you are) because they didn't understand why their $800k house only nets them like $50k when they sell it. Really? What happens to them if the house depreciates? What if it sells for a loss? What about that weird 2023 clause in section 7?
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Oct 10, 2016 21:00
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Rotten Red Rod posted:So, I have a question. We (my wife and I) are selling our house, and it's a situation where my father in law put 100k down on a house for us, which we would then pay the mortgage on. Seems great, right? Well, no, he made us sign a contract that says we start off with 1/3 share in the house (1/6 each) and he owns 2/3s. He's a laywer, and I've misunderstood a lot of the process and assumed this was a gift - it's not, he's invested and expecting to make money off it, and becomes angry and abusive at us when we expect him to help us out in any way. It's one of the reasons we want out of this deal - and also because the market is way, way up and I'm worried about it going down again and getting us stuck. I don't see anything in your agreement that clarifies who is responsible for taxes, mortgage payments, and other costs associated with owning a home. How this is handled in a multi owner situation depends on your local laws. Do not take advice from the internet on this. Meet with a local real estate lawyer. Taking 2/3rds of the property tax, maintenance, and mortgage taxes out of his portion of the sale should more than pay for a lawyer.
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Oct 10, 2016 21:01
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Yeah I want the legalgoons to weigh in on this hosed up situation. Check this thread: http://forums.somethingawful.com/showthread.php?threadid=3266659
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Oct 10, 2016 21:01
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lampey posted:I don't see anything in your agreement that clarifies who is responsible for taxes, mortgage payments, and other costs associated with owning a home. How this is handled in a multi owner situation depends on your local laws. Do not take advice from the internet on this. Meet with a local real estate lawyer. Taking 2/3rds of the property tax, maintenance, and mortgage taxes out of his portion of the sale should more than pay for a lawyer. I agree but I don't want to push it. I'm totally fine with ~$90 and getting on with our lives. That's more than enough for us to start over. The Mandingo posted:Yeah I want the legalgoons to weigh in on this hosed up situation. Check this thread: http://forums.somethingawful.com/showthread.php?threadid=3266659 Thank you, I will.
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Oct 10, 2016 21:04
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Leperflesh posted:Really? That's the "mobility" sacrifice. I didn't notice the balloon payment/forced sale in 2023, but again, I don't think it's entirely unreasonable. The dude floated $100k on something totally illiquid and without cashflows, this is a crap investment without sweetening the pot.
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Oct 10, 2016 21:04
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imho if you have to borrow money from a relative to buy a house you should just setup a recurring payment a couple months prior to closing for your share of the phone bill, repayment for college, a cousins' college fund or something similar. Then just have them sign the bank paperwork saying its a gift. Oh also you shouldn't get involved in an shady or illegal dealings or piss off any DAs for the next 25 years.
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Oct 10, 2016 21:04
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I think the biggest question would be whether you can sell the house without his approval based on this agreement, since he is majority owner if it is enforceable. But yeah, you should definitely seek out a local real estate attorney and explain the situation to them before you do anything else (don't even mention that you want to sell to anyone until you talk to a lawyer).
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Oct 10, 2016 21:08
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baquerd posted:That's the "mobility" sacrifice. I didn't notice the balloon payment/forced sale in 2023, but again, I don't think it's entirely unreasonable. The dude floated $100k on something totally illiquid and without cashflows, this is a crap investment without sweetening the pot. Dude should have just bought the house and rented it to his daughter. Or treated it as a gift. Or treated it as a loan, and arranged for payback. Or if he just wanted to invest in real estate, he can buy REITs or find investment partners to invest in a building or whatever. Treating your own children as investments and then holding them to abusive contract terms is revolting, not "sweetening the pot" and as we can see, those kids are now prepared to sever ties. Do you care more about getting a sweet return on your investments, than maintaining good relationships with your own kids? Even if you don't think the contract is at all abusive, if he cared about his daughter's financial well-being he'd have advised her to get her own lawyer before getting her to sign a contract of this significance. e. I want to reiterate that I am not a lawyer and am making barely-educated guesses as to the language in this contract. Maybe it really is a great deal for you two. You need a lawyer familiar with real estate laws in your area to review it and should not act until you've done that.
