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Old 06-12-2012, 07:31 AM
 
3 posts, read 69,295 times
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This is very confusing but I will do my best to make it as short and simple as possible. Years ago, my father purchased a home, in his name, for my sister. At the time, my sister's credit was horrible and she couldn't get a mortgage/note on any home. Dad always said "it was her home". He passed away a few years ago and one of his requests was that the home be given to my sister (since it was "her home"). I honored his request and we did a quit claim deed (? I think). Now, the deed is in her name. However, I am still paying on the note every month. There wasn't enough money to pay it off so I left it how it was and have been making double payments to get it taken care of as soon as possible.

Fast forward to today...my sister is now wanting to sell the home because she needs money. She claims to have someone already interested with a cash offer. If i'm not mistaken, she does have the right to sell the home. However, where does that leave me and the note? Will I be forced to pay it off? If I can't pay it off (which I can't), then that basically means she can't sell, correct?

Sorry for all the questions, I was just trying to abide by my father's wishes and now I'm getting screwed :/
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Old 06-12-2012, 07:42 AM
 
833 posts, read 712,977 times
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If that "note" is a mortgage, it will have to be paid off/satisfied before it can be sold.
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Old 06-12-2012, 08:30 AM
 
2,766 posts, read 3,422,680 times
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If there is a mortgage, it will be paid off upon the sale. Doesn't matter who's name its in.

So if $90,000 is owed on the mortgage, and it sells for $100,000, the mortgage will be paid off at closing and your sister will get $10k. No different than any other sale.

But..... you said the buyer is paying cash, so its possible for them to close without paying off the mortgage.

A quit claim deed is a document that once signed, forfeits an individual's claim on a property. By signing a quit claim deed, you give up your legal right to use the property or recover any profit from the sale of the property, as well as the rights to any equity you helped build. A common belief is that a quit claim deed also exonerates the signer from any financial obligations to the property's mortgage. It does not. When you sign a quit claim deed, you give up all of your benefits but retain your responsibilities.

I'm surprised the "due on sale" clause didn't kick in when the property was sold to your sister.

Transferring the title into someone else's name will activate a part of the mortgage called the "Due on Sale" clause. This means that, if the homeowners transfer ownership at any time before they have paid off the mortgage in full, the entire remaining amount of the loan will be due immediately.

Was the quit claim deed filed with the state?

Who's name is the mortgage in? Your late father or your name?

If the mortgage is still in your late father's name, your sister could sell it, and you could simply stop paying. The new buyer would need to pay off / remortgage the old loan or the bank would foreclose.

Last edited by 399083453; 06-12-2012 at 08:46 AM..
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Old 06-12-2012, 02:19 PM
 
3 posts, read 69,295 times
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[FONT=Verdana]The quit claim deed was handled through an attorney, so I would hope it was done legally and filed with the state. The note/mortgage is still in my Father's name. I left everything as it was but continued to pay on it each month. [/FONT]

[FONT=Verdana]My sister is very irresponsible with money and has gotten herself in a bind. That is probably why she has found someone willing to pay cash. She wants it quick and is probably selling the home for much less than it is worth. I just wanted to know my options or what to expect once this happens so I am not blindsided [/FONT]


Quote:
Originally Posted by 399083453 View Post
If there is a mortgage, it will be paid off upon the sale. Doesn't matter who's name its in.

So if $90,000 is owed on the mortgage, and it sells for $100,000, the mortgage will be paid off at closing and your sister will get $10k. No different than any other sale.

But..... you said the buyer is paying cash, so its possible for them to close without paying off the mortgage.

A quit claim deed is a document that once signed, forfeits an individual's claim on a property. By signing a quit claim deed, you give up your legal right to use the property or recover any profit from the sale of the property, as well as the rights to any equity you helped build. A common belief is that a quit claim deed also exonerates the signer from any financial obligations to the property's mortgage. It does not. When you sign a quit claim deed, you give up all of your benefits but retain your responsibilities.

I'm surprised the "due on sale" clause didn't kick in when the property was sold to your sister.

Transferring the title into someone else's name will activate a part of the mortgage called the "Due on Sale" clause. This means that, if the homeowners transfer ownership at any time before they have paid off the mortgage in full, the entire remaining amount of the loan will be due immediately.

Was the quit claim deed filed with the state?

Who's name is the mortgage in? Your late father or your name?

