Multiple Names on Deed? Realty law help!

pcwerk · #1 04/10/05, 12:08 AM

Hello Community Members,
[And after the outpouring of help to Hears the Waters I know that this
"cybercommunity" is about as real as any community I have ever been
part of...and I am proud to be a part of it as well.]

Here's the problem. My MIL bought a farm for us (MIL, Wife, &Me) and
we have been splitting the note three ways. She put about $40,000.
down and used her excellent credit. She also sold her townhome here
in Houston and will be moving up to the farm at end of month. My wife
will be following one month later. [Btw, it is a beautiful 35 acre spread
with a renovated 2 story 1910 farmhouse in SE Minnesota--remember me ;-)
Anyway, I am trying to stay here in Houston for another year mainly to
resolve some unfinished personal issues (like what to do w/ my 84 yr old
mother who doesn't want to move and says she will not even come to visit
us in that "god-forsaken country").
ANYWAY, I'm wanting to somehow put my wife and my name on the deed
to protect us from any unforseen future circumstances (like if my MIL
decides to bail after one of those harsh Minn. winters and decides to sell
out from under us). My wife says that if we did that they would have to
check our credit (which is crap) and then may jack up the sweet 5% interest
rate her mom got. Does anyone know if this is true?
Also, I thought about getting a legal contract drawn up that would basically
put a lien on the place if MIL decided to bail. She would have to get our ok
before she sold the place. Does anyone know if that could be done?
How would you good people resolve this situation? I don't mean to sound
greedy or anything but I don't want to pay for years on this place and be
in such an insecure situation. I may be dumb but I ain't stoopid...
I would appreciate any help ya'll could give.

James in Houston, Tx (but soon will be Houston county, Minn.)

kasilofhome · #2 04/10/05, 12:41 AM

there are two deeds that are often cause confusion with land. The deeds are completely different animal.

1. is the vesting deed. Think of it as the person or persons who get to enjoy the land. and what every is still attached. ( Rights - mineral timber ect) minus and exceptions ( easments covenents ect)
2. is the trust deed. Think of this document as the paper that declares who is the person or are the people who are totally responcble to pay for the right to have the privialbe of owning.

most often the names are the same.
in fact when a lending is involed that is how the the bank want it. but

At any time any one can do a QUIT CLaim deed. to change the names or update the names on the vesting deed.

MIL could Quit claim the land to ad you people
she should have a lawyer look at it because often in a case like this the MIL for gets herself and ends up cutting herself out

NO Credit check is needed (unless MIL reqest one in order for her to add you. but it is not needed. She could ask you to pay the legal fees for it too -- That would be fair an you should offer should she go the lawyer way.

Rick · #3 04/10/05, 06:57 AM

Quote:

Originally Posted by pcwerk

Hello Community Members...................Here's the problem. My MIL bought a farm for us (MIL, Wife, &Me) and we have been splitting the note three ways. She put about $40,000. down and used her excellent credit. She also sold her townhome here in Houston and will be moving up to the farm at end of month............ANYWAY, I'm wanting to somehow put my wife and my name on the deedto protect us from any unforseen future circumstances.... My wife says that if we did that they would have to......check our credit (which is crap) and then may jack up the sweet 5% interest rate her mom got. Does anyone know if this is true?...................................I would appreciate any help ya'll could give.

James in Houston, Tx (but soon will be Houston county, Minn.)

It seems like so many bad things could happen.....MIL could marry a Minisotan who might take over or even inherit the land. Are there other siblings who stand to inheret the place?

Basically, you need 51 percent control of this place, in order for you to be confident that it will always be your place.

