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Weird deal as my in-laws sell the MIL's house


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2016 Oct 31, 8:22am   11,347 views  34 comments

by CL   ➕follow (1)   💰tip   ignore  

The MIL has now moved into a facility, which is a desirable outcome overall. As is common and predictable, there were some disagreements and acrimony related to the POAs and what they mean, and whether the daughter entrusted with financial type duties was performing them as well as she could have, charges mostly leveled by a lone sibling who seems to have paranoia issues in general.

So, he made a move wherein he had a lawyer draft a new POA, which of course, superseded the CPA daughter from the POA, and left him as both the medical and the financial
attorney-in-fact. (I know these only are in play if the MIL were incapacitated, yet the momentum and the MIL's acquiescence has made it de facto responsibilities)

Since the brother lives somewhat close, the MIL has settled into her old folks' home and the rest of the siblings are scattered throughout the country, the brother who has seized control is now anxious to sell the house so as to avoid maintenance and needless visits. He arranged a sale with a friend for around 200k, and all seemed ready to go. However, he discovered that the Recorder's office had some weird docs on file that said that his sister (the one he has been aggressive towards) was specified as the mortgagee, with a dollar amount specified at $62,500 with 7% interest per annum. The docs have been on file since 1999.

Any idea what my father-in-law could have been thinking? I talked to the SIL, and she gave me some vague story but I still don't see what benefit my FIL might have received by having these drawn up.

Thanks in advance for your insights!

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1   CL   2016 Nov 1, 9:00am  

Any housing pros still around? No worries if nobody knows, but obviously you're the first people I thought of to point me in the right direction.

Thanks!

2   Strategist   2016 Nov 1, 9:58am  

Confusing post.

3   CL   2016 Nov 1, 10:02am  

Strategist says

Confusing post.

Not sure where it confuses, but basically FIL died, siblings had duties per the FIL's will. Paranoid BIL has bumped the CPA sister and now has both medical and financial duties. As he goes to sell the house, there is doc at the County Recorder's office saying that the now-violated sister is to be paid 62K plus interest from the house (which I believe would come out to over 200K, the entire proceeds from the sale).

Isn't that a weird thing, or is anyone familiar with that kind of doc or structure? HTH!

4   FNWGMOBDVZXDNW   2016 Nov 1, 10:07am  

My reading of the post:
POA = power of attorney.
MIL first gave POA to daughter 1.
The MIL is still in full capacity, and she signed the new POA docs giving POA to son 1.
In 1999, MIL borrowed $62,500 from daughter 1 at 7% interest.

Questions:
Did daughter 1 transfer $62,500 to MIL in 1999, or was it just on paper.
Has MIL been paying monthly to daughter 1?
Is FIL still alive? Sounds like no.
Is $200K a fair price for the house?

5   Strategist   2016 Nov 1, 10:08am  

The sister must have lent money to FIL. She would need to get paid unless there was some fraud involved.

6   Ceffer   2016 Nov 1, 10:09am  

FIL must have taken a loan from CPA and never told anybody. Estate owes CPA the dough, unless through duress, CPA made FIL sign something he didn't understand when she had authority. CPA would have to demonstrate loan to FIL to justify note.

7   CL   2016 Nov 1, 10:41am  

YesYNot says

Questions:

Did daughter 1 transfer $62,500 to MIL in 1999, or was it just on paper.

Has MIL been paying monthly to daughter 1?

Is FIL still alive? Sounds like no.

Is $200K a fair price for the house?

I have a feeling it was on paper
I don't believe any money has changed hands, either at the beginning or monthly since (1999)
FIL is dead, MIL has moved into a home. That is what prompted the pending sale, and the resultant docs.
I think 200k is reasonable. It's Indiana, so they should be happy anyone still wants to live in that state. :)

8   Tampajoe   2016 Nov 1, 10:43am  

I'd say they should do a comparative market analysis of the house--many realtors will do it for free in hopes of getting the listing. Any time someone has a buyer ready without it going on the market--it's usually under market price.

9   CL   2016 Nov 1, 10:44am  

Ceffer says

FIL must have taken a loan from CPA and never told anybody. Estate owes CPA the dough, unless through duress, CPA made FIL sign something he didn't understand when she had authority. CPA would have to demonstrate loan to FIL to justify note.

I don't think she could have done anything like that in 1999, since he was fully in charge of his faculties, and POA was not yet designated.

I don't think she was in a position to lend him money, nor would he have needed it since he had assets.

Could he have done so for a smooth transfer of title if they had both died, or some weird reverse mortgage-y type deal?

The documents don't appear to be signed by both parties, but it is holding up the sale regardless.

Weird! Thank you all.

10   CL   2016 Nov 1, 10:46am  

Tampajoe says

I'd say they should do a comparative market analysis of the house--many realtors will do it for free in hopes of getting the listing. Any time someone has a buyer ready without it going on the market--it's usually under market price.

