Q: I helped my brother buy a house in 2005 by giving him $60,000 as part of his down payment. His wife didn’t want to contribute anything to the purchase and they could not buy the house they liked without my help.
In exchange, they agreed to put my name on the deed as owner of 10 percent of the property. At the closing, we told the lawyer to put three names on the deed but I was told that it would take a couple of months to mail the deed in so I couldn’t have a copy of the deed right away. I never got a copy and forgot about it.
I recently found out that my name was never put on the deed. What I have is a notarized agreement for the amount they borrowed from me and the 10 percent share in exchange.
I have lost trust in both of them and wondering if I can get my money back based on the notarized agreement I have even if my name is not on the deed.
A: It seems someone pulled a fast one on you. However, you should have known better than to wait for documentation. At every closing transaction there is documentation and you should have received copies of the documents at the time of the closing.
On the good side, while your name isn’t on the title to the home, your name is also not on the mortgage to the home. If your brother gets into financial difficulty, at least your credit won’t get trashed in the process.
As for the document you refer to in your email, it’s unclear exactly what it is and how much it would help you now. If you got a promissory note or some agreement by which your brother promised to repay you the $60,000, you got just that: a promise to repay you without any collateral. If the document merely states that you get 10 percent of the property, well, that even less clear.
The document might create some sort of ownership right in the property or it merely reflects that you have the right to get 10 percent of the proceeds from the sale of the home when and if it is sold.
You need to talk to a good real estate attorney and have him or her go over the document with you. You will then, hopefully, be able to determine what rights you might have or not have with respect to the property.
If you were at the closing and you and your brother both directed the attorney to place your name on the title to the property, you may have a claim against the attorney. While it’s difficult to say at this time what your claim would be, the attorney should have indicated to you at that time that he was representing your brother and was only taking direction from your brother. If the attorney was a closing attorney and represented the lender at the closing, the attorney may not have had a duty to place your name on title.
Frequently, if a person signs a contract to buy a home and applies for a loan, the lender will only allow that person to hold title to the property. That person would also have to sign the note promising to repay the debt on the property and that person would sign the mortgage on the property giving the lender the right to sell the property if the homeowner fails to repay the debt to the lender.
You probably did not apply for the loan on the property and the lender may not have allowed you to take title to the property unless you had been on the contract to buy the home.
You probably did not have an attorney representing your interests and would have benefited from the counsel he or she would have given you. It’s also probable that you gave the $60,000 to your brother, he deposited into his bank account and his lender requested a letter from you to indicate that you had given your brother a gift of these funds and you were not looking for repayment.
If you got such a letter, you should have stopped right there and indicated to the lender that you actually were going to be on title to the property for your 10 percent but you were not going to be responsible for the loan. The lender could have made the determination at that time to decide whether to allow you to be on title or not.
Some closing agents generally believe that a lender will not allow a non-borrower to hold title to the property. Thus only your brother and his wife could have been on title. In that case, the attorney gave you what he or she thought your brother could give you. That is, a right to claim 10 percent of something in the future. That may not have been what you wanted or bargained for, but that’s what you might have ended up with.
Unfortunately, if you directed the attorney to place your name on the deed and your brother remained quiet, the attorney may not have had a duty to you or may not have had to place your name on the deed. However, if you directed him to place the name on the deed and your brother did the same, the attorney should have indicated to you clearly that he or she could not do that and that your name could not be on title.
If the directions weren’t clear and the attorney believed that you intended to create an agreement between you and your brother for the repayment of the money, the attorney should have shown you documents at the closing. It’s unclear exactly what happened during the course of the purchase of the property.
You should review the documentation and then decide whether you need the assistance of an attorney who can be your advocate and represent your best interest and only your interests. You can also explore any legal options that may be available to you.
Finally, while it sounds as though you no longer have much to do with your brother and his wife, you should try to have a conversation about these issues with them. Ask for an explanation and then make sure they understand you expect them to repay the cash or add your name to the title.
Published: Oct 24, 2007