How do I safely buy half a house from my mom?

November 9, 2006 8:54 AM

How do I safely buy half a house from my mom?

For some time, I have been living with my mother to help her out with the bills, which she couldn't afford by herself. I now have enough money to pay off the mortgage on her house. However, I would like to have my name on the title as well. This is partially for my own benefit (I have paid in quite a bit) and partially to prevent my mother, who is prone to doing some highly impractical things, from managing to lose the house I've spent a lot of time, money, and effort into securing for her. Obviously, there will still be taxes and home-owners insurance.

What pitfalls can I avoid? Will my name being on the title exclude me from first-time home buyer advantages later? Do I need a lawyer? I'd obviously like to do this with a minimum of acrimony, but I still want to protect myself.

posted by adipocere to home & garden (12 answers total)

If you have enough money to pay off half the mortgage, you have enough money to pay a lawyer to find out the best way to do it. You will end up saving money. If you are concerned, talk frankly about the economics of the lawyer when you meet with her or him. Ask the lawyer if it with be worth your dime to employ her or him. You should get this one right. That asset is the biggest one she has and you need to protect it.
posted by Ironmouth at 9:13 AM on November 9, 2006

You will need a lawyer. Also, given your situation, you might want to discuss being the sole owner of the property. If your mother truly is prone to accruing lots of debt, creditors still could force the sale of the property if she's on the deed. My folks did this with an elderly grandparent who bought anything and everything that telephone solicitors were offering. It essentially makes them judgement-proof, since they have no substantial assets.
posted by electroboy at 9:13 AM on November 9, 2006 [1 favorite]

If you are in the UK, read this, as the key thing you need to understand is joint tenancy vs tenancy in common. Then talk to a lawyer. I can recommend someone if you want recommendations from total strangers.

I'd guess you would lose "first time buyer" benefits thereafter. If you're not in the UK, ignore me. Or even if you're in Scotland, it's probably different.
posted by crocomancer at 9:15 AM on November 9, 2006

IAAL, but IANYL. You need a lawyer. Make a list of the things you want to achieve, and things you want to avoid, before you go in for a consultation. That should save you some time (which is money). You've got some of that already: you want to have some control over the house, but avoid losing first-time buyer advantages. (You might ask the lawyer exactly what those advantages are, and consider how much they're really worth to you.) Also, discuss with your mother so you're on the same page: what does she want? How much control is she willing to give up?

Good luck.
posted by spacewrench at 9:20 AM on November 9, 2006

Oh, sorry. I meant that I have enough money that I'm capable of paying off the entire mortgage, leaving her free and clear.
posted by adipocere at 9:21 AM on November 9, 2006

You should absolutely get a lawyer, for both of your sakes. If you have enough money to pay off the mortgage, not consulting with a competent attorney is a false economy. If you live in a common law jurisdiction (US, England, Ireland, New Zealand, Australia), you may have an interest in the house because of the payments you have made. It's called a resulting trust - you pay for it, it's at least partly yours, basically, if there are no agreements to the contrary.

But left alone, these things are messy, especially if, god forbid, you and your mother fell out, or your mother had creditors pursuing her. A lawyer will help you arrange things to everyone's benefit.
posted by tiny crocodile at 9:43 AM on November 9, 2006

Second everything else said here too.
posted by tiny crocodile at 9:43 AM on November 9, 2006

Only an attorney would be able to help you figure out what type of ownership interest you would want in the property.

In the U.S. you could be a joint tenancy, which would give you the right of survivorship in her share of the property if something were to happen to your mother (or your share to her). Or you could do other types of ownership where your half would not go to the other owners and would stay in your estate.

You need to think about perhaps giving your mother a life interest in the property, or putting any part of the property in a trust.

Finally, as with any type of property ownership you should think about creating an estate plan.

You have many options. An attorney would most certainly be the best way to figure all this out.

NOTE: I am a law student. I am not licensed to practice law. This is for INFORMATIONAL purposes only.
posted by irisell at 10:02 AM on November 9, 2006 [1 favorite]

What you may want to consider is a gift of equity purchase between your mother (seller) and you (buyer). Completely legitimate when done between family members. Considering your concerns re: your mother's impracticality, you may want to be vested on title as sole and seperate owner of the property when the deal closes. YMMV if you are not in the US
posted by Carnage Asada at 10:14 AM on November 9, 2006

Quit Claim Deed
posted by oh posey at 10:22 AM on November 9, 2006

What kind of lawyer do I look for? Is there a special type I need to look for, because I imagine your everyday guy doesn't know much about it.
posted by adipocere at 10:54 AM on November 9, 2006

You need a real estate lawyer. I'd also talk to an accountant because in Canada at least there are Capital gains implications from performing this transaction.
posted by Mitheral at 12:33 PM on November 9, 2006