How can I legally take over pymts on my sisters house?

Question

My sister is moving out of the area and asked me to move into her house and take over payments. She refi'ed recently and has a 3 yr hard prepay, thats the reason she won't sell right now. So I agreed to keep house in her name for 2 years and make regular payments, until I put house in my name.
So if we put my name on title (quit claim) can we take her off in 2 years and refi just in my name? or does she have to sell the house to me?

Answer 1

Get the house in your name TODAY. Have her quitclaim the home to you when you agree to start making the payments. You should also write up a simple agreement stating that you agree to make the payments on time and refi when the prepay is up.

You need to protect yourself against future success. I have seen this situation before wherre teh seller came back later and wanted to keep the property because the home went up in value more than they anticipated. You are saving your sster probably about $10,000 by allowing her prepay to expire. Transfering the property will protect you.

It is possible that the lender will not like the transfer (many loans have a "due on sale" clause) but they are VERY VERY unlikely to act on it as long as the payments are baing made on time. They do not want the property - they want the loan payments. I have done this myself dozaens of times and have never seen a lender act on a Quitclaim transfer - they are VERY common.

BTW - verbal agreements are not enfoceable in real estate sales. Get you ragreement with your sister in writing.

Answer 2

The mortgage company won't care WHO pays the money as long as it comes in on time. BUT your sister is still responsible for the debt.

Here are some background suggestions:

1) People change (even sisters). If that is your deal now, put it in writing so that there is no question about what you meant today after two years have passed.

2) If she will give you a quit claim now for her interest in the property that is good. You do not need to record it for it to be valid. Simply agree in the initial document (item #1) to hold on to it until a certain date and to then record it. Your document will also need to stipulate things like who pays the taxes and who claims the interest on the note etc.. don't forget things like that. If you BOTH claim the interest, the IRS may end up owning the house.

3) If you agree to a later recording, there is no reason that she can not give you a GRANT DEED for the land. That is a better document then a quit claim as long as she is the sole owner of the property (she is - right?). The GRANT DEED is the token of sale - you can specify in your document (item #1) how much money you are giving her and when. Check with the tax people to make sure that you have the 'sale' occur in two years and not today. That will avoid any tax issues on that matter

4) When the time comes to make a transfer, you can take the grant deed to a mortgage company and get your own loan which will be used to pay off her note (plus mayber some cash back to you?). The escrow company will take care of all of the title and transfers and when the process is done you will be the owner (and debt ower).

Its a fairly simple process. You simply need to be very clear and prececise in your agreement (item #1) and cover all of the details that you can think of.no matter how trivial or unimportant they may seem now.

good luck to both of you.

Answer 3

You may take the property from her legally with a sales contract and subject to the existing loan.

Make up a small contract between the two of you spelling out that you are to take over the existing mortgage. If there is gonna be more money to your sister than just assuming the mortgage place it in this contract and how it is to be paid.

Then look in the local telephone book, call a title company, explain to them that you want to purchase your sister's property subject to the existing mortgage. This transaction will cost a small service fee, but is well worth it in the long run and could save potential legal problems in the future.

They will make the proper paper work for you and her to sign. Once all the documents are signed the insurance and taxes will now be in your name.

Pay the mortgage each month in checks from your personal checking account. This is important as if you do it this way when the hard prepay is up most lenders will consider your transaction a refinance as oppose to a sale.

There will be those that will jump up and down about a due-on-sales clause and in most loan docs the lender has one, but they will not knock on your door to find out who is living there as long as the mortgage is keep current.

I hope this has been of some use to you, good luck.

"FIGHT ON"

Answer 4

She can quit claim property to your name, her mortgage would remain the senior lien on the property. Each will need the other to sign off until the first mortgage is paid out and you take her off the deed.

Lots of things can go wrong; judgements against either, lapse in mortgage payments, inability to arrange financing, death of one of you.... Not the best way to do this, but if you're trying to save a buck.

Might also just ask her lender about it?