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Old 06-15-2014, 06:33 AM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,950,422 times
Reputation: 6717

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The French story mentioned above is pretty famous:

A 120-Year Lease on Life Outlasts Apartment Heir - NYTimes.com

FWIW - I think younger people today have no idea how long many older people are lasting. My husband and I are in our late 60's. And both have family members in their 90's. My father's family has an exceptional history of longevity - his mother died at 103. He and 2 of his 4 siblings are still alive and going strong (they're in their mid-90's).

So - if I were the OP - I wouldn't consider doing this with someone who isn't at least 85-90 now. Robyn
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Old 06-15-2014, 06:40 AM
 
Location: Florida
19,840 posts, read 19,937,680 times
Reputation: 23281
A quick check on the op's other posts suggests that he/she was or is a real estate agent or broker( without the proper designation required by CD) who should be familiar with the advantages or pitfalls of this plan.
Was the only actual question.......

Quote:
Originally Posted by REtoday View Post

Any thoughts on how to get the word out on this ?
I will not deal with a homeowner directly unless the homeowner is represented by an attorney.

Ideas please.
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Old 06-15-2014, 06:53 AM
 
Location: Boston
71 posts, read 102,858 times
Reputation: 54
All good information. I am an investor mostly doing flips and renovations. did have a Real Estate license in the past.
What if the home one buys from the seller is a multifamily ? And the OP lives in one of the units and the seller lives in the other.
That certainly changes the metrics.

Also, if this were to work the OP would have to buy the property at a serious discount as he/she would be responsible for all aspects of the home except utilities.

I think these reverse are a rip off for the elderly. Too many upfront fees!!!!!

I can do it for NO fees and I can do it much faster.
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Old 06-15-2014, 07:08 AM
 
Location: Florida
19,840 posts, read 19,937,680 times
Reputation: 23281
Quote:
Originally Posted by REtoday View Post
All good information. I am an investor mostly doing flips and renovations. did have a Real Estate license in the past.
What if the home one buys from the seller is a multifamily ? And the OP lives in one of the units and the seller lives in the other.
That certainly changes the metrics.

Also, if this were to work the OP would have to buy the property at a serious discount as he/she would be responsible for all aspects of the home except utilities.

I think these reverse are a rip off for the elderly. Too many upfront fees!!!!!

I can do it for NO fees and I can do it much faster.

You can do it for no fees but would the end result , with the discount on price, result in that elderly person getting any more cash?
Especially since you would have to discount enough to allow for potentially large expenses for repairs, tax increases, etc.
Or would you only consider people who are already very elderly...like 90..or who fit the description of 'one foot in the grave'?
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Old 06-15-2014, 08:26 AM
 
Location: Boston
71 posts, read 102,858 times
Reputation: 54
It would have to be done on a case by case basis. Or perhaps have the seller pick up some of the costs of the property, i.e. the taxes or any mainyenance issues.
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Old 06-15-2014, 12:29 PM
 
Location: California
4,556 posts, read 5,478,999 times
Reputation: 9623
Default Consider this before giving a Life Estate

Quote:
Originally Posted by REtoday View Post
I'm looking to purchase a home from people who no longer can afford the maintenance / upkeep , but want to live out the rest
of their years in that home. Dealing with my own aging Dad has made me attempt to come up with an outside the box way to help these folks , yet make it worthwhile
for me as well.

The typical seller would be someone who has limited income to maintain the property.
Or, an elderly person who wants to live in place vs in a nursing home / Assisted living etc.
Their only expenses would be utilities.

The money from the sale to me would support them and solve alot of problems for the persons family.
I would own the property. A win - win for all....

Any thoughts on how to get the word out on this ?
I will not deal with a homeowner directly unless the homeowner is represented by an attorney.

Ideas please.


LawHelpMN.org - Find Free Legal Help, Access Legal Aid Information, and Know Your Rights About the Law

Life Estates - Questions and Answers: Be Careful with Life Estates

Q.) What are some of the problems with a life estate?
A.)
1. You cannot easily sell or mortgage the property. Your children and their spouses must all agree, and sign off, if you want to sell or borrow against the property. You cannot remove their names from the title to sell the property unless they agree. You cannot force them to agree. In addition, they own an interest in the property and could demand a share of the proceeds if you sell it. This is true even if you gave the property to them by adding their names to the title without getting any money from them for the interest. Remember that if your child is married, their spouse must also agree.

