Cosigning for a mortgage and---

[BTDretire]

Hi all, I (63 years old) have mentioned here before, when mom died almost 7 years ago she left a house split between my sister and myself. Because my sister (61 yrs old) has nothing and a slightly above minimum wage job, I felt it was her lowest cost place to live, I suggested she stay there. She did live with and take care of mom the last 6 months mom lived. My part of the house is worth about $35,000 now.
 I have not got a dime out of my half of the house and note, If we had sold after mom died my part invested in VTSAX would have  grown to about $60,000.
 I'm now trying to get all my affairs in order for retirement and this is a liability I don't want.
Sis has tried at least once maybe twice to get a mortgage and has been declined for financial reasons.
 The question: If I cosigned a mortgage for her and she didn't pay (a $35,000 mortgage is only $167mo)
then I'm responsible. Can I be forced to pay or do they just take the house and I take the ding on my credit.
 The $35k is worth the risk of her non-payment and a ding on my credit. At 63, I don't need credit.
 

[dogboyslim]

Short answer: it depends on your state, but most likely yes, they can force you to pay.  Also, they won't tell you about payment issues until they have been missed, so you will be in arrears most likely from the get-go if Sis doesn't pay.

I guess I'm looking at this and thinking that in this situation I'd be tempted just to deed over the house to my sister.  I agree that 35k is a good chunk of change, but is it worth your relationship with your sister?

At any rate, my suggestion is if you are going to cosign, consider it not as a cosigned loan, but a loan you took on.  Also, since this is family and you are taking the risk anyway, why not seller finance?

There is no way to go that doesn't have particularly ugly familial consequences if sis doesn't pay.

Out of curiosity, if they foreclosed on the home and sis is booted out, where is she going to live?  Will you be helping with that?  I guess just think about this not only from the perspective of the potential 35k right now.

Good luck to you!

[marty998]

Short answer: it depends on your state, but most likely yes, they can force you to pay.  Also, they won't tell you about payment issues until they have been missed, so you will be in arrears most likely from the get-go if Sis doesn't pay.

I guess I'm looking at this and thinking that in this situation I'd be tempted just to deed over the house to my sister.  I agree that 35k is a good chunk of change, but is it worth your relationship with your sister?

At any rate, my suggestion is if you are going to cosign, consider it not as a cosigned loan, but a loan you took on.  Also, since this is family and you are taking the risk anyway, why not seller finance?

There is no way to go that doesn't have particularly ugly familial consequences if sis doesn't pay.

Out of curiosity, if they foreclosed on the home and sis is booted out, where is she going to live?  Will you be helping with that?  I guess just think about this not only from the perspective of the potential 35k right now.

Good luck to you!

Agree there's no easy answers, but as pointed out before on the forum, this is exactly how Economic Outpatient Care works. Financially needy relatives basically guilt you into handing over cash and assets to them by not being able to support themselves.

After all, who wants to see family end up homeless? Not saying the sister is taking advantage here, but the scenario has been played out before.

[former player]

Am I understanding this right?  That you and your sister jointly own the house and that there is currently no mortgage on it?  That you want your sister to take full ownership of the house, but that she isn't able to get a mortgage for the $35k your share is worth?

The possibilities are:

1. You give your half share to your sister, and get the gift legally regularised.  That simplifies things nicely for you.

2.  You cut out the middleman, and make a lease to own agreement with your sister: she pays you rent at an agreed rate and at an agreed point she owns the whole house.  Or as an alternative, you make the house over to her subject to a mortgage that your sister pays to you not the bank. You would either have to be prepared to force your sister to keep up with the payments or you would have to be prepared to let the debt go. Whether the potential effects of one of these arrangements on your relationship with your sister would be worth it to you depend on how you feel. 

3.  As you suggest, cosigning a mortgage with a commercial lender or credit union.  Cosigning a mortgage is, effectively, you taking out a debt.  It's a debt you hope your sister will pay off, but nonetheless it is a debt that you will owe.  Don't underestimate the effects on you of getting non-payment letters any time your sister is behind with the payments, or of being dragged through a short sale or foreclosure proceedings.  Depending on the legal regime where you live, you are liable for the whole of the debt plus any unpaid interest plus any foreclosure costs, and these will first be taken from the value of the house at sale but you may also be liable for any excess - this does depend on the law in your area.

4.  Putting the house up for sale (this might mean going to court to force your sister to sell).

As far as I can see only No.1 immediately meets your aim of getting your affairs in order and removing liabilities and complications from your life, but you get no monetary value from it.  Nos. 2, 3, and 4 provide monetary value but at the cost of complications and a risk to your relationship with your sister.  I don't see any way forward that gets you both a lack of complication and a monetary return.

[Just Joe]

Divide the house into a duplex and let the sister live in her half while you rent out the other half? Rent out your room and you move out? This continues until you get your $35K?

[patchyfacialhair]

Unless you're super super behind for retirement, I'd honestly just gift your half to her.

[Basenji]

What does your sister say? Is she stonewalling you or trying to figure out a solution? You say she did not get a mortgage. Have you had any other discussions?

