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#422305 - 04/05/13 04:40 PM Help. Living in a home my brother bought for us with good intentions.
desynerguy Offline
Junior Member

Registered: 04/05/13
Posts: 3
Loc: Ontario Canada
Need some advice here please. 10 years ago I was diagnosed with pancreatic cancer. We managed to keep our own home for 3 years before seeing the writing on the wall that I would loose everything so we sold and rented then a few years later went bankrupt. My brother was kind enough to assist in purchasing a home to get us back in the real estate market. The idea was, buy a fixer and do the work and we buy it over a period of 3-5 years. Originaly he said he did not want anything for it, just to help us, we thought very generous and kind. We were to pay the mortgage for him. We worked out the cost and agreed to pay $1500 a month to pay for the loan he took. We have never missed a payment to him. So now It has been 3 1/2 years and he needs the money back to pay off his loan. We are not in a position to buy the house yet (at least I dont think we are). We bought for 218,000 put 40,000 into fixing and it has a value now of around 330,000. He mentioned in an email that he wants to have us list it, sell it and split the difference which was not the original idea. Whatever, I will go with that but am a bit shocked because now we are short for a down payment. The other big thing is that he mentioned his capital gains that we need to pay. Is there a way around the capital gains question if we were to buy the house and stay there? Is there a way we can keep this home instead of selling it and eliminate real estate fees, land transfer taxes, capital gains on his "profit" Any advice would help. We tried to get a mortgage with a credit union and were told not yet so we are in the process of rebuilding our credit. We were told we could get a private mortgage as long as we have 20% down. With having to pay my brothers capital gains and giving him his portion of the profit then there will only be enough for us to have 5-10%. We are in Ontario Canada.

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#422310 - 04/05/13 06:41 PM Re: Help. Living in a home my brother bought for us with good intentions. [Re: desynerguy]
DueDiligence Offline
Major Contributor

Registered: 12/05/06
Posts: 1635
Loc: Wild Wild West
You say your brother was "kind enough to assist in purchasing a home"-- but, you're not on the note, correct? And, you're not on the deed, correct? But, you also say, "We bought for $218,000". Who is this we?

Do you have any type of formal written agreement between you and your brother?

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#422320 - 04/05/13 11:00 PM Re: Help. Living in a home my brother bought for us with good intentions. [Re: DueDiligence]
desynerguy Offline
Junior Member

Registered: 04/05/13
Posts: 3
Loc: Ontario Canada
You are correct. When I say we...I meant that he would not have purchased the home. It was my wife and I who picked out the home. No real written agreement. Also, no hard feelings between us either, just looking at my options.

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#422322 - 04/06/13 12:23 AM Re: Help. Living in a home my brother bought for us with good intentions. [Re: desynerguy]
DueDiligence Offline
Major Contributor

Registered: 12/05/06
Posts: 1635
Loc: Wild Wild West
Realistically, you have no options.

Your brother can list and sell the home and take all the proceeds from the sale after he pays off his note.

Apparently you're not even a tenant under a lease. Possibly the case could be made that you're a month-to-month tenant based on the cancelled checks you have made out to your brother each month. You were not "paying him back" because he loaned you no money-- effectively you were paying rent. Nevertheless, more than likely if the house is sold, you'll have to vacate.

Absent some type of lease-purchase/rent to own agreement between the parties, you simply have nothing to stand on. Sorry.

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#422323 - 04/06/13 02:18 AM Re: Help. Living in a home my brother bought for us with good intentions. [Re: DueDiligence]
MHT Offline
Member

Registered: 12/25/09
Posts: 322
Loc: Ontario, Canada
If he needs to sell it then you may be best to just take whatever money he is willing to give you and start saving for a downpayment for the next home. You may have to rent for a while as you save that money but it is probably the best option without having any hard feelings. Without knowing what part of Ontario you are in, there may also be the possibility of buying something cheaper than what you are currently in....depending on the local market of course. This would mean you could be much closer to getting your downpayment together. Right now you will likely be considered a tenant so you will get your 60 day notice from the beginning of a rental period if the buyer wants it for their personal use.

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#422333 - 04/06/13 12:17 PM Re: Help. Living in a home my brother bought for us with good intentions. [Re: desynerguy]
Bigtoe Offline
Major Contributor

Registered: 10/14/07
Posts: 2364
Loc: Outer Banks
Talk to some other lenders. I don't know about up north but in the states, credit unions over charge on their loans and they are very reluctant to make loans regardless of the borrowers ability.

If you can get a loan, buy it from your brother with no profit in the sale price and write up a separate side agreement with your brother to pay him back the profit in payments. This way there is no profit to get taxed and you can reward your brother for his effort.
_________________________
Your Outer Banks real estate agent. Helping people buy and sell OBX real estate since 1989.

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#422339 - 04/06/13 04:48 PM Re: Help. Living in a home my brother bought for us with good intentions. [Re: Bigtoe]
MHT Offline
Member

Registered: 12/25/09
Posts: 322
Loc: Ontario, Canada
Around here, credit unions tend to be more flexible than the banks are but yes, the rates also tend to be a bit higher.

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#422364 - 04/07/13 11:34 AM Re: Help. Living in a home my brother bought for us with good intentions. [Re: desynerguy]
Vermont Offline
Major Contributor

Registered: 04/12/08
Posts: 7950
Loc: Vermont's North-East Kingdom
I agree with BigToe. And by having your Brother hold some paper for your missing Down Payment, but getting a conventional loan, the Bank or Credit Union will also consider this a lower LTV.

Their Underwriters will also realize that this is actually a more secure loan because they know you're not going to walk . . . . the whole reason for refinancing at this point is to release you Brother from further involvement. Afterall, you don't want a different house.

You Brother did his part by facilitating your successful transition back into home ownership. He was there when you needed him. It wasn't intended to be forever, and we're all glad that wasn't necessary.

Meanwhile, what about this Pancreatic Cancer issue? Most (actually all) of my Friends who have encountered this virulent form of cancer have fallen by the wayside because it is usually inoperable and virtually un-treatable because it is usually not discovered until it is already at a very late stage. After 10 years, you seem to have beaten those odds; so my congratulations to you.

How'd you do that ?
_________________________
Dale C. Hittle of GOLDEN RULE PROPERTIES in Glover, Vermont
Where We're Always Striving To Put Together "THE FAIR DEAL"

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#422375 - 04/07/13 01:44 PM Re: Help. Living in a home my brother bought for us with good intentions. [Re: Vermont]
desynerguy Offline
Junior Member

Registered: 04/05/13
Posts: 3
Loc: Ontario Canada
Hi Vermont.
You hit the nail. That was along the line of where I was going with this. You are right, we dont want to move and my brother did me a great service. He wants to move on and I dont. I suppose we could invoice for the sweat equity we put into the home so there is no capital gains? As for the cancer...yes., First, God is great. Second it was stumbled upon during a bout with a pesky little thing called a kidney stone....Still here and cancer free my friend. But, "I" did not do it, I was just chosen to go for the ride. Have a great day.

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#422656 - 04/14/13 03:00 PM Re: Help. Living in a home my brother bought for us with good intentions. [Re: desynerguy]
Scintillion Offline
Member

Registered: 01/26/12
Posts: 437
Loc: Colorado, USA
Lots of different ways that this could play out depending on what type of posture you'd like to take. Only way for their not to be capital gains is if the house isn't sold at a profit. Best to speak with your brother and see what he is willing to do. It all becomes academic if you aren't able to obtain financing, though.

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