Posted by Ronald * Starr(in No CA) on July 07, 2002 at 20:52:55:
John Merchant-----------------
I was about to say that I really like your post.
Then, I noticed that you have a JD. So you know about what you are speaking.
I still like your post. I feel that you gave Kenny good advice.
Good Investing and Good Advising**********Ron Starr**************
Transfer ownership—Legal Questions !!! - Posted by Kenny
Posted by Kenny on July 06, 2002 at 10:45:46:
This is more of a legal question. My mother owns 3 rentals and her primary residence. Her primary residence is paid for but the rentals are not. She is not in great health and I wanted to transfer her primary residence into my name without any legal ramifications. What is the best way to avoid probate and also create a valid sale?? Can she sell the house to me for $1.00?? Is this legal?? I once heard that even in a transfer, there is a waiting time before it can truly be valid. 3yrs.??? About those rentals her name is on the mortgages. What happens if she die’s prior to paying them off?? Don’t know which way to turn to. Do I need to get legal advise from local Attorney?? Can I do this myself??? With a little help from the pros here on this site.
Thanks in advance…
Re: Transfer ownership—Legal Questions !!! - Posted by GL(ON)
Posted by GL(ON) on July 07, 2002 at 05:49:11:
I have seen a deed at the registry office (court house) on which the consideration was “natural love and affection”. In other words not a penny was paid for the property. This was a transfer from a mother to a son in circumstances similar to what you describe.
The best way is to consult a lawyer, so it is done in the proper form. And this is important. If there is ever a question in future whether this was a legitimate transaction which your mother entered into of her own free will, with full knowlege, then you need to be able to prove she had independent council.
Re: Transfer ownership—Legal Questions !!! - Posted by Edwin de Lepper
Posted by Edwin de Lepper on July 06, 2002 at 12:04:47:
Hello Kenny,
I’m not a legal expert and just started in real estate myself. Whenever I have legal questions I call the best law firm in town. Not that I can afford a lawyer at $200 an hour but my membership with Pre-Paid Legal Services gives access to them for $0.87 a day. You could benefit from this service every day! The will review contracts, give you unlimited legal advise by phone and you have access to them when you need them. Guaranteed! Look at www.prepaidlegal.com/go/kherndelepper
Best of luck!
Kind Regards,
Edwin de Lepper
Re: Transfer ownership—Legal Questions !!! - Posted by Dave T
Posted by Dave T on July 06, 2002 at 11:58:15:
You said “I wanted to transfer her primary residence into my name without any legal ramifications”.
Why do you want to do this?
Why does it have to be a sale?
What does your Mother want to do?
Does your Mother have a will?
If your Mother dies, do you inherit the house anyway? If so, and if there is a significant amount of equity in the property, from a tax standpoint it would be better for you to inherit the property. When you inherit, the property’s basis is established by an appraisal. If you later sell the property, you may eliminate all taxes on the profit. If your Mother gives you the house, your basis is her original cost basis. Now if you decide to sell, the difference between your selling price and your Mother’s basis is your taxable profit.
There does not have to be a sale for your Mother to transfer property to you – she could just add your name to the deed. If your Mother adds your name to the deed as a joint tenant with right of survivorship, the house is excluded from probate.
What will you do with the rentals if you get control of them? Will you continue to maintain them as rentals? Who manages the properties now (screens tenants, collects rents, supervises repairs, etc.)? If your Mother is doing all this now, but her health is failing, perhaps she should hire a professional management company to do all this instead. Then the day to day management of the rental properties goes on despite of your Mother’s health.
At your Mother’s death, the mortgages on the rental properties will still have to be paid. The executor of your Mother’s estate will take over this responsibility until the properties are probated. Putting the rental properties into a living trust will allow the rentals to bypass probate as well.
I have raised a lot of questions here and I don’t really expect you to answer. There are several ways to address your questions, but some of the solutions may not be the best for either you or your Mother. Instead, I suggest that you and your Mother need to be talking to someone well versed in estate planning who can help you answer each of these questions and really help your Mother structure an estate plan that preserves the bulk of her estate for her legacy.
Re: Transfer ownership-Some legal issues - Posted by John Merchant,JD
Posted by John Merchant,JD on July 06, 2002 at 11:41:06:
Depends on a number of things, whether this is simple Quit Claim Deed situation, or not.
If you were sitting down with a local (where the property is, not your or your Mom’s state)lawyer who does some RE work and practice, he/she would ask you these questions:
If it’s just you, as an only child, probably a simple QC Deed will work.
Nothing stopping your Mom, probably from giving her property to anybody she wants-unless she’s mentally questionable.
If she has a history of mental problems, such as Altheimer’s (sp?), and she is cutting out other sibs or their kids, those guys could come into court later and claim they were defrauded, because the Deed Grantor (your Mom) wasn’t legally competent to grant or deed anything, at the time she did it.
I think most any lawyer would advise you, if there are other sibs, or their kids, being cut out, to maybe have a psychiatrist examine your Mom to be able to testify later that indeed the lady was in perfect mental health at the time of the Deed’s execution and delivery.
I’ve seen some really ugly Will contests and court battles, that totally destroyed the family ties, and your Mom could prevent this by careful planning right now.
She might want to also do a new Will, stating what she is doing, or has done, and explaining it, and also inserting a non-contestable provision, to-wit that any heir or beneficiary who does file or assert any kind of will contest does thereby forfeit any devise or grant to that beneficiary.
This provision is quite common and makes the would-be contestant think twice before filing a contest.
Be aware that a QC Deed only grants what the Grantor owns, so if her title is in any way flawed, or incomplete, so would any grant from her likewise be flawed. So this should be explored while she is still living.
My advice would be to make an appointment, and talk to a local attorney and get some legal advice when it can do you and your Mom the most good…while she’s in OK condition and mental health. This would be money well spent.
Good post & great advice ! - Posted by John Merchant,JD
Posted by John Merchant,JD on July 07, 2002 at 08:05:43:
Absolutely right!
A lot of very savvy investors insert language in their offers to buy, to the effect that Seller is advised to seek legal advice from his/her own attorney so there’s no later claim of over-reaching or fraud.
I’ve even gone so far as to make an appointment with, and take the other party to a knowledgeable RE attorney and PAY a small fee to that lawyer (to represent the Seller, NOT ME, so that party couldn’t come back at me later with any kind of claim that I was guilty of trying to slip anything by the Seller.