[PDXTabs]

If I were you and I could afford it I would just give her the other half of the house. If she still can't get a mortgage I would not co-sign it for her.

[Catbert]

When asked to co-sign one question to ask yourself is what you know that the bank doesn't and vice versa.  Maybe you know that a young relative just graduated college, got a good job and is extremely hardworking although with zero credit history.  You decide to co-sign because of what you know.  In this case, however, the bank knows why you sister isn't a good risk for a 35K loan and you may not.

Do you know why she can't get a loan?  Low income?  Past late payments/bankruptcies?  Derelict house in a bad neighborhood?

I wouldn't co-sign for someone with a history of late payments or bankruptcies.  If you chose to cosign I *think* that if you default on the loan they can foreclose on the house and ding you credit in a big way.  The only way they could force to give them cash is if the foreclosed house sells a auction for less than you owe.   That could certainly happen to a derelict house in a bad neighborhood if the housing market tanks again.

[rantk81]

Can you buy out your sister's half and deed the house to yourself?  And then charge your sister rent?

[BTDretire]

Divide the house into a duplex and let the sister live in her half while you rent out the other half? Rent out your room and you move out? This continues until you get your $35K?

  Oh God, no, I'm not living in the same house with her, I'm over 1000 miles away!

[BTDretire]

What does your sister say? Is she stonewalling you or trying to figure out a solution? You say she did not get a mortgage. Have you had any other discussions?

 Yes, this is the second round of me asking her to apply for a mortgage, about two years apart.
This gave her a little more work history and a slight raise of income.
  She has an option, she has a girlfriend/lover/user that lives in the house an amount of time I'm unclear of.
The girlfriends mother is ill so 3 sisters rotate schedules to live with and take care of her.
But just $100 a month of additional income (rent from girlfriend) would make the mortgage payment easy.
 I have been unhappy with her since I ask her to split mom's savings and send it to me. She said she needed that money to fix the house, she didn't fix the house and spent the money. The house is in poor repair.

[BTDretire]

Can you buy out your sister's half and deed the house to yourself?  And then charge your sister rent?

 I don't want to do that, to easy for her to not pay me, where as a bank is a more official situation, they can take the house, I don't want the house.

[BTDretire]

Short answer: it depends on your state, but most likely yes, they can force you to pay.  Also, they won't tell you about payment issues until they have been missed, so you will be in arrears most likely from the get-go if Sis doesn't pay.

I guess I'm looking at this and thinking that in this situation I'd be tempted just to deed over the house to my sister.  I agree that 35k is a good chunk of change, but is it worth your relationship with your sister?

At any rate, my suggestion is if you are going to cosign, consider it not as a cosigned loan, but a loan you took on.  Also, since this is family and you are taking the risk anyway, why not seller finance?

There is no way to go that doesn't have particularly ugly familial consequences if sis doesn't pay.

Out of curiosity, if they foreclosed on the home and sis is booted out, where is she going to live?  Will you be helping with that?  I guess just think about this not only from the perspective of the potential 35k right now.

Good luck to you!

I don't feel that I owe her a place to live, she has three children and a girlfriend to help her.
She choose to live in a van with her girlfriend for several years traveling about.
 I have given her about 7 years of subsidy, I'm retiring and want to get my affairs in order.

[Just Joe]

No chance of the girlfriend and your sister buying the place together? A $35K loan ought to be easy to get with even two minimum wage jobs.

Otherwise - gift it to her if you can afford to. See about taxes and liabilities first of course.

[Basenji]

I have been unhappy with her since I ask her to split mom's savings and send it to me. She said she needed that money to fix the house, she didn't fix the house and spent the money. The house is in poor repair.

Whoa, there's even more to this. How much money was half the savings? At this point you either escalate and alienate your sister by consulting a lawyer to find a way to get your half of the savings and half of the house or wash your hands of the whole thing and just give her the house. All other solutions above you've rejected. Co-signing a mortgage and saying it would be no big deal to default is risky and unethical.

Leaving aside the emotional component of "Hey, that's my money!": How much of your retirement plans depend on the $35k? Ignore the "it would have been $60k by now" argument, that's just a thought exercise that makes you more angry.

[BTDretire]

Short answer: it depends on your state, but most likely yes, they can force you to pay.  Also, they won't tell you about payment issues until they have been missed, so you will be in arrears most likely from the get-go if Sis doesn't pay.

I guess I'm looking at this and thinking that in this situation I'd be tempted just to deed over the house to my sister.  I agree that 35k is a good chunk of change, but is it worth your relationship with your sister?

At any rate, my suggestion is if you are going to cosign, consider it not as a cosigned loan, but a loan you took on.  Also, since this is family and you are taking the risk anyway, why not seller finance?

There is no way to go that doesn't have particularly ugly familial consequences if sis doesn't pay.

Out of curiosity, if they foreclosed on the home and sis is booted out, where is she going to live?  Will you be helping with that?  I guess just think about this not only from the perspective of the potential 35k right now.

Good luck to you!

