Protecting a personal loan to a relative - Posted by wanabee

Posted by BTI on May 15, 2006 at 12:32:12:

Don’t learn the hard way. If your going to do this you make the payments directly to the parties that need to be paid. Yes you can be wiped out in a tax sale. Get a note and mortgage/trust deed to secure your loan, family needs to be kept on a business basis too.

When I was a young investor I had a brother and 3 friends who were also investors and our word to each other was as good as gold, if we needed some money quick we could borrow from the others with just an I.O.U. (and that was just for our wives benefit, in case we died they would know what was due or owed) but when each of us tried to do that with family or best friends, we got burned and wrote it off to experience. So keep it on a business level, maybe he should sell depending of what his future looks like for the next few years, some times it just better to regroup.

Protecting a personal loan to a relative - Posted by wanabee

Posted by wanabee on May 15, 2006 at 08:51:31:

Hello All:

I want to help out a relative who is in a bit of a financial crisis. Is it possible to lend him my own money to pay off back taxes and immediate repairs on his home, but protect myself by putting a lien or personal mortgage against his property? Would I get him to sign some sort of collateralized note or another form of lien (mechanics?)? This would be for over $10k. Also if the city was to actually take his property to Tax Sale (assuming the remote possibilty my money was used for another purpose), would it be sold subject to my mortgage/lien against the property or does it get washed away? Do I just go at bid on it if it were to come to that? I am in PA. Thanks for your replies. – wanabee