Is it possible to sell your claim to some land before you inherit it?
December 9, 2007 9:09 AM Subscribe
My parents own some land which I’ll inherit one day. I was wondering if it's possible to sell my claim to the land before I’ve actually inherited it?
Hello,
My parents own some land which I’ll inherit one day. At the moment I’m having some financial problems and I was wondering if it were possible to sell my claim to the land before I’ve actually inherited it? For example, could I sell my claim to the land now for 10% of its market value, with transfer of ownership happening in 2035?
It might seem like a strange idea, but it’s effectively a 1000% return in real terms to the person who invests in the land (possibly more, as the value of the land rises over time). Ideally I’d rather not sell any of my parents’ land. This is a last resort (financial and other situations are very bad).
I’d also like to be able to buy the land back in future (or a portion of it) if I can somehow afford the market value.
Does anyone know if this is possible, e.g. through some sort of contract?
I’d appreciate any advice you can give me on the above.
Thanks in advance.
Regards
Hello,
My parents own some land which I’ll inherit one day. At the moment I’m having some financial problems and I was wondering if it were possible to sell my claim to the land before I’ve actually inherited it? For example, could I sell my claim to the land now for 10% of its market value, with transfer of ownership happening in 2035?
It might seem like a strange idea, but it’s effectively a 1000% return in real terms to the person who invests in the land (possibly more, as the value of the land rises over time). Ideally I’d rather not sell any of my parents’ land. This is a last resort (financial and other situations are very bad).
I’d also like to be able to buy the land back in future (or a portion of it) if I can somehow afford the market value.
Does anyone know if this is possible, e.g. through some sort of contract?
I’d appreciate any advice you can give me on the above.
Thanks in advance.
Regards
First of all, where is the land located and where would the sale take place? (Those facts matter for figuring out what's legal for you)
Second of all, do your parents agree to this? If they don't, they could just choose not to will you the land in the first place.
posted by LobsterMitten at 9:14 AM on December 9, 2007
Second of all, do your parents agree to this? If they don't, they could just choose not to will you the land in the first place.
posted by LobsterMitten at 9:14 AM on December 9, 2007
My parents own some land which I’ll inherit one day.
This is not a given. What if they change their last will and testament? There is no contract that you can sign that will make them unable to change their will whenever they want.
Imagine that you find a buyer for your scheme, then you tell your folks about it and are written out of their will and you inherit nothing. If you inherit nothing, then your buyer gets nothing. Who would buy a scheme like this?
posted by kuujjuarapik at 9:18 AM on December 9, 2007 [1 favorite]
This is not a given. What if they change their last will and testament? There is no contract that you can sign that will make them unable to change their will whenever they want.
Imagine that you find a buyer for your scheme, then you tell your folks about it and are written out of their will and you inherit nothing. If you inherit nothing, then your buyer gets nothing. Who would buy a scheme like this?
posted by kuujjuarapik at 9:18 AM on December 9, 2007 [1 favorite]
It is not, in general, possible to tell who will inherit land upon its owner's passing. (It is possible to determine who would inherit if the owner died right now, but unless he does so, that information goes out of date quickly.)
To answer your question directly, yes, under most systems of law I know something about, you can do what you propose. One way would be to sell a quitclaim to the land. That says, more or less, "if I have or ever acquire any interest in the land, it belongs to you." Normally one would quitclaim a fee simple interest (ordinary ownership of land in perpetuity) but I suppose you could quitclaim a shorter interest (i.e., "if I have or ever acquire any interest in the land, it is yours for 10 years, after which it reverts to me.")
I think it's exceedingly unlikely that anyone would pay for such an interest, because it's worthless against anyone but you. For example, if your parents found out about the quitclaim and weren't happy about it, they could just give or devise the land to a charity -- you'd never see it, and the quitclaim would be worthless. However, if you find someone who's buying, I might be willing to sell a quitclaim to some large and important real estate in New York...
posted by spacewrench at 9:20 AM on December 9, 2007
To answer your question directly, yes, under most systems of law I know something about, you can do what you propose. One way would be to sell a quitclaim to the land. That says, more or less, "if I have or ever acquire any interest in the land, it belongs to you." Normally one would quitclaim a fee simple interest (ordinary ownership of land in perpetuity) but I suppose you could quitclaim a shorter interest (i.e., "if I have or ever acquire any interest in the land, it is yours for 10 years, after which it reverts to me.")