Agree there's no easy answers, but as pointed out before on the forum, this is exactly how Economic Outpatient Care works. Financially needy relatives basically guilt you into handing over cash and assets to them by not being able to support themselves.

After all, who wants to see family end up homeless? Not saying the sister is taking advantage here, but the scenario has been played out before.

Oh she has taken advantage, I don't think it is a devious plan, but just easy to continue in her ways.

[BTDretire]

I have been unhappy with her since I ask her to split mom's savings and send it to me. She said she needed that money to fix the house, she didn't fix the house and spent the money. The house is in poor repair.

Whoa, there's even more to this. How much money was half the savings? At this point you either escalate and alienate your sister by consulting a lawyer to find a way to get your half of the savings and half of the house or wash your hands of the whole thing and just give her the house. All other solutions above you've rejected. Co-signing a mortgage and saying it would be no big deal to default is risky and unethical.

 Yes, mentioned that very early, lawyer said, because mom put her on the account to help pay the bills the money is hers. Also she has no money, so water under the bridge.

Leaving aside the emotional component of "Hey, that's my money!": How much of your retirement plans depend on the $35k? Ignore the "it would have been $60k by now" argument, that's just a thought exercise that makes you more angry.

I'll be fine without $35k, but I would like to leave it to my kids.

[Dances With Fire]

When asked to co-sign one question to ask yourself is what you know that the bank doesn't and vice versa.  Maybe you know that a young relative just graduated college, got a good job and is extremely hardworking although with zero credit history.  You decide to co-sign because of what you know.  In this case, however, the bank knows why you sister isn't a good risk for a 35K loan and you may not.

Do you know why she can't get a loan?  Low income?  Past late payments/bankruptcies?  Derelict house in a bad neighborhood?

I wouldn't co-sign for someone with a history of late payments or bankruptcies.  If you chose to cosign I *think* that if you default on the loan they can foreclose on the house and ding you credit in a big way.  The only way they could force to give them cash is if the foreclosed house sells a auction for less than you owe.   That could certainly happen to a derelict house in a bad neighborhood if the housing market tanks again.

+1 From past experience, I would NOT co-sign...We live debt free with no contracts of any kind attached.

That said, what about insurance for the property in the years to come? What about TAXES and who will be responsible for the prompt payment of those? If you co-sign YOU are responsible for those taxes and any other liens on the property.
 
Delinquent payments for water, electric, trash, and/or heat. As well as liens for any past due repairs. You may want to consult with an attorney BEFORE you sign anything.

Just my 2 cents, just trying to help. Be careful and good luck.

[BTDretire]

When asked to co-sign one question to ask yourself is what you know that the bank doesn't and vice versa.  Maybe you know that a young relative just graduated college, got a good job and is extremely hardworking although with zero credit history.  You decide to co-sign because of what you know.  In this case, however, the bank knows why you sister isn't a good risk for a 35K loan and you may not.

Do you know why she can't get a loan?  Low income?  Past late payments/bankruptcies?  Derelict house in a bad neighborhood?

I wouldn't co-sign for someone with a history of late payments or bankruptcies.  If you chose to cosign I *think* that if you default on the loan they can foreclose on the house and ding you credit in a big way.  The only way they could force to give them cash is if the foreclosed house sells a auction for less than you owe.   That could certainly happen to a derelict house in a bad neighborhood if the housing market tanks again.

+1 From past experience, I would NOT co-sign...We live debt free with no contracts of any kind attached.

That said, what about insurance for the property in the years to come? What about TAXES and who will be responsible for the prompt payment of those? If you co-sign YOU are responsible for those taxes and any other liens on the property.

I'm already responsible if she doesn't pay the property taxes, I'll lose my half.
 

Delinquent payments for water, electric, trash, and/or heat. As well as liens for any past due repairs. You may want to consult with an attorney BEFORE you sign anything.

Precisely why I want to get rid of this liability.

[rantk81]

OK, given the past history the disappearance of the savings, the sour relationship, etc... I would do one of the following:

1) Assuming the 35K doesn't make a huge difference, then I'd completely write off the situation.  Quit-claim any ownership on the house, and be done with it, to minimize any potential liability/lawsuits that might arise from whoever is occupying the house 1000 miles away from you.  Make it clear that I would refuse to provide any further financial support, ever, no matter what (and potentially cut off all contact/communication, depending on how bad the relationship is.)

2) A more nasty approach, if you're up for it: Deed the property over, and offer a mortgage to your sister for her half of the ownership interest value (based on appraisal.)  *When* she defaults on the loan, initiate foreclosure, sell at auction.

[BTDretire]

I have one other option that would not directly benefit me but will benefit my kids,
 I can give the house to her with a life estate and then the house goes back to me or my estate.
Seems to be my best option, but I'm waiting for a reply about this latest mortgage application.

[neophyte]

If the bank won't give her a $35k mortgage on a property that she already owns 50% of free and clear (assuming she does), she's either a terrible risk or the bank doesn't know the whole story.

One option I didn't see yet is selling it to her for below market value if they will give her a mortgage for $25k or even $20k.  That way you're not out the whole $35k, but it's still off your hands without too much drama.  I think the best solution however would be for her to buy it with her kids or girlfriend.