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Oct 10, 2016 21:15
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Leperflesh posted:Treating your own children as investments and then holding them to abusive contract terms is revolting, not "sweetening the pot" and as we can see, those kids are now prepared to sever ties. Do you care more about getting a sweet return on your investments, than maintaining good relationships with your own kids? Well, that's one way to look at it. Another is this guy is really serious about teaching his daughter and son-in-law about contracts and money the way that tends to stick the best - the hard way  . I'm not really defending the guy, I just feel like if you extract the family relationship from the deal, this isn't some crazy one-sided deal. I don't think it's a good deal for them, but borrowing $100k for a down-payment rarely ends in a good deal. Would their financial situation be better if they 3% FHA'd and PMI'd their way in?
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Oct 10, 2016 21:20
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Droo posted:I think the biggest question would be whether you can sell the house without his approval based on this agreement, since he is majority owner if it is enforceable. Yes, that is my biggest question. As of this moment he is willing to sell. I'm stepping on eggshells to make sure he stays that way and we get our percentage. Leperflesh posted:Dude should have just bought the house and rented it to his daughter. Or treated it as a gift. Or treated it as a loan, and arranged for payback. Or if he just wanted to invest in real estate, he can buy REITs or find investment partners to invest in a building or whatever. All these things are true. He's been abusive (psychologically and physically) to all his daughters, and his oldest daughter is currently locked in to a similar deal with no way out. Looking back we were very dumb to agree to this. We're just lucky the market is up so much and he needs the money. baquerd posted:Well, that's one way to look at it. Another is this guy is really serious about teaching his daughter and son-in-law about contracts and money the way that tends to stick the best - the hard way If he hadn't offered us this deal we would have kept renting and likely had savings by now, and - most importantly - not have financial ties to him. Yeah, I'd be better off.
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Oct 10, 2016 21:25
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Rotten Red Rod posted:We're just lucky the market is up so much and he needs the money. Talk to a lawyer for sure. But if it looks like you are going to get screwed and he needs the money, you might want to consider looking into a cash out refi. Then you could pretend like you wanted to stay in the house for a long time, and ask him if you could buy out his share. Maybe he would take $125k now if he thinks the alternative is $150k in 5 years.
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Oct 10, 2016 21:40
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Hashtag Banterzone posted:Talk to a lawyer for sure. Where would I get the 125k? And that's probably what he would get from the sale anyway. Probably more.
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Oct 10, 2016 21:46
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Rotten Red Rod posted:Pay him? I pay the mortgage and property taxes. I've never paid him directly. I was looking at the Royalty section which said every 2 years it gets recalculated. While you didn't say he bought the property for you, there was a mention of you having made 3 years of payments. Has there never been an adjustment in the past? I may be in a bit over my head here. At any rate, it looks like you are going to get stuck with the full costs of selling the house out of our share, so you won't walk away with much.
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Oct 10, 2016 21:54
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daslog posted:I was looking at the Royalty section which said every 2 years it gets recalculated. While you didn't say he bought the property for you, there was a mention of you having made 3 years of payments. He said he's willing to recalculate that now since we are selling. Even if he doesn't the original 33% is fine by me. We haven't done an adjustment, no, I pretty much immediately forgot about this document because I assumed he was family and would help us out instead of being hostile. Yes, I will be handling the repairs, touch ups, etc. to stage the house. Some I will be doing myself whenever possible. However, I was assuming the realtor fees and any major repairs paid with escrow would come out of both our shares. Exactly what other house sale expenses should I expect that would reduce $90k (or more) to not very much?