I am a cynic, and maybe it was oversight on her part, but why would she want you to be in such a weak position. Perhaps she was protecting herself, to make sure you do your part to have outside employment, and pay your share. In that case, I would think that the lawyer could set up a note for you to pay off (to her) ,stipulating that when she is paid off your portion of the land ownership reverts to you. Make sure that the paperwork states that upon her death, the payments would go to any heirs that there might be, and the land and home still become yours.

goatlady · #4 04/10/05, 07:56 AM

Quit Claim deed is the way to go. It's just a new deed which has everyone's names on it (in your case) with all of you having equal shares (2/3s for you and wife) with right of survivorship (you get it when MIL dies and last one alive has the whole thing). This is a standard form, no biggie (costs about $30 here), lawyer can do, all sign, notarized, and RECORDED. When recorded it takes the place of any previous deed and the previous deeds become null and void. Has absolutely nothing to do with the bank, financing, interest rates, etc. The way it stand now you have NO claim to the property regardless of how much you pay or have paid. She dies, you're out of luck without a big court hassle unless she has a will stipulating you inherit.

Hoop · #5 04/10/05, 08:10 AM

You are in a very tenuous situation. Your MIL can have you thrown out of the house and into a Minnesota snowbank in January, and there is little legal recourse for you.
HER name is on the deed. Not yours. Not your wife.

As others have pointed out, there are issues that need to be addressed. Surely your MIL expects you & your wife to gain equity with your payments. Is there a contract which explains how this works?

The worst case scenairio for you & your wife are this: your MIL becomes gravely ill and must go into a nursing home. The nursing home LEGALLY takes the farm and leaves you & your wife on the side of the road.

Communicate with your MIL. Be reasonable. Its doubtful she will sign anything that restricts her decisions when it comes to financial matters.

As far as putting a lien on the property, forget it. One needs some sort of legal claim to initiate a lien. You have none.

**Terri** · #6 04/10/05, 09:03 AM

This is why partnerships were invented. And, you need a lawyer to make certain that the papers are drawn correctly. There are other ways of sharing ownership, also, and I am not sure which would be the best for you and yours. But, a lawyer would know.

Yes, right now, if anything DOES happen to MIL you and your wife could lose it all. But, there is a limit to what your MIL can do for you without you haveing to treat it as income and having to pay income taxes on it. She cannot just give you too much equity without you having to declare it.

A REAL ESTATE LAWYER would know how to handle this so that it is fair to everyone, so that nobody ends up out on their ear due to illness or tragedy.

Jena · #7 04/10/05, 10:22 AM

Looking at it from the MIL perspective...

if you have poor credit, she may be concerned that a lien could be attached to the ground due to a judgement against you. This is something you might think about as well, if there are any outstanding judgements.

I was listed on a house with my mom and dad many years ago. We were all on the note and all on the deed. When I left the house, I quit claimed it back to my parents as there was no longer a need for me to be on it anymore. We had a good rate, but I had good credit too (way back then).

These situations can always be tense. My only gripe was that my parents refused to sell me that house. I lived there for 6 years and paid the mortgage payment, but basically it was nothing but rent. She wanted the tax write off of a rental, but I wanted homeownership. That's why I left finally and bought another house on my own. That really put her in a bind, but I had to do what I had to do.

There are many circumstances that can affect the arrangement...tax deductions and write offs, a death of one of you, etc. I would clearly list out your priorities and worries, then invite her to do the same. Her needs and worries could be very different than yours. Once everyone knows where everyone is coming from, you can visit a lawyer and see how best to cover everyone's needs without sacrificing others. There is likely to be compromise involved. I could not find a solution with my own parents, but we were able to resolve the situation without harming our relationship, which can take some diplomacy and tact and understanding. Don't forget that your MIL has been very generous with you and sometimes you have to take a risk for that generosity. Also don't forget that your wife is her daughter and your MIL is likely to consider what would be best for her as well, if you ever leave the picture. Sorry if that is cynical, but I just got blind sided by my husband so divorce is on my mind.

Jena

Elizabeth · #8 04/10/05, 01:09 PM

I would never, under any circumstances, make mortgage payments on any property unless my equity was reflected in the ownership of the property, if for no other reason than that which Hoop mentioned above- no matter how well-intentioned your MIL is, and even if you and your wife stand to inherit the property someday, you cannot foresee what will befall MIL in the coming years.
If she wound up in a nursing home, you and your wife could lose your home and everything that you have invested in it- not a position I would want to be in.