[SKL-HOU]

She can’t even get a secured loan. In that case no way i would cosign anything with her. Can you force the sale of the house to get your share? It certainly wouldn’t be the nicest thing to do and may end up with less than 35k but it doesn’t sound like she feels the need to make any changes.

[the_fixer]

I see zero upside to co-signing and all downside.

You co-sign and get the 35k she defaults and you owe 35k + fees and who knows what else then it hits your credit.

From the sounds of it there is a huge potential that she will default on the loan or not be able to make the payments and the pressure will be on you to make the payments or have your credit suffer and your sister homeless.

I honestly would sell it to her for whatever the bank will loan her just to get it out of my name

Or I would let her make payments directly to you till she reaches the agreed upon amount.

Or I would just give it to her and wash my hands of the situation and never give her another dime.





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[Miss Piggy]

I have one other option that would not directly benefit me but will benefit my kids,
 I can give the house to her with a life estate and then the house goes back to me or my estate.
Seems to be my best option, but I'm waiting for a reply about this latest mortgage application.

Is it worth the hassle? Will it be worth anything at that point in the future? You say it's already in disrepair.

Regardless, I get it...it sounds like simply giving it to her would mean she got your mom's entire estate. (Or maybe not?) There's definitely an unfairness to it if that's the case. But would you feel any sense of relief to just be rid of it altogether?

[BTDretire]

Ya, I could just give it to her, but I worked hard and lived frugally, I shouldn't use a $0.35 coupon and just let $35,000 go away.
 I suspect I'll end up give her a Life Estate vs. Irrevocable Trust and then the property goes back to me at her death, or my kids.

https://www.investopedia.com/articles/investing/010716/life-estate-vs-irrevocable-trust-which-better-you.asp

[CoffeeR]

The worst that can happen (financially) is not that you loose you house, but that you end up being the "deep" pockets should there be a high liability event with the house or property (e.g. you get sued due to an accident or other incident involving the property). You clearly cannot trust your sister to keep good liability insurance on the house. If you keep the property, make absolutely sure you have proper liability insurance and (obviously) you cannot depend on your sister telling you she is taking care of this.

[Frankies Girl]

You can force the sale of a shared property most likely. It would be a last resort move, and only do so if you really are done with your sister/her family since doing so will likely end any possible relationship you have currently.

My uncle forced the sale of shared property between his siblings once my last grandparent died. My grandmother's house was put up for auction, and it was easily sold, despite one of the siblings not wanting to do so, but they didn't have the funds to buy anyone out so that's what ended up happening. Proceeds split between owners/heirs after expenses were paid out. If the house is in poor repair, then you're not going to get anything approaching your estimate. Honestly, where are you getting that amount anyway? If you don't live nearby and have no idea the state of the property, what if it is in absolutely terrible shape or located in a really depressed area? Might want to research comps for fixer-uppers in the neighborhood as well to figure out if you're wildly overestimating your value so you can assess true value for your half and proceed from there.

I would suggest you research the possibility in the state the property is located (contact a few property auction groups that work with estates for instance), and then approach your sister with the following deal: she pays you X amount monthly/lump sum/whatever you decide is acceptable - by X date, or you will force the sale of said property and you will split the proceeds. If she defaults on any agreed upon payment schedule, then she has to make it up within 30 days (or whatever), or you'll proceed with the sale of said property.

If you want quit of her, the liability and the hassle, this is the route I'd take. Again, it would likely end any possibility of having a relationship with her, but it sounds like you're not really that interested in one anyway and the money/property and liability issues are the foremost. I personally would not want to be tied to a mooch sibling like this by owning property together in any way, so the fact that you've been doing this for YEARS and liable for taxes/insurance and any other stupid shit she could have happen (liens/injury to guest, damage to neighbor's property) alone would make me quite short about the "pay me for my half ASAP or we're selling this house ASAP" with no delay.

[the_fixer]

Ya, I could just give it to her, but I worked hard and lived frugally, I shouldn't use a $0.35 coupon and just let $35,000 go away.
 I suspect I'll end up give her a Life Estate vs. Irrevocable Trust and then the property goes back to me at her death, or my kids.

https://www.investopedia.com/articles/investing/010716/life-estate-vs-irrevocable-trust-which-better-you.asp

Going that route you will still be tied to the crazy train and have liability.

What if she does not take care of the house and it is worthless/ uninhabitable or when she calls you and it needs repairs that she can not afford? What about the fines from the city when it is not taken care of and gets fined?

How would you feel leaving your half to your kids and having them deal with her and everything that comes with it if you pass away first?

Seems like a whole lot of downside for no upside.

Put emotions aside think about it like some random person left it to the two of you how would you feel then?

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[Another Reader]

Agree with Frankie's Girl.  Your sister needs to move on with her life and you need to get out from under the property.  I would tell her the property needs to be sold and, if necessary, go to court to get a partition judgement and the property sold. She gets half of what's left and you get half.  No further entanglement or liability exposure.  Too bad about your mom's savings, but lesson learned.

