Q: I co-own a house with my mother. My brother wants to buy my half of the property, and we agreed on a price, but he wants to pay me over time. He will inherit the rest from our mother eventually. Is there any reason I should be concerned? — Grace
A: Yes, there are several issues you should consider.
When entering into any agreement, especially one with a family member, you should have a written contract. Not only will this help resolve problems that may arise, but it will also cause you both to think of issues now that you would not have otherwise.
You need to address what happens if your brother stops paying you, if he lets the hazard insurance lapse, or fails to pay the property taxes.
You should also consider what would happen if he passes away unexpectedly before paying you off, files for bankruptcy or gets a divorce.
Because allowing your brother to pay you off over time for the house is essentially a mortgage loan, you will need to check state and federal law and do it by the book.
Also, every person has a unique financial position, and this sale may have tax consequences, so speak with your tax professional before moving forward. This information will help you structure the transfer appropriately.
This transaction is more complicated than it may seem and should be set up to fit your family’s unique needs. The three of you should consult with an experienced attorney to help you structure this properly.
Most of the time, everything will work out fine on its own. But having dealt with family disputes like this in my law practice, this is a situation where an ounce of prevention is worth five pounds of cure.
Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. He practices real estate, business litigation and contract law from his office in Sunrise, Fla. He is the chairman of the Real Estate Section of the Broward County Bar Association and is a co-host of the weekly radio show “Legal News and Review.” He frequently consults on general real estate matters and trends in Florida with various companies across the nation. Send him questions online at www.sunsentinel.com/askpro or follow him on Twitter @GarySingerLaw.