You did not mention what equity you have at present, if any. Have you already started making payments? I would talk with MIL asap, work out a resolution before paying anything more, or cut my losses now and back out of the deal.
Unless the payments you make are to be considered rent, but it did not sound like that was the situation from your post.

Good luck to you, from another Southerner who recently transplanted to Minnesota!

Mudwoman · #9 04/10/05, 01:22 PM

Not sure about the information you have been given on Quit Claim Deed. When I sold real estate a long, long time ago in Texas, the only time you could do a Quit Claim Deed if there was a mortgage on a property was if the loan was assumable without qualifying. Chances are your MIL has a conventional loan, so you need to find out more information on this. Any Title Co will be able to give you information on whether this can be done and they won't charge for your the consult.

The first time you told this story, I got uneasy. I'm still uneasy when I hear you tell this. Too many times, there are undisclosed expectations that come along and bite you.

Ann-NWIowa · #10 04/10/05, 05:51 PM

I agree you all should consult an attorney. M-i-l could keep a life estate and deed the property to you or you all could hold it jointly in various ways, or there are other options. Your m-i-l has legitimate concerns about you being on the title if you're having financial problems. Your creditors could get liens against the property. On the other hand it might be possible for her to place the property in a family trust with you and your wife as beneficiaries. Trusts can have spendthrift provisions that prohibit creditors from getting at it. Each state has different laws regarding these things so a MN attorney will be needed. If you should file bankruptcy, the property could end up sold for the benefit of creditors...even a remainder interest on the life estate...so definitely find out all the legal ramifications before your name goes on the title.

kasilofhome · #11 04/10/05, 07:42 PM

The Title Company is not where you need to go first. that will be the last step.
If at all.
Talk to MIL with you wife. Find out if she is concerned as to you or you and your wife or just your wife being a credit risk. AS menstioned if some one is on a RECORDED VESTING DEED and has a jugement then any land in there name could have a lien placed on it.

If that is the problem It might be wise to draw up and noterize a QUITNCLAIM DEED but not record it have it held ( orginal with you ) and a cert conformed copy with the MIL with her will.

Really a realestate atty is the way to go. a title company will not be interested in your case as there is no reason for a title search / title chain to be done. NOR are you interested in an owners policy at this time. Yes they can take the doc's that the lawyer draws up and record it. They will charge about$100 dollars to do that. But any human with the time and the fee can show up in the recorders office and do that.

The realtors are not going to help you because its not a sale involing a commission.

This is not to snub any one it is just that I just want to make this quick and short.

I was a lic title examiner for 3 years before being a mom. and I did maintain a realtor lic too

heidith · #12 04/10/05, 07:48 PM

Ditto on the quit claim deed. In addition you can change the deed so that you can leave your share to your children and THEY can then leave their share to their children and so on which is exactly what my family has done with our St. Lawrence river property. My children are the 6th generation to use the property and are already named as the owners should we pass away before they are 18. Furthermore, it has nothing to do with the mortgage.
Heidi

Quote:

Originally Posted by goatlady

Quit Claim deed is the way to go. It's just a new deed which has everyone's names on it (in your case) with all of you having equal shares (2/3s for you and wife) with right of survivorship (you get it when MIL dies and last one alive has the whole thing). This is a standard form, no biggie (costs about $30 here), lawyer can do, all sign, notarized, and RECORDED. When recorded it takes the place of any previous deed and the previous deeds become null and void. Has absolutely nothing to do with the bank, financing, interest rates, etc. The way it stand now you have NO claim to the property regardless of how much you pay or have paid. She dies, you're out of luck without a big court hassle unless she has a will stipulating you inherit.

Rick · #13 04/10/05, 08:19 PM

Ann-NWIowa and Jena

I don't believe there is any legal risk, to all three of these parties being on the deed, unless all three are named in a judgement.