[robartsd]

I'd be inclined to either quit-claim and be done, or offer her seller financing to buy you out.

If you seller finance, I'd make sure your lien is properly registered as a first mortgage so that you have superior claim on the property if she fails to pay as promised. Even if you don't foreclose on her while she lives, you protect your claim against the property for after she passes. You/your kids would then be repaid your loan + interest & fees up to the full value of the house. Of course that could strain relations between you/your kids and her heirs.

[BTDretire]

The worst that can happen (financially) is not that you loose you house, but that you end up being the "deep" pockets should there be a high liability event with the house or property (e.g. you get sued due to an accident or other incident involving the property). You clearly cannot trust your sister to keep good liability insurance on the house. If you keep the property, make absolutely sure you have proper liability insurance and (obviously) you cannot depend on your sister telling you she is taking care of this.

 After the hurricane forced retirement, I'm getting my affairs in order.
 This is what started the latest push, I'm in the process of purchasing an Umbrella policy, I needed to make sure this and another property had at least $250k Liabililty, in order for the Umbrella to work.
  So, I'm in the process of limiting my exposure, and this is one of them.
 Also raising my auto liability to fit the Umbrella. The total cost was cheaper to raise my auto liability than to
 purchase the lower low limit Umbrella. If that doesn't make sense ask me to explain it.

[BTDretire]

Ya, I could just give it to her, but I worked hard and lived frugally, I shouldn't use a $0.35 coupon and just let $35,000 go away.
 I suspect I'll end up give her a Life Estate vs. Irrevocable Trust and then the property goes back to me at her death, or my kids.

https://www.investopedia.com/articles/investing/010716/life-estate-vs-irrevocable-trust-which-better-you.asp

Going that route you will still be tied to the crazy train and have liability.

What if she does not take care of the house and it is worthless/ uninhabitable or when she calls you and it needs repairs that she can not afford? What about the fines from the city when it is not taken care of and gets fined?

How would you feel leaving your half to your kids and having them deal with her and everything that comes with it if you pass away first?

Seems like a whole lot of downside for no upside.

Put emotions aside think about it like some random person left it to the two of you how would you feel then?

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Maybe I don't understand, but I thought if I gave her the property with a life estate, it was her's until she died and then it reverted to my name.
 I may have given the wrong impression about condition of the house, It is far from great, but it is not falling down either. The state values it at $67k and it is probably worth that or more. The house won't show well because  one of the two is a bit of a hoarder, I went up there after watching the Aug 2017 Solar eclipse with my daughter, it's a squeeze to get through the kitchen the living room is only half usable because of to much stuff, we hardly had enough room to sleep. The have tarps covering exess item between the garage and house and the garage is packed full of items.
 I just convinced my self, the place would never sell with them living in it. :-)

[Lulee]

Dude, it is SO time to stop trying to kick this tarball down the road.  Firmly but kindly tell your sister she has 3 months to come up with a loan to buy you out or it is going on the market which means she has move all that crap out into some other place.  You don't have to be accusatory or recriminating or anything but firm.  Meanwhile find out how to force the sale if necessary and any other legal details that may need ironing out prior to the sale.  You CAN with finesse force her to take up her own responsibilities without severing the relationship.

If this was a stock you owned and you had the CEO who stole and was running the company into the ground, you would sell it and be grateful to have done with it before the complete crash and burn.  She stole from you and lied to you.  OK, maybe you can forgive and forget that.  But the house has depreciated in value since you two inherited it and it will depreciate a heck of a lot more if a hoarder lives there.  It may indeed become a total loss.  Meanwhile, you are spending money on an umbrella policy to mitigate the fact your sister is increasing your liability.  THIS IS CRAZY.

You're trying to contrive an answer to the situation where you don't have to put your foot down.  But you are going to have to do it now or in the future after she passes.  At that future horror, either you or your kids will inherit a rundown house full of crap possibly with her girlfriend still living here who will then try to get you to let her stay and your sister's kids trying to get you to let them either have it since it was dear old mom's home or let them use it for "a while" because it's doubtful they learned any different behavior from their mother.

Yeah, if you'd fought your way through this years ago, you could have grown the money into a nice nest egg for your kids.  You can do it now by being an adult and facing the situation head on.  Doesn't matter what could have been; focus on what can be.

You and your kids deserve better.

[Frankies Girl]

Ya, I could just give it to her, but I worked hard and lived frugally, I shouldn't use a $0.35 coupon and just let $35,000 go away.
 I suspect I'll end up give her a Life Estate vs. Irrevocable Trust and then the property goes back to me at her death, or my kids.

https://www.investopedia.com/articles/investing/010716/life-estate-vs-irrevocable-trust-which-better-you.asp

Going that route you will still be tied to the crazy train and have liability.

What if she does not take care of the house and it is worthless/ uninhabitable or when she calls you and it needs repairs that she can not afford? What about the fines from the city when it is not taken care of and gets fined?

How would you feel leaving your half to your kids and having them deal with her and everything that comes with it if you pass away first?

Seems like a whole lot of downside for no upside.

