Real Estate Question

Whisperwindkat · #1 06/28/11, 05:16 PM

It appears that my husband might be in a bit of a pickle with our farm. Bear with me, this is kinda long. In 2001, a friend of my mother's offered to sell us her farm. Long story short, when we tried to get financing on the farm the bank would not finance it because...the foundation needed to be fixed, the wiring needed to be done (half the house on original fuse box and many plugs no longer worked), the wood around the porch was rotted out, no door on the crawl space, and there was a broken beam in the roof. Well, she fixed the foundation and because of a storm that came along about then she filed an insurance claim and got the roof fixed. She refused to do the wiring and said the bank would just have to finance it like it is. Bank laughed and said no way. We fixed the crawlspace door and the rotted wood. She said that she would finance the house and carry the mortgage. We drew up a contract showing how much we gave her as a downpayment and what our payments would be. She wanted to keep the insurance and taxes in her name and so the payments include the insurance premiums and taxes. We have been making regular payments the whole time we have been here. We have also added a new building to the property, fencing, repaired the roof on an existing building, replaced the oven and stovetop (neither worked properly), replaced flooring so that we could get the dog urine smell out of the house, fixed plumbing, put in propane heaters, and countless other repairs and expenses associated with having a home. A year ago, she was diagnosed with pancreatic cancer. She told us that she needed to draw up some paperwork so that her sister, her heir, would have to continue to carry the mortgage. She has not done it and everytime I asked about it she said that she would get it done. Now, she is saying that everything that we paid was just to be considered rent and her sister could do what she wanted with the farm. She is dying, in the hospital now and might not come out. We have invested a lot of money in this property and we are worried that the contract won't be valid once the property is passed to her sister. Should we be worried or should we be ok and just make sure to have that contract handy? Thanks for any advice, Kat

Danaus29 · #2 06/28/11, 05:20 PM

Do you have anything in writing? Or an oral agreement recorded on tape? Do you still have the receipts for the appliances, fencing and the shed? Have you ever paid rent?
Can you afford an attorney?

Bearfootfarm · #3 06/28/11, 05:40 PM

Quote:

We drew up a contract showing how much we gave her as a downpayment and what our payments would be.

If the contract say you were BUYING, her sister can't do anything but accept payments.

Nothing anyone "says" matters.

What is WRITTEN is all that has meaning

Yvonne's hubby · #4 06/28/11, 05:47 PM

In my state your contract should protect you... provided you have met your contractual obligations along the way... all payments made on time, and of course you have kept records so it wont be a problem to prove to the judge while our trustworthy heir is taking the estate through probate. I would be looking for an attorney in your state, to see how things are handled there. You may or may not have a lot to worry about.

Macybaby · #5 06/28/11, 06:38 PM

Like bearfootfarm said - it the contract was written correctly, the heir will inherit the right to receive the payment and the mortgage with a lien on the property IF you default, but she does not inherit the property.

if the heir does not like this, she can try to find someone to purchase the mortgage from her, and then you'd have someone else to make payment to.

However this all hinges on having a valid purchase contract in the first place. I'd contact an RE lawyer too, just to be on the safe side.

oregon woodsmok · #6 06/28/11, 11:02 PM

You say you drew up a contact. That's that. Whatever is in the contract is what happens.

If the sister inherits, she inherits the note and she gets the payments. She does not inherit the house. If you stop paying, she can foreclose, but that's the only way she gets the house.

If the sister does inherit the note, I suggest that you set it up so payments are made through an escrow account. It costs a couple dollars per month, but keeps things simple.

Also, if the sister inherits the note, check into cashing her out--- give her less than face value of the note, so she gets a lump of cash and your house gets paid off. She might like that deal; you don't know until you ask.

I suggest that you take your contract down to a lawyer and learn what your rights are. It doesn't cost much to have a lawyer look over a contract for you. Or go to legal aid and have them interpret your contract for you.

By the way, if you did not record your contact with the county recorder, get yourself down there and do it now.

Raven12 · #7 06/29/11, 01:00 AM

Quote:

Originally Posted by Yvonne's hubby

In my state your contract should protect you...

It depends on the state. The contract has to be recorded to be valid here. Also, you can lose all the money invested in repairs and upgrades because the property was not officially deeded in your name.

zant · #8 06/29/11, 09:19 AM

A guy that worked for me had a similar "contract agreement" with his "best friend",paid 500 amnth for 7 yrs,then "friend" called him up,said he was selling property-R.E. lawyer said this was not a legal contract(this was in ME)-so he had to get a mort for 45,000 after paying 42,000 already-price of land/trl being sold was 45k.ALWAYS get a lawyer involved when doing land transaction-others may say no,but spending 500-1000 for a lawyer is cheap compared to.........