Creditors seeking restitution from the husband and wife can't take the property and sell it unless the MIL was also responsible for the debt .

pcwerk · #14 04/10/05, 09:45 PM

Quote:

Originally Posted by kasilofhome

The Title Company is not where you need to go first. that will be the last step.
If at all.
Talk to MIL with you wife. Find out if she is concerned as to you or you and your wife or just your wife being a credit risk. AS menstioned if some one is on a RECORDED VESTING DEED and has a jugement then any land in there name could have a lien placed on it.

If that is the problem It might be wise to draw up and noterize a QUITNCLAIM DEED but not record it have it held ( orginal with you ) and a cert conformed copy with the MIL with her will.

Really a realestate atty is the way to go. a title company will not be interested in your case as there is no reason for a title search / title chain to be done. NOR are you interested in an owners policy at this time. Yes they can take the doc's that the lawyer draws up and record it. They will charge about$100 dollars to do that. But any human with the time and the fee can show up in the recorders office and do that.

The realtors are not going to help you because its not a sale involing a commission.

This is not to snub any one it is just that I just want to make this quick and short.

I was a lic title examiner for 3 years before being a mom. and I did maintain a realtor lic too

I appreciate all of ya'lls advice. I knew this was the place to get sound advice.
I think we will just need to wait until I move up my wife in mid-May to see the
Minnesota lawyer that handled the closing. I will look into the Quit Claim and
also see about a Partnership.
Mudwoman, I am also uneasy about all this since there are so many uncontrollable variables. My wife has just been desperate to get on a
farm (Hell, SHE's the one that should be on this forum--that girl wants to
start the homesteading life!) and once this came around, and then I saw it,
we really had to move on it. I have just taken an attitude of "what happens
will happen". The wife and I at least agree that if it gets to the point where
our relationship is in danger (one can't stand the weather, or I can't get along
with MIL, etc.) we will always CHOOSE THE RELATIONSHIP. I hope and pray
thats the way it will be...
I will keep ya'll posted on the situation as it develops.
James in Houston, Tx (but soon will be Houston County, MN)

seedspreader · #15 04/10/05, 10:03 PM

If your MIL put 40,000 down and used her good credit, she deserves to be the one on the lease in my opinion.

It sounds like she is putting a lot out there for this venture too, and I don't know your relationship (as none of us do) but I wouldn't ruin it over a non-trust issue. If you don't trust her now, (even a little) don't go through with this deal.

Just my .02

Jena · #16 04/10/05, 10:58 PM

Quote:

Originally Posted by Rick

Ann-NWIowa and Jena

I don't believe there is any legal risk, to all three of these parties being on the deed, unless all three are named in a judgement.

Creditors seeking restitution from the husband and wife can't take the property and sell it unless the MIL was also responsible for the debt .

They usually don't, but they certainly can. An undivided interest is harder for a creditor to come after as they have to force a division, but it can be done. If the property is valuable enough to cover the costs, you can bet they will do it.

Jena

EricG · #17 04/10/05, 11:10 PM

I'm no expert but I would look at how the mortgage is written. It may prevent your mom who is the mortgage holder from transferring an interest in the property, which is what the quitclaim would do. The bank needs to protect their interest ($$) in the property. Basically they gave your mom a mortgage on the property based on her having full title to it. I suspect they won't allow her to reduce her title interest and keep the same mortgage, unless maybe it's an assumable mortgage?

It may well say that if you transfer the interest in the property to somebody who is not responsible for the mortgage the mortgage becomes due in full. I'm not sure but I would verify this. Your mom should have a copy of the mortgage.

A lawyer familiar with real estate would be a good person to help sort this out for you.

Eric

Rick · #18 04/11/05, 06:00 AM

Quote:

Originally Posted by Jena

They usually don't, but they certainly can. An undivided interest is harder for a creditor to come after as they have to force a division, but it can be done. If the property is valuable enough to cover the costs, you can bet they will do it.