I think it's exceedingly unlikely that anyone would pay for such an interest, because it's worthless against anyone but you. For example, if your parents found out about the quitclaim and weren't happy about it, they could just give or devise the land to a charity -- you'd never see it, and the quitclaim would be worthless. However, if you find someone who's buying, I might be willing to sell a quitclaim to some large and important real estate in New York...
posted by spacewrench at 9:20 AM on December 9, 2007
IANAL, BIAALSWCSFHFEIW
(But I Am A Law Student Who's Currently Studying For His Final Examination In Wills) :p
As far as the above comments go, I believe they're correct- you certainly cannot sell something you expect to inherit, as you've got no legal right to it until the will is executed upon the death of your parents.
Theoretically, however, it is still possible to achieve what you want, assuming your parents are willing to cooperate.
Your parents could give you a future interest now, retaining a life estate in the property for themselves. Functionally, this is similar to willing you the land, except that it's effective immediately- you'd have a legal interest in the land that would only become possessory upon their death. You'd then be perfectly free to sell this interest to anyone who was interested in buying land that they couldn't actually use for some time yet. Nothing in this arrangement would violate the rule against perpetuities.
Having said that, two caveats:
First, this is all under the common law. I have no idea if your jurisdiction still applies these rules, and it's quite possible that it does not.
Second, it's a horrible idea, and any decent attorney would strongly advise you (and, even more strongly, your parents) not to do it. Most of these crazy common law rules and doctrines have been largely phased out in favor of the much more flexible and capable law of trusts.
posted by Shiva88 at 9:40 AM on December 9, 2007 [1 favorite]
(But I Am A Law Student Who's Currently Studying For His Final Examination In Wills) :p
As far as the above comments go, I believe they're correct- you certainly cannot sell something you expect to inherit, as you've got no legal right to it until the will is executed upon the death of your parents.
Theoretically, however, it is still possible to achieve what you want, assuming your parents are willing to cooperate.
Your parents could give you a future interest now, retaining a life estate in the property for themselves. Functionally, this is similar to willing you the land, except that it's effective immediately- you'd have a legal interest in the land that would only become possessory upon their death. You'd then be perfectly free to sell this interest to anyone who was interested in buying land that they couldn't actually use for some time yet. Nothing in this arrangement would violate the rule against perpetuities.
Having said that, two caveats:
First, this is all under the common law. I have no idea if your jurisdiction still applies these rules, and it's quite possible that it does not.
Second, it's a horrible idea, and any decent attorney would strongly advise you (and, even more strongly, your parents) not to do it. Most of these crazy common law rules and doctrines have been largely phased out in favor of the much more flexible and capable law of trusts.
posted by Shiva88 at 9:40 AM on December 9, 2007 [1 favorite]
You could probably sell someone an option to buy the land at a certain price if you inherit it. They'd be taking a gamble so the option wouldn't be worth much.
posted by unSane at 9:45 AM on December 9, 2007
posted by unSane at 9:45 AM on December 9, 2007
Even if it were possible to do this (for example if your parents actually deeded you a share or gave you the future interest as Shiva mentions), you could well end up on the losing end of the deal, because there is no way to determine the future value. If unforeseen events make the land vastly more valuable than it is now (somebody builds a casino next door, for example), you will have sold your birthright for a bowl of porridge.
posted by beagle at 9:54 AM on December 9, 2007
posted by beagle at 9:54 AM on December 9, 2007
A "mess of pottage" is what I meant. Same difference.
ML
posted by beagle at 9:55 AM on December 9, 2007
ML
posted by beagle at 9:55 AM on December 9, 2007
I have been in a somewhat closely related situation. If you were to somehow do this, even perhaps with your parent's consent, you would be forcing them into a business deal with a stranger, who may not have their best financial interests at heart.
What if said stranger sells his share again, to someone unscrupulous who tries to take the remaining parcel from your parents, forcing them into an expensive legal battle? Or, what if he gets the inside scoop on a development deal, and persuades your parents to sell the land to him cheap so he can resell to the developer? Etc, etc, etc.
Please don't open this can of worms.
posted by vignettist at 10:11 AM on December 9, 2007
What if said stranger sells his share again, to someone unscrupulous who tries to take the remaining parcel from your parents, forcing them into an expensive legal battle? Or, what if he gets the inside scoop on a development deal, and persuades your parents to sell the land to him cheap so he can resell to the developer? Etc, etc, etc.
Please don't open this can of worms.
posted by vignettist at 10:11 AM on December 9, 2007
The only exception to the quite correct discussion about the difficulty in selling your interest in the land would be if you were the remainderman for your parents' life interest. That might happen if, say, your grandfather had bequethed the land to your parents, for the duration of their life, and then to you. This would be an actuarially valuable and marketable interest (depending on how property law works where you live), which you could probably borrow against. However, the people that buy this sort of interest tend to know that the people they're buying off tend to be in need of cash, and then you would have to figure in the value of your parents' life interest.