Put emotions aside think about it like some random person left it to the two of you how would you feel then?

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Maybe I don't understand, but I thought if I gave her the property with a life estate, it was her's until she died and then it reverted to my name.
 I may have given the wrong impression about condition of the house, It is far from great, but it is not falling down either. The state values it at $67k and it is probably worth that or more. The house won't show well because  one of the two is a bit of a hoarder, I went up there after watching the Aug 2017 Solar eclipse with my daughter, it's a squeeze to get through the kitchen the living room is only half usable because of to much stuff, we hardly had enough room to sleep. The have tarps covering exess item between the garage and house and the garage is packed full of items.
 I just convinced my self, the place would never sell with them living in it. :-)

Couple of things...

Doesn't matter jack if the life estate part is actually true (and I doubt it is - you'd still be listed as connected to this property). You in the US? Then if someone is hurt or gets taken by your sister, they will STILL sue any and everyone attached to the property to get settlement. Even if they don't have a legal leg to stand on... you want to deal with the hiring of a lawyer to defend yourself, the headache of worrying over this, the hit to your insurance if they do decide to settle just to kick the suit out as fast/cheap as possible and ding YOU for the trouble? Insurance companies do this ALL THE TIME - that's why the US has become a sue-happy place. Insurance companies know how to weigh the cost of defending against a frivolous lawsuit versus just offering a few thousand/tens of thousands to get the case settled.

And saddling your kids after your death with this albatross is just shitty. I had a hoarder parent. I begged for DECADES to let me help, let me find help, anything... it was horrible. My family home was filled with garbage and things I'd hoped to save from childhood were forced out into garbage. It took about a year to fix it up enough to sell easily, and it was expensive and a pain in the ass (which fortunately we could afford to hire out). Trying to untangle ownership and dealing with potentially nuts relatives down the road in addition to all that? Oh hell no, please don't do this to them. I know, that means YOU have to deal with it NOW, but again... the best solution would have been telling sister no to co-ownership when you both inherited way back when and just selling up if she didn't have the funds to buy out your share at that time. But it's water under the bridge at this point, and your sister is a pretty lazy, moochy jerk and you just need to deal with her shit and get untangled once and for all.

She's not going to be helpful or anything; she's profited off your avoidance. She's really good at making things seem complicated and acting as if it's somehow your responsibility to keep subsidizing her stupidity because it is what's worked for her all this time. Actually she's been pretty shrewd about using you and getting way more than her fair share because she doens't care about you or your family - just herself. So realize that, and take control finally.

[bugbaby]

In this type of cases,  I don't think it really matters whether or how much you need or really want this $35k. Your sister is a financial and likely all-around dud.

Besides, if you never agreed on the value of her caring for your dying mother, she probably feels she deserves everything for that.

I've been there. I turned my home loan of $80k to my sister into an outright gift and removed myself very early from a situation that was gradually turning toxic.

 There is a type of disordered relative whom the more you give, the more they resent you while also feeling entitled to even more.

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[carolina822]

Ya, I could just give it to her, but I worked hard and lived frugally, I shouldn't use a $0.35 coupon and just let $35,000 go away.
 I suspect I'll end up give her a Life Estate vs. Irrevocable Trust and then the property goes back to me at her death, or my kids.

https://www.investopedia.com/articles/investing/010716/life-estate-vs-irrevocable-trust-which-better-you.asp

Going that route you will still be tied to the crazy train and have liability.

What if she does not take care of the house and it is worthless/ uninhabitable or when she calls you and it needs repairs that she can not afford? What about the fines from the city when it is not taken care of and gets fined?

How would you feel leaving your half to your kids and having them deal with her and everything that comes with it if you pass away first?

Seems like a whole lot of downside for no upside.

Put emotions aside think about it like some random person left it to the two of you how would you feel then?

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Maybe I don't understand, but I thought if I gave her the property with a life estate, it was her's until she died and then it reverted to my name.
 I may have given the wrong impression about condition of the house, It is far from great, but it is not falling down either. The state values it at $67k and it is probably worth that or more. The house won't show well because  one of the two is a bit of a hoarder, I went up there after watching the Aug 2017 Solar eclipse with my daughter, it's a squeeze to get through the kitchen the living room is only half usable because of to much stuff, we hardly had enough room to sleep. The have tarps covering exess item between the garage and house and the garage is packed full of items.
 I just convinced my self, the place would never sell with them living in it. :-)

Not a lawyer, but since it's only half yours, only your half of the life estate would revert to you, right? So then you're fighting with her kids over her half that they just inherited. I can't imagine that's going to be any easier than what you're facing right now.

35 grand isn't chump change in my world, but even I would just let her have the damn thing if selling it isn't a viable option. It's frustrating and it doesn't sound fair, but short of forcing a sale, you're never going to see much money from it and it's going to give you years of heartburn. It sucks, but a prolonged fight over (in the grand scheme of things) not that much money doesn't seem worth it IMO. You've worked hard and you're retiring - you're not the loser in this situation unless you let it consume you.

edit: just realized that you're the "build a wall" guy from another thread. Since it seems you enjoy spending money on things to make a point rather than accomplish an actual goal, then carry on with whatever your ridiculous plan is.
[MOD NOTE: let's stay on topic]

[nancyjnelson]

And saddling your kids after your death with this albatross is just shitty.

