Family and Money, Would this bother you? Part II

In My Humble Opinion
1

Inthis thread, I talked about my mother’s then planned move to Georgia, and how I was concerned that my sister and her husband may take advantage of her. The advice in that thread by many people was to not worry about the baby grand because my sister will be taking care of my mother for a long time.

This is long, and I apologize for the length.

Back to story. My BIL purchased the house they found in my sister’s development, and the plan was that my mother would move to GA, sell her house in Salt Lake City, and then pay them back as soon as her Salt Lake house sold. The house was a HUD house bought at foreclosure, and according to my mother, he purchased it as a “owner occupied” house, although there was never any intention on their part to occupy the house.

The house required extensive renovations which my BIL contracted out, somewhere in the $30k range, although my mother is not sure what the details are, and the BIL has not provided any paperwork for it.

She moved in August, they got the house ready to sell and it finally closed last Friday. The Salt Lake house sold for more than what the GA house is costing. My mother should be receiving the money within a couple of days.

Now comes another part I don’t like. My BIL has asked my mother to transfer the money to him, but he is not giving her the title and is claiming that since he purchased it as owner-occupied, he needs to keep the title in his name for a year. Again, nothing in writing, and while I’ve told both my sister and my mother that I would like an attorney to look at this, they are planning on going ahead with the transfer. I emailed my sister, asking for clarification but she only said that she was “willing to talk” without addressing any of my concerns via email

So, this time I’m not asking if it should bother me or not, I’m skipping ahead to contacting an attorney to get to the bottom of it.

The only question is how to approach my sister. I’ll wait until I have a chance to talk to the attorney, but any additional advice?

2

Honestly, unless your mother does not have a mind of her own at this stage, were my sister and BIL to arrange this with my mom, I would stay the hell out of it.

3

I agree. Stay out of this. It’s not worth the stress it causes you. Once your mom is not able to make decisions for herself, then get involved. But for now, no good can from your involvement.

4

I disagree (to a point) - I’d go ahead with protecting your mother’s interests, but be aware that you will probably end your relationship with your sister and brother-in-law.

My WAG - your BIL wants the house to be registered as owner-occupied so he doesn’t have to pay capital gains on it (in Calgary, only your first house - your residence - is tax-free - after that you pay taxes because further houses are income properties). I believe you also have to keep a house in your name for a full year so you don’t have to pay taxes on houses that you have flipped for a profit. If he already owns a house, he’s engaged in a fraud.

5

My GIL? (Grandma in law) was in a similar situation, she was competent but easily manipulated. Her son and daughter in law convinced her to move out of a condo and purchase a house “with” them. She cashed in her retirement and paid all the down payment and initial fees. Yet was not the homeowner, the son was.

Fast forward a few years, she is not in an apartment working at a McDonalds because they sold the house and moved far away, leaving her with her retirement funds gone and no home. And no repayment at all for the 80k or so estimated she spent on the home. Now for the bad news, my MIL tried to stop all this from happening, both through legal and family means, and was told pretty much point blank as long as she is competent she can do what she wants. And the good news I guess, she is in the middle of a civil lawsuit against her own son being paid for from some Ohio older peoples rights group of some kind.

Either way TokyoPlayer this is ugly, and I wish you the best of luck and I am sure from reading your past posts you will do what is in the best interest for those involved.

6

Like so many things, the definition of “owner”-occupied changes by location, so remember to ask the lawyer for the relevant one, TP. In Spain a home is “owner occupied” if it’s occupied by the owner, a dependant or a first-degree relative, which includes parents-in-law.

I think having the new house in your mother’s name would still have been the simplest way, but maybe by having it in his name, your brother-in-law was able to obtain necessary credits more easily (he’s known locally, she’s not; he’s also quite a few years younger) and also to get things done more easily (he didn’t need a power of attorney or equivalent to choose contractors or tell them what to fix). If this was his reason to put it in his name first, then changing it to her name again within too-short a period would likely trigger the kind of inspection and paperwork blocks which take longer than being patient would. I’d like an agreed date by which the house’s title goes in your mother’s name, but a scenario where everything is actually aboveboard is possible. Since I don’t know the parties involved or the legal details, I can’t tell whether it’s also probable.

