does anyone know real-estate law?

championmama

I may need to post on another board, but i'll try here first.

DH's g-ma died a few years ago, and his aunts are finally ready to go through the house, clear out her stuff and sell.  We are buying it, and plan to use it as rental property.  We are buying it below its value and are using the 'gift of equity" as the down payment. 

Since we're not working with a realtor, we need to come up with our own purchase agreement.  I'm wanting to do that right now, and it's obviously too late to call mortgage broker to ask him about this.

1.  How do I word the "gift of equity"/sellar concession into the document?

2.  The three people on the deed are DH"s two aunts and his father.  His father passed away since the deed was transferred.  Since his name is on the deed, it has to be in the purchase agreement.  My dad says to put (deceased) next to his name, as well as on the line where he would sign.  Does this sound right? 

I'm sure mortgage man can help me with this tomorrow, but I'd really like to get it typed tonight and signed by the aunts tomorrow AM.

Thanks for any help!

JOEBunny

Seriously?  You need a lawyer and an accountant.  If you do this yourself your crazy.  You (and/or your Dh's aunts) could owe if you are audited and do this transfer wrong.  You will also not be able to get clear title, and thus, not get a mortgage, unless the will/estate of your FIL has been probated. 

championmama

We're seeing a lawyer next week about some other stuff, and I asked the mortgage broker about a purchase agreement, but he said since it's not a listed property a general one we came up with ourselves would suffice.  I'm not trying to be dumb about this, but maybe I'm missing something? 

 

championmama

I think i'll just call the lawyer tomorrow and ask to meet with him wednesday or thursday.

JOEBunny

The actual agreement for sale is not a big deal, you can do that on the back of a napkin and have it stand up, but you do have to be careful about trying to buy the house under market, especially if you are just buying out the aunts and using the late FIL's equity.  Someone in my old neighborhood tried to do this, paid $100K for a house worth $160K that belonged to their parents.  In essence, the $60K was the difference.  They could have gifted her part of the $60K over a couple of years and been fine, but they didn't, so the "gift" of the $60K was treated as income and the person owed taxes on it.  If they had just used a true fair market value in the first place and had the money gifted over a couple of years, it would have been fine. 

It is complicated and not easy to fix if you mess it up.  They got caught because one of the neighbors was mad that the false sales price brought down the sales prices on the street and she turned them in to the IRS.