Our Little Farm · #9 06/29/11, 09:22 AM

Did you have the contract notarized?

Deacon Mike · #10 06/29/11, 10:58 AM

Quote:

Originally Posted by Whisperwindkat

She wanted to keep the insurance and taxes in her name and so the payments include the insurance premiums and taxes.

This is your risk. Go down to the county courthouse (or online if you can) and see who the county thinks owns the property. And get a real estate attorney today.

mnn2501 · #11 06/29/11, 11:04 AM

Many people think that paying for a lawyer to draw up a legal contract is a waste of money. But then you have situations like this.

#12 06/29/11, 11:27 AM

Check with a lawyer and see exactly what you have and what your rights are. It sounds like you have what's called here a "contract for deed" . I bought my house that way. As long as you make your payments on time and are current, the owner can't take the house back. If it were me I would try to divorce yourself from any further dealings with the owner and her sister by going to the bank and taking out a mortage and paying her off. CD's usually have a ballon date anyway and there is usually a clause that allows you to pay off the balance at any time.

Good luck.

rickfrosty · #13 06/29/11, 11:32 AM

[QUOTE=Whisperwindkat - - Should we be worried or should we be ok and just make sure to have that contract handy? Thanks for any advice, Kat[/QUOTE]

You should be worried ! Get a lawyer pronto & preferably one who seems to be paying attention - I'd ask around.
I am a realtor & this is way beyond anything I'd try to advise someone on.

Nevada · #14 06/29/11, 11:37 AM

Quote:

Originally Posted by Whisperwindkat

We have invested a lot of money in this property and we are worried that the contract won't be valid once the property is passed to her sister. Should we be worried or should we be ok and just make sure to have that contract handy? Thanks for any advice, Kat

Her sister inherited the loan. It's as simple as that. There is really no reason to be worried.

Nevada · #15 06/29/11, 11:41 AM

Quote:

Originally Posted by rickfrosty

You should be worried ! Get a lawyer pronto & preferably one who seems to be paying attention - I'd ask around.
I am a realtor & this is way beyond anything I'd try to advise someone on.

Honestly, I don't see the big deal. The loan paper is now owned by somebody else. Why should that change the terms of the contract?

po boy · #16 06/29/11, 11:53 AM

Quote:

Originally Posted by Nevada

Honestly, I don't see the big deal. The loan paper is now owned by somebody else. Why should that change the terms of the contract?

Agree, provided it was done right.

mnn2501 · #17 06/29/11, 12:24 PM

Quote:

Originally Posted by Nevada

Honestly, I don't see the big deal. The loan paper is now owned by somebody else. Why should that change the terms of the contract?

But what is in the contact? the O.P. said "We drew up a contract showing how much we gave her as a downpayment and what our payments would be." that leaves a lot open to interpretation.
Was it an actual contract? was it signed, noterized, registered? or was it just a piece of paper they gave her showing a downpayment and what they would be paying (which is what the OP said it was)?
Sorry, but not all property dealings are as airtight as you seem to think.

KeithBC · #18 06/29/11, 12:47 PM

Only one thing matters: Was the sale registered at the Land Titles office? If your name is on the title, you own it and you are just repaying a loan to the heir. If your name is not on the title, the heir owns it, and, regardless of the contract, you have been paying rent all along.

You can perhaps sue for breach of contract if the contract specified that it was a sale and the sale was never registered. But the owner is whoever's name is on the title.

Nevada · #19 06/29/11, 01:13 PM

Quote:

Originally Posted by po boy

Agree, provided it was done right.

Of course. I would like to review the contract to see what it says. There could be language problems, but if the intent is clear it will be fine.

Nevada · #20 06/29/11, 01:30 PM

Quote:

Originally Posted by KeithBC

Only one thing matters: Was the sale registered at the Land Titles office?

A private contract (for land, or otherwise) does not need to be filed anywhere to be valid. Fact of the matter, it doesn't even need to be notarized. As long as the intent is clear, everyone agrees that they signed it, and it's consistent with the laws of the state, it's a binding contract.

For real property deeds, if it's a "race" state then yes it needs to be recorded (with the county, not with a title office as you suggest), but not in a "notice" state. I happen to live in a "race/notice" state. "Race" refers to the deed being recorded in the county offices, but "notice" can be made in a variety of ways.

There are sometimes occasions where "wild deeds" (an unrecorded deed that someone finds laying around, perhaps in his deceased grandmothers belongings) will crop up. Regardless of the laws of the state, wild deeds almost always end up in front of a judge.