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Get the facts before lending to nephew
By Edith Lank | Columnist
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Published: 7/11/2010 12:33 AM

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Q. I own a home in another state, which I acquired after my father's passing. He lived in the VA hospital a few years before his death. My nephew moved into the house. He wants to stay there, but I doubt he will qualify for a bank mortgage. I'd like to work out an agreement with my nephew to pay me back in a 20-year time frame by sending monthly mortgage payments. I may charge him an interest rate of 1 percent or so. I want a written and notarized document safeguarding me in the case of my nephew's default on the loan. By the way, could an attorney write something like this for me or should I look elsewhere? Have you heard of a plan like this? What do you think of it?

A. You don't tell me anything about your nephew's income, credit rating or bill-paying record. Why wouldn't a bank lend him the money? Investigate before you work out a payment plan. Does he have enough income to carry mortgage payments? Will he keep up property taxes and insurance? Can he afford repairs? Is your financial situation such that you can afford to tie up that much capital for 20 years at low interest?

If you decide to go ahead, then yes, your lawyer and probably another lawyer located near the house can draw up the mortgage papers and see that they're entered in that county's public records. Your lawyer can also give you advice about a low-interest mortgage, which may involve income tax complications. But if your nephew couldn't keep up and defaulted on the loan, or got behind on property taxes, would you really want to foreclose and put him out? You'll have to decide that for yourself.

Q. Can you settle a debate between my friend and me? She and her adult daughter purchased a home together. If my friend passes, I say the house goes to her daughter. She thinks her other two sons can claim her half of the home. Who is right?

A. Either one could be right. The deed by which they purchased the home contains wording that would answer the question. If the deed says the new owners are "Mrs. A and Miss A, joint tenants" or "joint tenants with right of survivorship," then when one dies, the other automatically becomes the complete owner. On the other hand, if the deed says the house is now owned by "Mrs. A and Miss A as tenants in common" or simply by "Mrs. A and Miss A" with no further wording, then when one dies that person's share goes to heirs named in a will. If there's no will, the state determines who owns that half.

Q. I have a question about open listings. Let's say two brokers have an open listing on a property. The first broker showed the property to a prospective buyer, but the buyer decided not to buy. Two weeks later, the second broker calls up the prospective buyer and arranges a sale. Who would receive commission from the seller? The first broker who tried but failed or the one who called up the buyer for a second shot?

A. In the case of open listings, the whole commission is supposed to go simply to whichever agent sells the property. Disputes do come up, though, with other types of listings. Often, the answer depends on whether the purchaser was legally "abandoned" by the first agent. I'll give you my standard wimpy answer: I don't know all the circumstances and I haven't seen the contracts involved. And for good measure - I am not a lawyer.

Q. My boyfriend and I recently signed a contract on a house. We put down $3,000. The closing is this month. We just learned a family member is selling their house. We would really like to have it. It's $15,000 less with lower taxes. Is it possible to get out of this agreement? And what, if any, will the consequences be?

A. Supposing you still wanted that first house, how would you feel if the sellers had just received another offer for $15,000 more and decided not to sell to you? But I guess there's always a chance of some "out" in your contract, or perhaps the sellers would agree to let you go if they kept your $3,000. At this point, your real estate lawyer is the one to look over the contract and advise you.

•Edith Lank will personally respond to any questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.

2010, Creators Syndicate Inc.