Q: My brother offered to provide financing for my first house. He insisted on keeping my house in his and his late wife’s name until it was completely paid off. He said that the reason was for tax purposes.
I now owe less than $12,000 on the property. In the meantime, he died and did not leave a will.
He said he had a trust for the property, but nobody has been able to locate it.
I have a contract for the sale of the property that has his and his late wife’s signatures on it. I have an attorney and he said it was a legal contract. My brother had evidently borrowed $35,000 on my house and had a credit life policy on it.
The insurance company says they had canceled the policy due to his poor health. At first, my attorney said there was plenty of money in the estate to pay off the mortgage. Now he says there is no money. My niece is the executor of the estate but she won’t talk to me.
I live in Missouri and I have tried to research the state laws but I can find nothing that pertains to the above. Also due to the condition of the house, all the main supports had to be replaced and the floors leveled, a new well dug because the old one was 10 feet from the septic. I also had to install a new furnace and I have an additional $30,000 invested in the house.
We are going before the probate judge later this month and I’m scared to death I’m going to lose the house. Do I have a leg to stand on? Please help if at all possible as I’m not able to sleep.
A: Unfortunately, I can’t provide much in the way of assistance in your case. Your brother apparently tried to help himself as well as helping you, and because he died intestate (without a will), he has caused a tremendous amount of financial chaos at a time when all you probably want to do is grieve for your loss.
You need to speak to an attorney who can help you prove that you and your brother and his wife had a valid contract to purchase the property. If you can prove that, you can probably get title transferred to you during probate.
Once you have title in your name, you may then be able to take out a home equity loan for $12,000 to pay off your brother’s loan. You can also borrow additional funds to fix your house.
As for the credit life insurance policy cancellation, you should have your attorney look into it. I’m not a fan of credit life insurance because I think you pay a lot of money for a declining liability. But it’s possible that the company is claiming the policy isn’t valid when in fact it is valid. Your attorney should be able to help you investigate this further.
As for why your niece isn’t talking to you, it’s likely a matter of dollars and cents. She thought her father owned your house and was expecting to net a tidy sum after it was sold and the mortgage paid off.
Instead, you produced a sales contract that shows they sold it to you, and suddenly, any assets in the estate have to be used to pay off the loan. Your niece has realized that she could wind up with nothing, and when you think you’re going to get a lot of something and wind up with nothing, it’s quite disappointing.
To help bolster your case, you should also look for any and all paperwork you have that could support your story that the real intent was for you to own the home. You should also collect every receipt showing the improvements you made to the home as well as copies of all the checks you paid to your brother for the home.
If your checks that you paid to him showed that you were paying “rent,” you may be out of luck. If your checks show that you were paying the mortgage, these checks might help you out.
You and your brother took a huge risk by not recording the sale of the property and by his not having a will. It’s entirely possible you will lose your house (which is why I suggest you speak to an attorney as soon as possible), but I hope that isn’t the outcome.
If you get the house but have to take out a mortgage to pay off your brother’s loan of $35,000, consider yourself lucky.