2. Selling the home could cause tax problems for you and your children. This is true even if your children sell the house after your death. Adding someone's name to the title of your home may be a gift under tax law. If your children sell the house after you die, they might have to pay capital gains tax on the proceeds. Talk to a tax expert before you sell the home.

3. Once your child is on the deed to your house they have an interest in the home and their legal problems could become yours. If your child is sued or owes taxes, a lien could be filed against your home. The lien would have to be paid if you wanted to sell or mortgage the property. Your child's interest in the home is not protected if he or she files bankruptcy. If your child gets a divorce, his or her spouse could claim all or part of your child's interest in your home. If your child dies before you do, the child's estate would have to go through probate. Your child needs to have a Will saying what should happen to his or her interest in your home in this situation.

4. Giving your child a life estate could prevent you from getting Medical Assistance (MA) for a long time. You cannot get MA to pay for nursing home care, or care that keeps you out of a nursing home, if you give away your assets. Adding a child's name to the title of your home is a gift. As the law in this area is complex, and changes frequently, it is important to understand the risks you are taking before adding a child's name to the title of your home. Talk to a lawyer who knows this area of the law well. The penalty can be quite severe.

5. The State could have a claim against the property after your death if you received MA; Long Term Care; General Assistance Medical Care or Alternative Care. This law applies to life estates created after July 2003. The law says the state can take money from the value of a life estate after you die to pay back the money you received from the programs listed above. There are a few exceptions. The state cannot do this if certain people continue to live in the house after you die. These people include:
a spouse;
a child under 21 or a blind or disabled child;
a child who lived with you for at least 2 years before you went into a nursing home and who provided care that kept you out of a nursing home;
a sibling with an equity interest who lived with you for at least 1 year before you went into a nursing home.


The Senior Law Project provides free legal assistance to low-income elderly living in Washington, Dakota, Ramsey, Carver and Scott counties. You may reach the project at (651) 224-7301 Monday through Friday between the hours of 9:00 A.M. and noon.

May 2011
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Old 06-15-2014, 01:40 PM
 
Location: Myrtle Creek, Oregon
12,293 posts, read 12,533,436 times
Reputation: 19526
This is known as sale with lifetime tenancy, and has been done as long as there have been houses. Usually the sale takes place within a family, which transfers ownership to the next generation while leaving Grandma in the house to die in peace. There is no reason that an outside party can't enter into the same kind of agreement.

As someone mentioned, this is essentially what a reverse mortgage does. Banks get rich off of reverse mortgages, which are a horrible deal for the sucker who buys one. The older person pays a high interest rate on every reverse mortgage payment, plus loan fees. It wouldn't be hard for a private party to write a better deal and still make a handsome profit.

Buying the property outright with lifetime tenancy is a cleaner way to deal with it, if you have the assets to cover the transaction. The purchase price would reflect how long you expect the old folks to live. It could be as much as 80% of the value, or as little as 25% of the value of the home. If you expect them to live another 10 years, 50% of the value would be in the ballpark. Consult an attorney.
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Old 06-15-2014, 02:22 PM
 
10,071 posts, read 4,685,240 times
Reputation: 15348
I got a dumb question, is new owner liable if old couple gets injured? Since he'd be the "landlord", does he need to make sure the property is safe for other people to live in? or if something breaks?
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Old 06-15-2014, 06:41 PM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,950,422 times
Reputation: 6717
Quote:
Originally Posted by eyeb View Post
I got a dumb question, is new owner liable if old couple gets injured? Since he'd be the "landlord", does he need to make sure the property is safe for other people to live in? or if something breaks?
Not a dumb question. And I don't have a clue. Robyn
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Old 06-16-2014, 10:01 AM
 
Location: California
4,556 posts, read 5,478,999 times
Reputation: 9623
Number 3 in post #26 speaks to liabilities:

3. Once your child is on the deed to your house they have an interest in the home and their legal problems could become yours. If your child is sued or owes taxes, a lien could be filed against your home. The lien would have to be paid if you wanted to sell or mortgage the property. Your child's interest in the home is not protected if he or she files bankruptcy. If your child gets a divorce, his or her spouse could claim all or part of your child's interest in your home. If your child dies before you do, the child's estate would have to go through probate. Your child needs to have a Will saying what should happen to his or her interest in your home in this situation.
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