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Strings attached to underwater condo
published Fri, 27 Mar 09 01:00:00 -0700

Ilyce Glink
Inman News

Q: I own a condominium. The property is worth anywhere from $110,000 to $119,000, but I owe $125,000 on it.

I'm the only person on the loan, but the property is deeded to my ex-wife and me as joint tenants with rights of survivorship. I want to take possession of the property solely so that I can sell it and clear it off my credit history. It is dragging down my credit report because it is a burden to my debt-to-income ratio.

Unfortunately, I am unable to move ahead with this plan because my ex-wife is attached to the property emotionally and will not agree to let me sell it. I will gladly give her sole possession of the property if she wants to refinance it into her name, but she refuses. She wants to have her cake and eat it too.

She doesn't reside in the property. It is being rented to a friend of hers below market value. Is it possible to get a court order to have her refinance the condo into her name only? And if she is unable to refinance the property for any reason within a certain amount of time, does she sacrifice her right to the deed?

A: Please talk to your divorce attorney. The issue of this property should have been settled in your divorce agreement. If your ex-wife was given half of the property as part of the settlement, then you will have to buy her out or risk letting the property fall into foreclosure, hurting your credit score and hers.

If the tenant is paying a below-market rent for the property, you might insist that your ex-wife make up the difference or rent the property out to a tenant that will pay market rent. If your tenant doesn't pay enough to cover the costs of the property, is your ex-wife chipping in to pay the difference? If she isn't and won't cooperate, your only option may be to get the lawyers involved again.

However, you might want to persuade your ex-wife that paying the lawyers money that could otherwise go to paying for the expenses of the home would not be the best course of action. It's in both of your interests to settle this amicably. Litigation should be your last resort.

Hopefully, your ex-wife will agree to a meeting with you or your attorney to discuss the facts and your proposal for dealing with this property. It's past time for you and her to move on.

Q: My mother put my brothers and me on the title to two properties in two different states. My mother's lawyer recently told her she has no claim to the properties and that they belong to the three of us.

One brother is living in one of the properties (my other brother and I did not agree to this). My other brother and I want to sell the properties, but are certain that our brother will not agree to this. ...CONTINUED

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What are our rights as far as selling the property or at least being able to use it equally with our brother who is living there? Can we force him to sell or at least buy us out (he has no job and no money!)?

There has been family history of his taking advantage of every situation he can. My brother and I would also like to sell the other property. Any advice would be greatly appreciated.

A: If you and your one brother wish to sell the property, your first course of action would be to negotiate a solution with your brother. If you can't negotiate a solution, you can bring a lawsuit against your other brother to force him to sell. You would need to hire an attorney with experience in partition suits. That is, a suit to partition the property and force the sale. You effectively go to court and ask the judge to settle the dispute for you. If the judge sees that no resolution is possible, the parties can request that the judge order the sale of the property.

A partition suit, as with any litigation, will cost time and money. During the litigation, you can also force your brother to pay his share of expenses for the home that he has failed to pay over the years. His share of the property expenses can be deducted from the total he is due (before it is paid).

Before attempting to litigate the matter, perhaps you can get him to agree to sell you the property outright for a certain amount of cash.

A second alternative is to swap properties amongst the three of you. Since there are two properties involved, you might be able to trade his interest in the property he does not live in for his interest in the property he does live in. If the two properties are roughly equal, this might not work unless you attach some additional money to the deal, but if the other property is more valuable, perhaps he will make the trade and you and your other brother will be able to sell.

Your question really points to the dangers of parents putting property into their children's hands before they die. Your mother was probably trying to either minimize estate taxes or perhaps protect these properties from having to be sold to pay a nursing home bill down the line.

In fact, what she has done may likely split her family in half. I can't imagine you and your brothers all sitting down together for a holiday meal, with you feeling like your brother is cheating you.

Please talk to a real estate attorney for other options and an explanation of how you would proceed legally, if you choose that direction.

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