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Oct 10, 2016 21:59
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Rotten Red Rod posted:He said he's willing to recalculate that now since we are selling. Even if he doesn't the original 33% is fine by me. Ok that makes sense. I was just assuming that he's going to try to screw you for whatever he can. 5% of 650,000 is 32,500 in real estate fees. You might want to write down any other assumptions and make sure he's on the same page.
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Oct 10, 2016 22:05
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daslog posted:Ok that makes sense. I was just assuming that he's going to try to screw you for whatever he can. 5% of 650,000 is 32,500 in real estate fees. You might want to write down any other assumptions and make sure he's on the same page. Yes, I will be asking him for specifics on things like these and being VERY clear about what we will receive every step of the way. Thanks - if you can think of anything else I should clearly spell out, let me know. I intend to have my lawyer write the Disbursement of Payment for the title company to make sure everything is correct. We do have SOME leeway - if he fucks with us we can turn his friends and mother against him, as they are as devoted to his daughters as they are to him. But that's the nuclear option and only if he blocks the sale as spelled out here or tries to screw us in some other way (any more than he already is). As it is now he's getting a nice payday so he's going with it. Edit: here's another question - capital gains tax. Here's a scenario - do we pay capital games tax in this case? From what I understand, there's an exemption for single people for sales under 250k in profit and married couples under 500k in profit. Original buying price: 485k Mortgage still to be paid: 370k Estimated sale price: 700k If I understand correctly, we will pay no capital gains tax. Are there any other taxes/costs involved I don't know about, other than realtor fees (I'm assuming 6%)? Rotten Red Rod fucked around with this message at 22:16 on Oct 10, 2016 |
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Oct 10, 2016 22:09
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It maybe depends, because those exemptions are for your home which is your primary residence. Is this really your home? What about his two thirds interest in it? Is he gonna pay cap gains on his share? My best guess is that yeah, you won't own any cap gains taxes, especially if you take your payout and use it to buy another home somewhere. But due to the arrangement you have, it might be more complicated than it seems, and you should talk to your tax professional. As to other fees: you'll pay both your and the buyer's realtor, which is probably 6% (that seems to be customary in California). In this market you can probably avoid having to offer to pay any of the buyers' costs. During inspections they will probably find some poo poo to demand that you fix or pay for them to fix, but that assumes you go with a buyer who wants an inspection contingency. You will probably need to pay for your lawyer, because in this case you probably shouldn't try to get through this sale without a real estate lawyer. All of the other significant fees should be covered by the buyer or their lender.
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Oct 10, 2016 22:27
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Leperflesh posted:It maybe depends, because those exemptions are for your home which is your primary residence. Is this really your home? What about his two thirds interest in it? Is he gonna pay cap gains on his share? It is our primary (and only) residence. It is not his (the 2/3s father in law) primary residence, he lives elsewhere in the state (California, by the way). I don't know if he will, that's my question. If so, will that be taken off the sale price, or be charged when tax time comes around? Are our profits from this counted separately or together? I'm not planning on buying a house elsewhere at the moment, at least not until we are situated out of state, both have reliable incomes, and happy and secure with savings. I thought the capital gains exemption says nothing about buying a new property...? Regarding realtors fees, I assume when you say "you'll pay" you mean all 3 of us (me, wife, father-in-law) and that is taken off the profit, not up front. Let me know if that's wrong. I have been budgeting for that all along. I am indeed paying for my lawyer. My father actually offered to cover the costs of the lawyer for me (have I mentioned my parents are the greatest). I just wonder how many billable hours I will rack up before this is done - the one I found charges $330 an hour, and I have no idea if that's reasonable or not. Rotten Red Rod fucked around with this message at 22:45 on Oct 10, 2016 |
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Oct 10, 2016 22:41
