Problems to Consider with Tenant Family Members

A daughter rents out a condo to her mother. After the mortgage is paid off, the daughter needs to make sure she still gets the rent checks.

Q: Earlier this week, a radio caller to your show asked about paying off the mortgage on the condominium she owns in Flint. She said she had bought in that community because of her mothers’ emotional connection with the property. The mother was 59 and paying rent to the daughter. From the way the caller related things, I think she already knew the financially correct thing to do – pay off the mortgage – and that is what you suggested.

What was not discussed was the great likelihood that once the mortgage was paid off, the mother would probably stop paying rent. I’m sorry, but I really think this is an issue that needs to be considered. My own mother did something similar to my sister. As long as the mother thinks the rent is “needed,” it will continue to be paid. If the mother thinks it is only being paid to enrich the daughter, she might consider the payment as optional. The caller indicated that the mother used emotion to get the property she wanted over the more rational thoughts of the daughter. So it might be worth considering keeping the mortgage in order to continue the cash flow. Otherwise the daughter will be out of luck. After all, what kind of daughter would evict a parent for non-payment?

A: This is an interesting point that we hadn’t considered – and since it happened to your sister, we know that it has probably happened to other folks as well.

One option to keep this from happening is to keep the mom completely in the dark about whether there is a mortgage or not. Keeping mom dark on an important financial issue may not be the best option, but could be one of the better options. While we might say that honesty is the best choice, each person would have to make a determination of what is best for him or her depending on family history.

In the case of the caller to the radio show, the daughter pays the monthly mortgage payment, taxes and insurance and the mom simply hands over rent. Whether the daughter decides to keep charging her mother rent once the property is paid off is another matter, but in the meantime, and considering the relationship between the parties, the daughter could be better off being silent on the issue of money, just to be sure, especially if there is a family history of financial problems and issues.

But to your last question – what kind of daughter kicks out her mother for nonpayment of rent? I think if a mother reneges on her agreement to pay rent each month, and it puts the daughter in a tough spot financially, then another kind of conversation has to take place – one that might include finding somewhere else to live.

Thanks for listening and for your input.


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