Brother wants to charge rent for a house in his name that Sister was living expecting to own it

In My Humble Opinion
1

I have a friend who is in a bit of family house drama. The background is this:

  • Mom died about 7 years ago
  • Sister (Mom’s daughter and my friend) lived with ailing Mom and took care of her several years prior to her death
  • Mom’s house was in Brother’s name (Mom’s son). Mom wanted Sister to have house, but Sister had poor financial habits.
  • House stays in Brother’s name. Brother files a Transfer On Death Deed saying house goes to Sister upon his death.
  • Sister lives in house since Mom’s death rent free. Sister behaves as if she owns the house by doing things like paying for repairs, upgrades, and property taxes.
  • SIL (Brother’s wife) is a bit of a loon and now wants Sister to start paying rent and is making sounds like she wants the house.
  • Sister gets anxious about everything and is freaking out about what to do

I’m hoping to get some advice for my friend (Sister) to help her figure out her options. Obviously a lawyer is the way to go, but I wanted to discuss some options here where the hourly rate is a very affordable $0/hour.

I think since the house is in Brother’s name, he may be able to do whatever he wants with it. I think he can rescind the TODD as well. They originally went to the lawyer about transferring the house to Sister, but the lawyer recommended the TODD due to Sister’s financial situation. The notes of that meeting may still be with the lawyer.

The Brother is pretty much a pushover for his wife, the loony SIL. which is complicating things a lot. Basically whatever SIL wants is what Brother will do.

Any thoughts on this messy situation? Can Brother start charging rent? Does Sister have any recourse for the money she put into the property thinking it would be hers one day? Does Sister have any recourse against Brother starting eviction procedures?

2

I think Sister is dependent on the good will of Brother to keep this situation intact. She is already paying a form of rent in terms of maintaining the property and paying the tax.

Brother legally owns the house and can legally do whatever an owner is allowed to do, up to and including evicting Sister, selling the house, living in the house, renting the house to meth dealers, whatever. Right now, Sister is living with the consequences of her poor financial habits.

AFAICT, Sister doesn’t have any more legal recourse than the average renter-without-a-lease would.

3

Here’s friendly advice, not legally valid in any jurisdiction, but it does mean that she is in a better position than she thinks.

If by “file” the ‘transfer on death deed’, you meant ‘publicly record’, then that deed is in the ‘chain of title’ of the house, which means that any person who is going through conventional channels to buy or mortgage the property (e.g. not a back of the alley exchange of money in a bag) will see that your friend has a future interest in the property. These are rights that are real and enforceable.

Practically speaking, this means that she is impacted by any sale or mortgage, so she has to join in any agreement; if they decided to refinance the house to pull out cash, she would have to agree to that mortgage (since, if it defaulted, the house - her house, once her brother dies - would be lost). And they can’t sell it without her signature (unless the new buyer also agrees that the house goes back to her when her brother dies).

Moreover, since she has an expectation to inherit the property, they can’t just let it sit and rot, lest she potentially sues them for waste.

That’s the good news.

The bad news is that, besides having a future interest, she is also probably going to be viewed as a tenant. Because she doesn’t have a written lease, her tenancy is subject to statutory rules regarding staying there and being evicted. So, yes, they could potentially evict her, but they’d have to give the notices required by law (probably some number of days of notice).

Now, she could countersue, and she could argue that by virtue of paying taxes and maintenance in exchange for residency, an agreement has been entered into, and therefore as long as she is paying maintenance she has a right to live there, but agreements can be rescinded, so I don’t think this is a permanent solution if she does in fact want to continue to live there without hassle.

(She may also start claiming ‘squatter’s rights’ under an adverse possession claim, but that will depend on whether 7 years is enough time under local law, whether he has ever bothered to stop by to check on ‘his house’, and whether she’s been telling people that she owns it. But paying the taxes and maintenance is a point in her favor).

Now, the practical advice:
Since she does have leverage as a person who is going to inherit the house, she should maybe talk to them about what the end game is. If sister-in-law really does want it, maybe she and brother want to buy out your friend’s interest. Pay her some amount and she’ll sign back the house. Or they can formalize the agreement that rent is either in the form of payment or in the form of maintenance/taxes/services (or some combination).

But if they start saying that they want the house because they want to sell it, or because it has value and they want to mortgage it, your friend gets veto power. And if they decide to kick her out because they intend to use it, well she has the right to ensure that their use does not destroy the place or ruin its value (e.g. they decide to tear it down for scraps, or turn it into a meth factory),

4

So the mom put the house in brothers name because she didn’t feel sister could handle it, and brother will transfer ownership of the house to sister upon death?