In short, you probably can't do it. If you can find a way, there will be very little money in it and you will be very likely to lose out long term. (IANAL!)
posted by prentiz at 10:38 AM on December 9, 2007
In short, you probably can't do it. If you can find a way, there will be very little money in it and you will be very likely to lose out long term. (IANAL!)
posted by prentiz at 10:38 AM on December 9, 2007
This is a bad idea. I'm a law student, so I know there are a couple ways you could do this, but there are many reasons why you shouldn't.
Go see a financial counselor, cut your monthly expenses to the bare minimum, etc. etc. If you're truly in super-dire financial straits that will exist up until you gain ownership of the land, suggest to your parents that they ask an attorney help them protect the land from your creditors when you get it.
This is a much better and more financially rewarding plan than trying to sell off a future interest.
posted by lockestockbarrel at 10:47 AM on December 9, 2007
Go see a financial counselor, cut your monthly expenses to the bare minimum, etc. etc. If you're truly in super-dire financial straits that will exist up until you gain ownership of the land, suggest to your parents that they ask an attorney help them protect the land from your creditors when you get it.
This is a much better and more financially rewarding plan than trying to sell off a future interest.
posted by lockestockbarrel at 10:47 AM on December 9, 2007
Such a contract seems to violate the Rule against perpetuities which is a pretty firmly entrenched principle of common law.
Maybe I misunderstand, but my reading is that the transfer would take place upon the death of the OP's last surviving parent. The rule against perpetuities won't play any role in this. All other caveats and reservations above should be heeded though.
posted by the christopher hundreds at 11:09 AM on December 9, 2007
Maybe I misunderstand, but my reading is that the transfer would take place upon the death of the OP's last surviving parent. The rule against perpetuities won't play any role in this. All other caveats and reservations above should be heeded though.
posted by the christopher hundreds at 11:09 AM on December 9, 2007
My parents own some land which I’ll inherit one day.
Not if you step in front of a bus this afternoon while talking on your mobile phone.
posted by wfrgms at 12:43 PM on December 9, 2007
Not if you step in front of a bus this afternoon while talking on your mobile phone.
posted by wfrgms at 12:43 PM on December 9, 2007
You need a lawyer to answer this question for you. We don't know what state you live in, nor are any of us your attorney (and it seems that most who have answered this question with any detail are soon-to-be-but-not-quite-yet attorneys, ala law students.)
Shiva88 has some pretty good advice in this thread. I still think it's possible you'll run into the rule against perpetuities if you go through with this, but it depends on the state (because it's not valid anymore in some states.) The way I'd write this is life estate to your parents -> then to X (the person you have sold your interest to) but subject to Y (that's you) or Y's heir's right of first refusal to buy the property at fair market value. The thing I'm unsure of is whether the option to purchase violates the rule against perpetuities, or whether it's an unreasonable restriction on the alienability of land. Obviously, if mentioned above, you'd need your parents' cooperation for this to work.
But yeah, find a lawyer. This law student has to study for finals now :-)
posted by Happydaz at 1:38 PM on December 9, 2007
Shiva88 has some pretty good advice in this thread. I still think it's possible you'll run into the rule against perpetuities if you go through with this, but it depends on the state (because it's not valid anymore in some states.) The way I'd write this is life estate to your parents -> then to X (the person you have sold your interest to) but subject to Y (that's you) or Y's heir's right of first refusal to buy the property at fair market value. The thing I'm unsure of is whether the option to purchase violates the rule against perpetuities, or whether it's an unreasonable restriction on the alienability of land. Obviously, if mentioned above, you'd need your parents' cooperation for this to work.
But yeah, find a lawyer. This law student has to study for finals now :-)
posted by Happydaz at 1:38 PM on December 9, 2007
Sorry to drag this thread out on such a minor point, but can someone explain how the rule against perpetuities could have any bearing on this kind of transaction? We're not talking about as-yet-unborn great grandchildren, the measuring lives here are the poster's parents who are necessarily already alive. I understand the poster can't sell something he has no claim on, but that's a separate issue. Two people have mentioned the rule against perpetuities, but I don't get it.
posted by the christopher hundreds at 5:09 PM on December 11, 2007
posted by the christopher hundreds at 5:09 PM on December 11, 2007
This thread is closed to new comments.
Also, there'd be nothing to prevent your parents from changing their will once you had sold your interest, so only a real sucker would take the other end of this contract.
posted by ikkyu2 at 9:14 AM on December 9, 2007