The buyer is a friend of the BIL, and the neighborhood is desirable. Story goes they just want it sold before harsh Indiana winter and 6 months of checking the pipes and scaring out any crackhead cooper fixture thieves.

11   Strategist   2016 Nov 1, 10:47am  

What does the sister say? She's in the middle of it all.

12   Tampajoe   2016 Nov 1, 10:47am  

The buyer is a friend of the BIL, and the neighborhood is desirable. Story goes they just want it sold before harsh Indiana winter and 6 months of checking the pipes and scaring out any crackhead cooper fixture thieves.

I'm sure all of that is true, but I'd also bet that $200K is under market for that area. What part of IN is it in? Chicago area? Indy?

13   CL   2016 Nov 1, 10:53am  

Tampajoe says

I'm sure all of that is true, but I'd also bet that $200K is under market for that area. What part of IN is it in? Chicago area? Indy?

Chicago area. http://www.zillow.com/lake-county-in/home-values/

14   CL   2016 Nov 1, 10:54am  

Strategist says

What does the sister say? She's in the middle of it all.

She mumbled something about him wanting to make it easier, so the MIL wouldn't be left homeless in the event of whatsit or whozit. After I got off the phone, I thought to myself, "I have no idea how owing (or pretending to owe) her money would ever help the FIL."

15   FNWGMOBDVZXDNW   2016 Nov 1, 10:55am  

Tampajoe says

I'm sure all of that is true, but I'd also bet that $200K is under market for that area.

Sounds like that is true. If the BIL is not doing anything shady, he should get a comparative market analysis just to show his relatives that he's not screwing them.

CL says

The documents don't appear to be signed by both parties,

The loan docs? Were they signed by the people who own the house? It seems to me that they would have to be signed by everyone who is on the title. You cannot loan someone more than a set limit without it being a documented loan without it being considered a gift on taxes. Because of that, it seems that you cannot document a loan that never happened without that being considered a gift in the other direction. It's unlikely that anyone would try to use that, but it's pretty shady if they did the docs without money transferred.

I take it the MIL doesn't know anything about the 'loan'?

16   Strategist   2016 Nov 1, 10:59am  

CL says

Strategist says

What does the sister say? She's in the middle of it all.

She mumbled something about him wanting to make it easier, so the MIL wouldn't be left homeless in the event of whatsit or whozit. After I got off the phone, I thought to myself, "I have no idea how owing (or pretending to owe) her money would ever help the FIL."

Makes no sense at all. Did she lend the money, and can she prove it, is the bottom line. The $62,500 loan compounded at 7% will be around $200,000, leaving nothing to be divided among the heirs.

17   Tampajoe   2016 Nov 1, 11:00am  

Chicago area. http://www.zillow.com/lake-county-in/home-values/

Lake county, IN is a large area. Prices will vary substantially depending on if it's Dyer/Schererville or Gary/Hammond....

18   CL   2016 Nov 1, 11:20am  

YesYNot says

I take it the MIL doesn't know anything about the 'loan'?

Good points, and nope. She has always been the one not involved in their finances and has no acumen.

19   CL   2016 Nov 1, 11:21am  

Strategist says

Makes no sense at all. Did she lend the money, and can she prove it, is the bottom line. The $62,500 loan compounded at 7% will be around $200,000, leaving nothing to be divided among the heirs.

I don't believe she did, and she has no interest in proving she did. She's not asserting that she did, although there is collective schadenfreude that it happened.

20   CL   2016 Nov 1, 11:22am  

Tampajoe says

Lake county, IN is a large area. Prices will vary substantially depending on if it's Dyer/Schererville or Gary/Hammond....

Right. I think there are new developments in the area for a similar amount, but they're new and larger. This is near the courthouse.

21   Ceffer   2016 Nov 1, 12:53pm  

If CPA isn't claiming to have given FIL a loan, and has never collected a payment, and doesn't make a point of it, or doesn't know why it is there, then get her to sign a release of the note on the title to sell and divide the proceeds. If a loan was never given, and a payment never made, the loan issue is a bit moot. FIL would have to have a specific statement of intent that he intended to bestow the note on CPA prior to any estate issues. If nobody knows FIL's motives, then CPA would have to be a real asshole to claim on the note, especially if she doesn't claim to know anything about it, never lent money, and never received a payment.

22   truth will find you   2016 Nov 1, 1:14pm  

CL says

I don't believe she did, and she has no interest in proving she did. She's not asserting that she did, although there is collective schadenfreude that it happened.

She doesn't need to prove it, a recorded lien is the most solid proof in the world, unless you can find a release from her, either recorded, notarized, or that she acknowledges.

So, bottom line:

legally, with no change in these facts, the estate owes her the exact amount specified. depending on months, about 185k to 198K or somesuch...
Also, the home can't be sold with a clear title, without that release, either agreed to, or paid.

options?
1. pay her.
2. she signs a release saying the debt is already satisfied in the past.

nothing else really comes to mind.

23   CL   2016 Nov 2, 3:10pm  

A few interesting things I discovered, that maybe you smart folks could opine on.