+1

Don't do this to your kids.  Deal with it yourself - shirking your responsibility and kicking this mess down the road to your children does not do them any favors.

[PhilB]

Tell your sister that you are really grateful to her for looking after your mother those last six months, and that you'd like to give her your half of the house to say thank you.  Then ride off into the sunset feeling really good about yourself.  That's the only way I can see you coming out on top.

[Villanelle]

I'd rather inherit $35k less in total property than had to figure out how to extract half a house from someone who has already proven they can't buy out half.   And a house that has a hoard in it. 

You are trying to preserve a gift of a shit sandwich for your kids.  If your sister dies first, you'd handle the mess (and yes, it will be a giant mess, from the sounds of it, and you will probably pay a fair amount of money to get the house cleaned out, please real estate fees, all from the already relatively modest $35k.  If you die first, then your kids get the same worthless alf-share you have, with the same headaches. 

To me, your options are to give a firm deadline and then force the sale, seller-finance her buy out (with a lien filed, and a willingness to  actually foreclose if she defaults, and to charge interest and fees when she is late--and make sure she knows that!) or just walk away after getting yourself legally removed from the house in all ways. 

[soccerluvof4]

I'd rather inherit $35k less in total property than had to figure out how to extract half a house from someone who has already proven they can't buy out half.   And a house that has a hoard in it. 

You are trying to preserve a gift of a shit sandwich for your kids.  If your sister dies first, you'd handle the mess (and yes, it will be a giant mess, from the sounds of it, and you will probably pay a fair amount of money to get the house cleaned out, please real estate fees, all from the already relatively modest $35k.  If you die first, then your kids get the same worthless alf-share you have, with the same headaches. 

To me, your options are to give a firm deadline and then force the sale, seller-finance her buy out (with a lien filed, and a willingness to  actually foreclose if she defaults, and to charge interest and fees when she is late--and make sure she knows that!) or just walk away after getting yourself legally removed from the house in all ways.

This ^.  I think you have done your share and she needs to take on some responsibility here. Its not your problem you have been the good sister so keep your mind clear of that and make your decision with that thought in mind.

[Annie101]

Tell your sister that you are really grateful to her for looking after your mother those last six months, and that you'd like to give her your half of the house to say thank you.  Then ride off into the sunset feeling really good about yourself.  That's the only way I can see you coming out on top.

This.

Also,  I wonder how your kids feel about this.  I would much prefer family harmony over inheriting $17,500 (it sounds like you have more than one child so divided by however many kids you have.) and having complete family dysfunction.

[Holocene]

I also think cosigning would be a terrible idea. Do you really want to be entangled in this property with her for another 30 years?  I also don't think a life estate is the answer.  If you die before her, your kids will have to try and deal with this mess and it doesn't sound like it'd be worth the hassle.

If it were me, I'd probably just give her the house.  It doesn't sound like she's in good shape financially and you don't need the money for your own retirement.  It's not a huge amount, so the loss isn't that great.  It wasn't your money to begin with anyway.  Sure, it's not fair and it does suck that she's not being responsible about this, but that's life.

If you're willing to potentially destroy your relationship with her, there are more options.  As others said, you could force the sale of the house to get your money.  You could try and do a private mortgage, but it'd take some research into how that would work and you'd have to be willing to foreclose on her and leave her with no place to live (ie. same as forcing sale of house but with more complications).  Or you could see if she could qualify for a mortgage of some lower amount.  That way you'd get some of the money and still be done with it.

Also,  I wonder how your kids feel about this.  I would much prefer family harmony over inheriting $17,500 (it sounds like you have more than one child so divided by however many kids you have.) and having complete family dysfunction.

Also this.  It's great that you want to leave your kids an inheritance from their grandmother.  But I agree that I'd rather have family harmony over $17.5k.  Maybe see how your kids feel before you decide if this is a hill worth dying on.

[PDXTabs]

I'll be fine without $35k, but I would like to leave it to my kids.

If I were your child, I would tell you to gift your half to my aunt so that you can retire in peace and I will never have to worry about this albatross.

[BudgetSlasher]

To echo others this needs to be settled soon. This is a house you are not living in and are not renting out, yet if I understand you correctly you are still paying at least a portion of the property taxes on and paying for insurance coverage. It sounds more like a liability than an asset.

I know you want to leave an asset to your children, but between now and then you are spending x dollars a year on additional insurance, y dollars a year on property taxes, and (judging by your descriptions of the house and your sister's ways with money) z dollar unexpectedly for major repairs (like replacing the roof). How long until that adds up to real money? How long would it take with x+y+z being invested (or left in investments) would it take to equal the 35K you think your half is worth?

Given everything you have said there seem to be two paths forward, either your sister ends up owning the house outright, this could be a result of you gifting her half the house; her buying your half of the house at 35k; or some combination where you accept less than 35k and consider the difference a "gift", or the house gets sold on the open market either because you get her to agree or because you go to court and force the sale.