Jena

Hi Jena,

I don't wish to argue, but this is an important point.

I have a few years experience authorizing credit, and collecting bills. This dates back to 1975. Unless things have changed since then, a creditor can not force the sale of property owned by an individual who is not named in a judgement granted to that creditor. They can intimidate the heck out of you, and they can imply that they can do lots of things.

I could understand that the creditor could "convince" all parties to sign off on a sale, but it would require the voluntary participation of the party who is not affected by the judgement.

Do you have any examples of this having happened? Maybe someone else on the board will offer their thoughts.

Be Well,

Rirck

heather · #19 04/11/05, 11:30 AM

Maybe someone already said this............

If you do the Quit Claim Deed (definitely a great idea)

Make sure it is RIGHT OF SURVIVORSHIP

NOT JOINT TENANTS

With right of survivorship, you & your wife will inherit your mil's share
(Or whoever survives, inherits the others' portions)

With joint tenants, the heirs of whoever dies inherit that portion

That is a BIG difference

We have recently finished a subdivision of a big piece of family property -
What a pain in the backside!
It is better to have it done at the beginning - don't wait -
You never know what will happen tomorrow!

Blessings, heather

rambler · #20 04/11/05, 06:39 PM

Quote:

Originally Posted by Rick

Hi Jena,

I don't wish to argue, but this is an important point.

I have a few years experience authorizing credit, and collecting bills. This dates back to 1975. Unless things have changed since then, a creditor can not force the sale of property owned by an individual who is not named in a judgement granted to that creditor. They can intimidate the heck out of you, and they can imply that they can do lots of things.

I could understand that the creditor could "convince" all parties to sign off on a sale, but it would require the voluntary participation of the party who is not affected by the judgement.

Do you have any examples of this having happened? Maybe someone else on the board will offer their thoughts.

Be Well,

Rirck

Me too, not wishing to argue, but to understand....

Now, lets say MIL goes to a home, & they need to collect money. MIL owns this proerty, the home will (if no other assets appear) take the property & sell it to raise the money owed.

Lets say the property is owned by SIL, but MIL made all downpayments & monthly payments. My understanding is the State would view this as MIL's property for 5 years (from dadte SIL's name appeared on deed) and claim it, sell it, & use money to pay bills.

Here in Minnesota, that is the advise I get from one professional after another. They do much more of a 'means' test than a 'who's name is on the paper' to see if they can go after property.

As well, if both names are on the property, the Sate will put a lean on the property for up to the amount the MIL invested in the property & % of gains. Perhaps not a forced sale as you say, but _certainly_ the bill for that amount would be transfered to SIL.

Other folks can try to do the same, with more or less success & legal footing.....

Did I understand the question properly?

Most have it right, he will need to sit down with all parties & see who needs what, then with a property lawyer & draw up the proper documents to protect everyone's taxes, investment, payments, and so forth. This quickly gets more complicated than anyone has mentioned here so far.

One way to accomplish part (but not all!) of the concerns would be a document allowing the other parties right of first refusal on any sale. (First all the paying parties & their amounts invested needs to be officially recognised - they are not now....) If MIL needs the cash or someone forecloses on her, she can't sell out from under you even if she doesn't like you any more, and you would need pay up if you want to keep living there. Kinda fair when such times arise tho, right? These documents are easily ignored if everyone remains friendly, and don't lock up a property as it can be sold for top dollar period for MIL - either SIL matches it or not, sale is done. Might be part of an answer. If MIL develops an unkonwn will and all assets are cut off from you, you at least have the option to keep the land if you are willing to pay the balance, won't be kicked off with suitcase in had period. Kinda allows some safety net for all sides.

You also would like to get into a good estate/ capitol gains tax thing, which any of these plans can really cost you if done wrong....... Best to put land through an estate/will, if you can trust the party not to change their mind on that.....

But it does take a lawyer to draw it up, you are likely dealing with close family, distant family, estate concerns, and nursing home/ hospital issues all of which present real concerns.

--->Paul