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Rotten Red Rod posted:It is our primary (and only) residence. It is not his (the 2/3s father in law) primary residence, he lives elsewhere in the state (California, by the way). I don't know if he will, that's my question. If so, will that be taken off the sale price, or be charged when tax time comes around? Are our profits from this counted separately or together? This is the confusing part, and I'm just not confident I have the right answer. Someone else here might. quote:I'm not planning on buying a house elsewhere at the moment, at least not until we are situated out of state, both have reliable incomes, and happy and secure with savings. I thought the capital gains exemption says nothing about buying a new property...? Ah, you're right. I think it used to matter, but not any more? In any case, yeah the government decided it doesn't need to cap gains tax people when they make a profit on selling their main home. quote:Regarding realtors fees, I assume when you say "you'll pay" you mean all 3 of us (me, wife, father-in-law) and that is taken off the profit, not up front. Let me know if that's wrong. I have been budgeting for that all along. Someone has to pay it. Typically the realtors take the fee off the total sale price of the house. So, if the house sells for $600k, you will pay the buyers' and sellers' agents a total of $36,000. You usually pay that money after the buyer's check clears. It is definitely not based on the profit - if it were, people selling their houses for the same as what they owe, would pay their realtors nothing. Note though that this fee, while "customary," is not legally mandated and is therefore theoretically negotiable. For example, if you sell with Redfin, they give you a rebate on part of the customary fee. quote:I am indeed paying for my lawyer. My father actually offered to cover the costs of the lawyer for me (have I mentioned my parents are the greatest). I just wonder how many billable hours I will rack up before this is done - the one I found charges $330 an hour, and I have no idea if that's reasonable or not. It sounds a little high to me, but a normal real estate transaction would only require an hour or two of the lawyers' time, just to look over things. This guide on Zillow suggests fees typically range from $150 to $350/hr: quote:Attorney fees: Some states require an attorney to oversee the closing. In most states, it’s up to you whether to hire your own lawyer. Real estate attorney fees vary. Some charge by the hour with rates ranging from $150 to $350 per hour, while others offer a fixed rate to conduct a real estate closing. Expect to pay $500 to as much as $1,500 if you hire an attorney. Your situation might cost more, if there is extra work because of your weird contract thing, but it also might not. 
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Oct 10, 2016 23:07
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Leperflesh posted:Someone has to pay it. Typically the realtors take the fee off the total sale price of the house. So, if the house sells for $600k, you will pay the buyers' and sellers' agents a total of $36,000. You usually pay that money after the buyer's check clears. It is definitely not based on the profit - if it were, people selling their houses for the same as what they owe, would pay their realtors nothing. Note though that this fee, while "customary," is not legally mandated and is therefore theoretically negotiable. For example, if you sell with Redfin, they give you a rebate on part of the customary fee. Sorry, I meant to say it's paid from the profit, not based off the profit. I understand that - they get their % on the total sale price, not minus the mortgage. I'm just making sure that my father in law will be required to pay his portion of the realtor fee, not me being entirely stuck with it. That part I will likely get my lawyer to write up.
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Oct 10, 2016 23:16
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Hahahaha nothing like a really shady lawyer doing shady lawyer poo poo to really work BFC up into a tizzy. This is awesome.
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Oct 11, 2016 00:20
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I am not a lawyer or an accountant or a tax expert, but my understanding is that it doesn't matter that the other guy is a co-owner; each co-owner is eligible for the $250k exemption in capital gains tax if they pass the use test of using the house as a primary residence and co-owner for 2 of the 5 previous years. If your name is on the deed and you were living there for at least 2 years, then you get the $250k exemption on your share of the profit. If the other guy wasn't living there, he doesn't get the exemption, but that has no bearing on whether you get the exemption. e: Oh right, you have a wife. She's also on the deed and passes the primary residence test of 2 out of 5 years, I hope? You get a $500k exemption on your share of the profits.
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Oct 11, 2016 03:15
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Pryor on Fire posted:Hahahaha nothing like a really shady lawyer doing shady lawyer poo poo to really work BFC up into a tizzy. This is awesome. Yeah, indeed, he's a real piece of poo poo. Glad to see our feelings about him are justified.
