My mom recently moved close by from out of state. She is in a tough financial position to say the least, and can only stay where she is at for 4 more months maximum.
My wife and I want to sell her our house. We live in a small house in a campground setting. We pay a monthly lot fee and that whole bit. This would be perfect for my mom, because it is affordable and the perfect size as well.
Problem: My mom can’t get a loan, even for this small amount.
Problem 2: We need the money for a down payment on a new house for ourselves.
Possible Solution (and this is where I really need some advice): Set up a land lease and allow my mom to make payments to us monthly. We will simply bite the bullet on the down payment, as we would rather help my mom find a place than afford a more expensive home.
Does this sound like a good idea? Is it feasible? How should I go about setting up the financial end of such an agreement?
Does a land lease mean your mother will be renting the house from you and paying you rent every month? If she defaults on the rent, would you evict her? Would you charge a late fee for late payments? If the land lease deal is a true sale, but you’ll be financing it for her, would you foreclose if she stops making payments? Is she healthy? Does she have an adequate income? Good credit or good history of making payments promptly? These are issues to consider, particularly if those payments she’s supposed to make to you are crucial to your mortgage payments. Would you care if she had a roommate - or significant other living with her? What if she didn’t maintain the property?
Best advice: see a lawyer with expertise in the real estate field. It would be well worth the fee.
Alright, that’s a lot to consider, and to tell you the truth–I hadn’t considered many of the negative outcomes you mentioned above.
I can’t imagine evicting my mother, but we would need the payments in order to move. She does well making payments on time. Her credit is not good, but much of this is due to past credit problems–nothing recent. She hasn’t found steady work yet, but she will be drawing social security starting next month.
Any estimates on the fee for such a lawyers visit?
See a lawyer and a CPA. There may be tax benefits involved that will make it easier for you to “give” the house to your mother. My experience with real estate lawyers is that they’re surprisingly reasonably priced; I had one broker a deal between me and my parents when we bought their old house, and I think it ended up costing us about $200.