If the mortgage is still in your late father's name, your sister could sell it, and you could simply stop paying. The new buyer would need to pay off / remortgage the old loan or the bank would foreclose.
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Old 06-12-2012, 03:14 PM
 
1,597 posts, read 1,384,799 times
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Let me see if I understand what 399083453 is saying.
So it sounds like the OP should warn the cash buyer that if they buy the house from his sister, that he's allowed to stop paying, and the cash buyer would be responsible to paying off the existing mortgage. Using the numbers above, they had better purchase the house for only 10K from hissister, cause they're gonna owe 90K the next day. Is that right?? That the OP's just paying for the time being to keep his sister from being foreclosed on, but wouldn't have the same obligation/motivation for a new random owner.
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Old 06-12-2012, 05:27 PM
 
3 posts, read 69,295 times
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Just for the record-I would never do that. I appreciate the info on all the options though. I'm not paying to keep my sister from getting foreclosed, I'm paying because I have a legal and moral obligation to. With that being said, I'm put in a tough spot because I'm gonna be screwed if she does this cash sale. I will be forced to come up with @ 60k that I just don't have. I wanted to know if I had any other options or anyone had any ideas on what to do.


Quote:
Originally Posted by snowdenscold View Post
Let me see if I understand what 399083453 is saying.
So it sounds like the OP should warn the cash buyer that if they buy the house from his sister, that he's allowed to stop paying, and the cash buyer would be responsible to paying off the existing mortgage. Using the numbers above, they had better purchase the house for only 10K from hissister, cause they're gonna owe 90K the next day. Is that right?? That the OP's just paying for the time being to keep his sister from being foreclosed on, but wouldn't have the same obligation/motivation for a new random owner.
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Old 06-12-2012, 07:36 PM
 
2,766 posts, read 3,422,680 times
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#1. Check with the registry of deeds and see what was filed, if anything.

Well there is no "leaving you with the note" The note is still in your fathers name.

I'm just guessing........ If your sister sells the house for $10k. And there is a $90k mortgage, basically a lien, the new owner has a choice. Come up with $90k by getting a mortgage or cash or loose the house by foreclosure. Your sister is out of the picture once she sells the house. Once she sells, you stop paying your fathers mortgage. The bank will contact the new owner. You cant ruin your father's credit, because he is no longer alive. You cant ruin your credit or your sisters because you have nothing to do with the mortgage and the house is no longer in any family member's name.

Whatever you do, do not pay off the mortgage or put it in your name. Just pay it until she sells it.

Best advice I can give is "consult an attorney" This is complicated.

PS. Its possible the bank has already started foreclosure proceedings on your sister, the new owner and that is why she wants to sell. She cant get a loan. The bank wants someone to assume the loan after your fathers death. You should ask her.
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Old 06-19-2012, 02:59 PM
 
Location: Washington DC
487 posts, read 729,183 times
Reputation: 492
I'm reading some pretty wacked out advise here.
Big important question that must be answered before anybody can give meaningful advise.
Is the loan your father took out to buy the house a MORTGAGE?
You must dig to find out that answer.

If the answer is yes. then no problem. the loan will be paid off from the proceeds of the sale.
in other words the cash buyer cannot obtain a clear title with an outstanding mortgage. the mortgage is recorded with the county, and must be payed off.
Doesn't matter if the buyer is paying with cash they already had in hand or with cash they get by taking out a new mortgage.

In the unlikely event your father took out a signature loan to buy it (not using the house for collateral) then your quit claim deed to your sister gives her the home free and clear and she can do what ever she wants with the house. your fathers estate is stuck with the signature loan and still owes the money.

Last edited by tigger37708; 06-19-2012 at 03:08 PM..
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Old 06-19-2012, 03:05 PM
 
Location: Washington DC
487 posts, read 729,183 times
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I assume you are executor to your fathers estate.

I have another question
Once your sister got the deed to the house,
Why are you as executor of the estate still making the payments?
Your dad is gone and its time for your sister to grow up.
Are these payments not whittling away at the estates assets?
Are they eating into your portion of the inheritance?
if they are
stop making the payments.
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Old 06-19-2012, 05:19 PM
 
Location: Boise, ID
5,565 posts, read 10,898,943 times
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Was there an attorney involved with the will/estate? That is who I would talk to first. The house should have been handled at that time. At this point, I'm not sure if the bank can attach any balance against the estate or not.

In other words:
Let's say the note/mortgage has an outstanding balance of $100k
Your sister sells it for $40k
Leaving the balance you mentioned of $60k

Does the estate have $60k worth of other assets? I'm not sure if the bank can sue for that or not. That is what you need to find out. You said there wasn't enough in the estate to pay off the loan, but is there enough in the estate + the cash offer? You say you have a legal and moral obligation to pay this debt. You may feel an obligation to your father on moral grounds, but it is possible you have no legal obligation. Again, ask the estate attorney.

I will say that if your sister is doing an "end run" around you and selling the house to get cash when she knows you are paying on a loan against it, and doesn't intend to help you pay that off, that would be the most upsetting part of the story for me.
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