It appears the mom wanted sister to get the house, but trusted brother to protect his sister. Which is sad.

5

There are also equitable claims that she might be able to raise if she’s trying to recoup her money or fight this change. Things like promissory estoppel (‘you said that I could stay here as long as I paid the taxes and insurance. I detrimentally relied upon that information to your benefit, so you can’t now renege’) or quantum meruit (‘even if we didn’t have a contract for me to pay for the maintenance and repairs of your property, you owe me a reasonable fee for the improvements I made’).

6

Moriarty, I’m going to disagree because I think the Transfer on Death Deed can be cancelled at any time by Brother, it’s comparable to a will, and doesn’t have legal force until he dies.

Adverse possession is also not going to help because her residency isn’t adverse, Brother knows all about it and is openly approving it.

She really should speak to a lawyer about it before asserting she has leverage.

7

Totally agreed. I’m no estate attorney, don’t know where the OP is asking about, haven’t done any formal research, and may not even be a real person.

8

Talk with a lawyer is the best advice. I don’t have a lot of insight for the OP but I am much less optimistic than Moriarty about Sister’s leverage. I believe that Transfers on Death are generally revocable right up until the title holder dies although this is a matter of state law and I don’t even know which state this is happening in. Sister may have equitable arguments about her interest in the house or the improvements she made but I don’t think it would end well for Sister if Brother and SIL want to kick her out and do something else with the house. I’m sorry and I wish your friend the best.

9

And worth every penny.

IANAL.

Is Sister paying the property taxes directly, in her own name? Or is she reimbursing Brother when the bill comes to him? If she is paying directly, that might muddy the waters a little. The rental income might get taxed, and Brother would need to declare it on his income taxes.

Is the house paid for? And especially, what state are you in?

ISTM that Brother is the landlord, and Sister is a tenant. Therefore, Brother can notify her that the terms of rental are changing, and evict her if she doesn’t agree.

But get thee to a lawyer with all deliberate speed, and before doing anything else. Then doeth thou what thy lawyer doth say. Because this stuff is complicated.It is not a matter of simply telling Sister “starting now you need to pay us $X per month or else we kick you out on your ear”.

I get a feeling you will wind up with either the house, or the Sister, but not both. Either way it’s gonna cost you some $$$.

Regards,
Shodan

10

Too late for this, obviously, but this is a situation in which the mother should have done her estate planning very differently, e.g. setting the house up as part of a life estate (where sister has access, but cannot sell it) or via some other sort of trust.

Sounds like it’s a tough situation all around. I’d definitely suggest that sister quit doing things like paying for repairs and taxes if brother starts charging her rent.

11

IAN at all AL, but I wonder about the “transfer at death” part of the arrangement. It seems to me that, unless Brother is significantly older than Sister, or in much worse health, it has a high probability of being moot - she could die before him, or be too frail to be living independently in her own house.

As far as leverage goes - practical, not financial - what are property taxes like in the area? How much is market rent? Because it sounds like she’s a fantastic tenant - not just rate-paying, but looking after the property properly on her own dime. Brother should seriously consider what he’d be losing if she wasn’t staying in that house - would he be able to find a stable tenant for years and years? Would he actually make any money on rent after paying for property taxes, maintenance, and the inevitable occasional tenant-hunt?

Who’s currently slated to get the property after Sister eventually dies? Any children in the mix anywhere?

12

Thanks for all the replies. As for the details:

  • The paid off house is in New Mexico worth about $300K and taxes of $2-3k/year
  • Sister paid the taxes to the tax office herself
  • The TODD was done by a lawyer and filed wherever those things are filed
  • Sister took care of bedbound Mom for at least 5 years. Mom had a stroke and dementia.
  • informal understanding Sister would get the house for taking care of Mom, but nothing in writing

Obviously this is straining the family relationships, so discussion is problematic. SIL being loony has strained relationships for a long time before all this.

Sister is still not good with finances and wouldn’t really be able to buy them out. She’s currently in school and doesn’t have a job either. But it sounds like she’s really subject to the whims of whatever they decide to do.

13

See a lawyer. IANAL.

But I do want to note that in some states you can’t use landlord tenant law / housing courts to evict a family member from the family home, regardless of ownership.

14

Nevermind

15

To accomplish what mom wanted (according to the OP) should probably have been done as a joint tenancy with right of survivorship so the question is why the attorney did it as a TODD.

16

I have no clue about the legal issues involved, but it sounds like it would have saved a lot of trouble if Mom had ever read the first chapter of Sense and Sensibility…