I was reading about Reverse mortgages (some family was researching so I thought I'd join them), and found that before 2014 there were issues, like:
https://en.wikipedia.org/wiki/Reverse_mortgage
"On 25 April 2014, FHA revised the HECM age eligibility requirements to extend certain protections to spouses younger than age 62. Under the old guidelines, the reverse mortgage could only be written for the spouse who was 62 or older. If the older spouse died, the reverse mortgage balance became due and payable. If the surviving spouse didn't have the ability to pay off or refinance the reverse mortgage balance, he or she was forced to either sell or give up ownership of the home. This often created a significant hardship for spouses of deceased HECM mortgagors, so FHA revised the eligibility requirements in Mortgagee Letter 2014-07.[21] Under the new guidelines, spouses who are younger than age 62 at the time of origination retain the protections offered by the HECM program if the older spouses dies. This means that the surviving spouse can remain living in the home without having to repay the reverse mortgage balance as long as they keep up with property taxes and homeowners insurance and maintain the home to a reasonable level."

What was interesting is that the FIL was 61 in '99 (before they changed the guidelines). If it was commonplace back then, could he have been trying to prevent that from happening to his wife? Or otherwise prevent a creditor from taking the property if he was not around? What could it possibly have to do with Reverse Mortgages?

Alternatively, this seems like effectively to be a lien. Like @Truth will find you said, the sale cannot go forward without it, right? Could he have been trying to prevent any sale without his fiscally conservative CPA daughter being knee-deep in it?

Thanks again everyone.

24   Strategist   2016 Nov 2, 3:18pm  

CL says

Alternatively, this seems like effectively to be a lien. Like @Truth will find you said, the sale cannot go forward without it, right? Could he have been trying to prevent any sale without his fiscally conservative CPA daughter being knee-deep in it?

Thanks again everyone.

Doubt it. FIL did nougat a reverse mortgage. Either sister loaned the money or not. The sale cannot go forward without resolving this first.
Hello mess.

25   truth will find you   2016 Nov 2, 3:32pm  

Strategist says

Either sister loaned the money or not. The sale cannot go forward without resolving this first.

Hello mess.

Mostly correct. however, a recorded lien will almost certainly count as proof that the loan was real. Sister will be under no obligation to prove she actually loaned the money, the lien without a release is proof.

26   Strategist   2016 Nov 2, 3:33pm  

truth will find you says

Strategist says

Either sister loaned the money or not. The sale cannot go forward without resolving this first.


Hello mess.

Mostly correct. however, a recorded lien will almost certainly count as proof that the loan was real. Sister will be under no obligation to prove she actually loaned the money, the lien without a release is proof.

The other heirs could stop the sale by filing a law suit. The sister would have to prove she loaned the money.

27   truth will find you   2016 Nov 2, 3:52pm  

Strategist says

The other heirs could stop the sale by filing a law suit. The sister would have to prove she loaned the money.

anyone can file a lawsuit about anything, but unlikely to win. A notarized recorded lien is literally the 100% gold standard of proof that a loan existed.

28   Strategist   2016 Nov 2, 3:55pm  

truth will find you says

Strategist says

The other heirs could stop the sale by filing a law suit. The sister would have to prove she loaned the money.

anyone can file a lawsuit about anything, but unlikely to win. A notarized recorded lien is literally the 100% gold standard of proof that a loan existed.

My guess, they will work something out.

29   truth will find you   2016 Nov 2, 4:03pm  

Strategist says

My guess, they will work something out.

likely. When my grandfather died 40 years ago, his live in girlfriend sued for "unpaid rent" as he had lived with her for several years. No lease. nothing in writing, she just sued for rent for literally nearly a decade. Who knows what their arrangement really was, maybe he paid for all the utilities and food. If she was not being paid rent she was owed, why not kick him out after say a year?

Anywho, as the rest of the family got tired of waiting, they negotiated with her. I can't think of a claim much less likely to win in court, but she did tie it up for a year or two.

30   zzyzzx   2016 Nov 2, 4:42pm  

CL says

Not sure where it confuses

All the acronyms is part of what's confusing.

31   CL   2016 Nov 3, 10:23am  

zzyzzx is deplorable says

All the acronyms is part of what's confusing.

We call those "ACNs". :)

90% of my acronyms are "in-law", and the other 2 are CPA and Power-of-Attorney. Figgered I was doing you all a favor by avoiding the full words.

Thanks everyone!

32   Ceffer   2016 Nov 3, 10:35am  

Sounds like the estate is going to wind up lawyer fee food and all be consumed as the relatives walk away with nothing except hating each other forever, as per usual usual.

33   CL   2016 Nov 3, 11:33am  

Ceffer says

as the relatives walk away with nothing except hating each other forever, as per usual usual.

It's an all too common occurrence.

34   Y   2016 Nov 3, 12:33pm  

if you could provide an address of a similar size house and lot within a couple blocks then you get much closer to the accurate market value. Zillow it for starters.

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