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Oct 11, 2016 03:44
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Rotten Red Rod posted:Yes, I will be handling the repairs, touch ups, etc. to stage the house. Some I will be doing myself whenever possible. However, I was assuming the realtor fees and any major repairs paid with escrow would come out of both our shares. Exactly what other house sale expenses should I expect that would reduce $90k (or more) to not very much? Seems to me (as a layperson) that any costs that go into selling the house should also be split along those same percentages. Need to stage the house? Make repairs? He pays 65%, you pay 35%. He wanted to own that share, part of owning a house includes those costs too. He shouldn't be only getting the benefits of the deal without the responsibilities.
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Oct 11, 2016 05:01
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AnonymousNarcotics posted:Seems to me (as a layperson) that any costs that go into selling the house should also be split along those same percentages. Need to stage the house? Make repairs? He pays 65%, you pay 35%. He wanted to own that share, part of owning a house includes those costs too. He shouldn't be only getting the benefits of the deal without the responsibilities. Again, same guy that used the insurance money that was meant for his older daughter's roof into personal investments. What you're saying makes sense for a rational, empathetic person, which he isn't.
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Oct 11, 2016 05:09
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And you do not want to push him into fighting things because if he decides to stop cooperating, your only legal option is binding arbitration instead of real court. I agree with your approach of just eating the small stuff like minor repairs and staging.
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Oct 11, 2016 05:22
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Binding arbitration is good for the layperson over the lawyer, and in like every contract ever.
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Oct 11, 2016 15:04
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blarzgh posted:Binding arbitration is good for the layperson over the lawyer, and in like every contract ever. This is absolutely, unequivocally, 100% false. Yes in some rare situations arbitration has been good for your average joe, but by and large it has crippled the ability of the layperson to have any legal recourse whatsoever in a wide array of scenarios.
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Oct 11, 2016 15:15
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Pryor on Fire posted:This is absolutely, unequivocally, 100% false. Yes in some rare situations arbitration has been good for your average joe, but by and large it has crippled the ability of the layperson to have any legal recourse whatsoever in a wide array of scenarios. yeah don't trust blazrgh, he's a lawyer trying to trick you into arbitration
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Oct 11, 2016 15:23
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mastershakeman posted:yeah don't trust blazrgh, he's a lawyer trying to trick you into arbitration HUSH
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Oct 11, 2016 15:26
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I refuse to believe a real lawyer wrote that. Who the hell styles what is effectively a partnership in a real property interest a "License Agreement"? Payments to equity are "royalty payments"? How do you use that many words describing the ownership re balancing and convey no meaning whatsoever? Is this the legal equivalent of an orthopedic surgeon trying his hand at a nose job?
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Oct 11, 2016 15:37
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Yeah you see that every day from shady lawyers, being obtuse and hard to understand is kind of the point. I feel like I failed to understand an arbitration joke or something, I have no idea who is lawyers and who isn't in here so if you know way more than me just shout me down it's all good.
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Oct 11, 2016 16:10
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SlapActionJackson posted:I refuse to believe a real lawyer wrote that. Who the hell styles what is effectively a partnership in a real property interest a "License Agreement"? Payments to equity are "royalty payments"? How do you use that many words describing the ownership re balancing and convey no meaning whatsoever? Is this the legal equivalent of an orthopedic surgeon trying his hand at a nose job? Someone who likes to pretend they are a REIT.
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Oct 11, 2016 16:15
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its a hosed up agreement for sure; calling it a "license agreement" and having its effect be the transfer of ownership interest in the property is like taking an 18 wheeler and calling it a "bicycle." For legal title in property to pass, the granting document must be recorded with the county records, otherwise you have, like jackson said, some sort of partnership or something. If the guy is competent, there are almost certainly more documents related to this transaction out there somewhere.