One more thing, you say you each own half the house, but how is it spelled out? Is it a joint tenancy, tenancy in common, or something else? Depending on how the house is owned your kids may end up owning your half of the house and whoever you sister leaves her half to and still have to deal with this issue (only without the affection of family involved) or if you pass before your sister she could automatically own the whole thing and your kids get nothing (of course if you outlive your sister you would own the house and probably have to evict whoever was living there with her).

[Villanelle]

I also think cosigning would be a terrible idea. Do you really want to be entangled in this property with her for another 30 years?  I also don't think a life estate is the answer.  If you die before her, your kids will have to try and deal with this mess and it doesn't sound like it'd be worth the hassle.

If it were me, I'd probably just give her the house.  It doesn't sound like she's in good shape financially and you don't need the money for your own retirement.  It's not a huge amount, so the loss isn't that great.  It wasn't your money to begin with anyway.  Sure, it's not fair and it does suck that she's not being responsible about this, but that's life.

If you're willing to potentially destroy your relationship with her, there are more options.  As others said, you could force the sale of the house to get your money.  You could try and do a private mortgage, but it'd take some research into how that would work and you'd have to be willing to foreclose on her and leave her with no place to live (ie. same as forcing sale of house but with more complications).  Or you could see if she could qualify for a mortgage of some lower amount.  That way you'd get some of the money and still be done with it.

Also,  I wonder how your kids feel about this.  I would much prefer family harmony over inheriting $17,500 (it sounds like you have more than one child so divided by however many kids you have.) and having complete family dysfunction.

Also this.  It's great that you want to leave your kids an inheritance from their grandmother.  But I agree that I'd rather have family harmony over $17.5k.  Maybe see how your kids feel before you decide if this is a hill worth dying on.

This is an interesting possibility.  Go with her to the bank (because she absolutely could be lying about not qualifying) and have them tell her the max loan for which she qualifies.  Then sell her your half of the property for whatever that amount is.  You may not get the full amount, but you'd likely get most of it.  Theoretically, you could then do a private loan (with a lien for the difference), but that might be more trouble than it's worth, especially after you pay for the lien paperwork and filings. 

You may also find out that she's lying about not qualifying because the status quo is pretty darn nice.  I thought your half was $35k (not $17.5 k), but either way, that's a pretty small amount and the bank would only be financing 50% of the property so if they have to foreclose they would be in decent shape starting from day 1.  So it's curious to me that she didn't qualify.  So go to the bank with her, find out what they will give her, and accept it, if you aren't willing to just sign it over. 

[former player]

As OP's sister lives 1,000 miles away it might not be practical for OP to go to the bank.  How about OP says to sister "I'm retiring, I need my share of the money from the house, I'm sorry you haven't been able to get a mortgage but because you haven't I'm afraid it's going to have to be sold.  I'll be getting in contact with a real estate agent next week".  That might smoke out whether a $35k mortage is really impossible.

Given that the OP's sister has children, and friends, and a job, has taken all the cash from the estate and had 7 years of free housing to boot, I don't see any reason for OP to subsidise her further.  In those circumstances, I'd be tempted to force sale of the house even if it costs the whole of the proceeds.

[Kl285528]

Hard money lender would likely make a loan to her. Basically a fifty percent down deal. She gets the loan, carries the mortgage and you get the proceeds from the loan. Heck, even if the hard money lender would only lend 30,000 that is 30,000 more than you have now. Then the hard money lender forecloses if need be, and you are out of it.

[Holocene]

You may also find out that she's lying about not qualifying because the status quo is pretty darn nice.  I thought your half was $35k (not $17.5 k), but either way, that's a pretty small amount and the bank would only be financing 50% of the property so if they have to foreclose they would be in decent shape starting from day 1.  So it's curious to me that she didn't qualify.  So go to the bank with her, find out what they will give her, and accept it, if you aren't willing to just sign it over.

Yes, OP's half is $35k.  But OP mentioned not needing the money and wanting to give it to his/her kids (plural).  So assuming 2 kids, they'd each get $17.5k.  Less if OP has more than 2 kids.  Annie101 commented, and I agreed, that the kids might not think it's worth the family strife this may cause for that amount of money.

Also, I agree that it's odd that she can't get a $35k loan for 50% of the house.  At first, I thought it might be because the amount was too low that many banks would not bother with it.  But OP suggested cosigning as a possibility, so it seems like her credit/income was the problem and not the loan amount.

Given that the OP's sister has children, and friends, and a job, has taken all the cash from the estate and had 7 years of free housing to boot, I don't see any reason for OP to subsidise her further.  In those circumstances, I'd be tempted to force sale of the house even if it costs the whole of the proceeds.

Agreed that the sister has already been given more than her fair share and does not have a right to be subsidized any further.  That being said, the sister may see this as her sibling essentially kicking her out of her home and leaving her with little to live on.  It could potentially destroy that relationship.  Maybe the OP is ok with that, but it's something that should be considered before going that route.