7

I’m a bit confused about how your mother is going to transfer what must be over $100k of money without there being serious tax consequences. You can’t gift that kind of money tax free, and you can’t hide it without running up against some serious legal issues. I mean, your BIL wouldn’t want to do something illegal, right? A person could get into trouble, you know, if the IRS were to find out…

8

You could report him to HUD for breeching his representations. That’d show them.

9

I agree that everything being aboveboard is possible; the impression I’m getting is that it’s not probable. :slight_smile:

10

  1. Your BIL is scamming the gubmint.

  2. Stay out of it unless your mother is demented and not capable of making legal decisions on her own.

11

Same here in Minnesota where I own and occupy a house I don’t live in - but my brother in law does.
I am not a lawyer and this is not legal advice, but could escrow work for something like this - they put the money in escrow for a year, in a year, the title changes to her and you BIL gets the money?

12

IANAL, but couldn’t the BIL sign a quit-claim deed and they all go have it notorized ? Then MIL keeps it in a safety deposit box ? That would protect the Mother, then when whatever time the BIL needs runs out they could go do a full transfer and register it at the courthouse, acting as if the quitclaim deed never existed ?

13

I’ve got a call scheduled with my sister to find out what is happening. What ever is going on, she refuses to discuss by email, and is pointedly repeating that.

We’ll see.

14

Talk to your Mom, not your sister. Ask her if she recognizes she’s taking a big risk? And is she comfortable with this choice, and is this her choice. If she answers ‘yes’ then you need to step back. It doesn’t matter if she wants to spend her money on unicorns or male strippers. If she hands it over to them and gets screwed there is little you can do. It will be much more important that she have an open and healthy relationship with you, if this is the path she chooses. If it comes to grief she’ll need to lean on you emotionally. She won’t be able to do that, if your relationship is soured now into a huge family row over this issue.

If your BIL is only dodging the tax man, and comes through in a year, as he says, who’s hurt? (Besides the tax man, obviously!) Do you know, for sure, that your Mom’s not a willing participant in this?

If she’s going to get screwed over and left penniless, I don’t see how you can stop it. She loves and trusts them, clearly. Unless she’s not capable, in a legal sense, then you need to let her make her own choices, hard though it may be.

15

There’s something wrong and shady, here, and i am getting an impression that your BIL is shady, and that your mother’s money could run out Tokyo Player, and then what? Where will she live, buy food and medicine, shoes, etc?

16

Again, unless she is does not have the mental facilities to manage her own life, it is up to her to do so and to make her own mistakes. She is an adult even if she is older.

17

If your BIL bid on the property as an owner occupant and is not, he can be charged with a felony. Owner occupant bids have priority. He should have done an investor bid. The HUD contract should specify how long he needs to be an owner occupant. Also, owner occupied properties qualify for a loan rate that is less than the rate for an investment property or second home. At closing you sign an occupancy affidavit.

18

See, the problem I’m seeing here is that BIL is a crook, and somehow TokyoPlayer’s mom is going to get left holding the bag for his illegal activities. Yes, she’s a legal, competent adult, but if it were my mom, I would do everything I could to protect her.

19

A gift tax return is required but no tax is due until the total of taxable gifts exceeds $5,000,000 under current law.

20

Did BIL pay cash for the house? I assume so.

Can your mother make the money transfer contingent upon their recording a lien against the house? That would prevent him from selling it out from under her. Wouldn’t prevent, say, a foreclosure, but it would offer some protection for her.

Perhaps it could be recorded as a mortgage of some sort though I can’t quite wrap my head around just how to do that. I’m thinking your mother acts as the bank, holds a mortgage on the place, and in a year your BIL “defaults” (not really a legal default obviously) and the house is turned over to her.

What if BIL gets into legal trouble and gets sued for everything he’s worth? He’d lose his house, the cash, and your mother’s house also.

If you phrase it to your sister that unless you know your mother’s finances have legal protection, you’ll notify the authorities, do you think that would at least protect your mother?