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Oct 11, 2016 16:32
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Pryor on Fire posted:Yeah you see that every day from shady lawyers, being obtuse and hard to understand is kind of the point. Arbitration is Court-Light, with summary proceedings, relaxed rules of procedure, evidence, trial, discovery, etc. The main reason lay people (pro se/pro per) get steamrolled in Court is because they don't know all the procedural pitfalls that can cause you to lose a case "on a technicality" or keep you from introducing important evidence. In an arbitration proceeding, like in Justice Court (JP Court/Small Claims Court), many of those advantages for a lawyer are eroded, and rendered less effective, somewhat evening the playing field. On top of that, mediation is a fraction of the cost of full on litigation, which, again, helps people who can't afford their own lawyer. In particular, this guy's situation is unique because his hypothetical 'opponent' wouldn't even have to pay attorneys fees to money whip him since he could donate his time to himself, essentially. Arbitriation is much shorter, has less discovery, and goes before an Arbitrator who may or may not be a former Judge who may care more about figuring out the underlying truth over simply ruling on who got procedural questions right. (Fun Fact: Judge Judy is an arbitrator!) This is why arbitration is better than real Court for lay people.
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Oct 11, 2016 16:41
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blarzgh posted:Arbitriation is much shorter, has less discovery, and goes before an Arbitrator who may or may not be a former Judge who may care more about figuring out the underlying truth over simply ruling on who got procedural questions right. (Fun Fact: Judge Judy is an arbitrator!) This is why arbitration is better than real Court for lay people. Unless you're going against a major corporation with a great relationship with their hand-picked arbitrator, I think you've got great points.
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Oct 11, 2016 16:51
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It also destroys the ability of consumers to form a class against a corporation. Classes tend to benefit the attorney more than the class itself, but can be costly and public for the corporation.
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Oct 11, 2016 18:05
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Rotten Red Rod posted:Agreed, and thank you. We plan to cut him out of our lives entirely after this. What kind of person goes to great lengths to screw over his/her own children? Is it about money, or is he just a genuine rear end in a top hat? Good lawyers usually aren't short on cash, though greed knows no bounds. I'm very curious how you were able to get the home loan approved with this $100k gift-vestment from your FIL. Terms of the deal would have had to be disclosed, I would think, or he'd be on the mortgage itself...or proof that the $100k was a term-less gift would be needed.
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Oct 11, 2016 19:09
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blarzgh posted:its a hosed up agreement for sure; calling it a "license agreement" and having its effect be the transfer of ownership interest in the property is like taking an 18 wheeler and calling it a "bicycle." For legal title in property to pass, the granting document must be recorded with the county records, otherwise you have, like jackson said, some sort of partnership or something. Theoretically, if this document is null and void, and all 3 of us are on the deed and title (we are, I checked today - I don't have them in hand yet but the preview showed all 3 names), how much share should each of us have in the house? Does it revert to 1/3, 1/3, and 1/3? Is it specified some other way? (Reminder that I'm meeting with a lawyer this afternoon.) Magicaljesus posted:What kind of person goes to great lengths to screw over his/her own children? Is it about money, or is he just a genuine rear end in a top hat? Good lawyers usually aren't short on cash, though greed knows no bounds. He is both all about the money and a genuine rear end in a top hat. He's abused all his daughters, physically and mentally. And he's short on cash because he can't stop buying and selling houses and cars like crazy. I don't know. He IS on the mortgage - he and I both are named on there, even though I'm the only one that's ever paid into it. Rotten Red Rod fucked around with this message at 19:19 on Oct 11, 2016 |
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Oct 11, 2016 19:15
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Rotten Red Rod posted:Theoretically, if this document is null and void, and all 3 of us are on the deed and title (we are, I checked today - I don't have them in hand yet but the preview showed all 3 names), how much share should each of us have in the house? Does it revert to 1/3, 1/3, and 1/3? Is it specified some other way? Anyone competent to offer you legal advice about this will a) charge you for it, and b) would never ever do it anonymously on the internet.
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Oct 11, 2016 19:19
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