I am not a bank...
 

I'm going nuts here. My brothers and I own some inherited property together. My oldest brother wants to purchase the property, and he wants my other brother and I to finance it for him. To understand how badly this stinks you have to know a little about my brother. His longest full time job lasted a couple of years. He had other part time jobs here and there and has not had a job at all in about 12 years or so. The house he is living in now was given to him, so he has never had to make a mortgage payment. He is married with 3 kids, and a stay at home "dad" while his wife works. He is the kind of person that everything always falls into place for, and I can never figure out how. Life just seems to swing his way. He doesn't have credit so he can't get a loan. To deny him the financing would cause issues that I don't want to deal with. He can be a bully and could make life unpleasant. But to agree to this financing would, I feel, be a huge mistake. There would be no recourse for me if he didn't make payments, and I would have to deal with his crap, again. He had an appraisal done on the property which came out about $100,000 less than we expected. So, that's another issue. I'm not asking for a solution, but has anyone dealt with something like this? Have you financed property for someone? How did it go? Should I trust this appraisal, or get one of my own? He called me Friday about this, and the conversation did not go well. He wants to move fast on this which also makes me nervous. Anyone have any words of wisdom?

Don't loan money to family or friends. Kids are the exception.

If your gut says, no. Listen to your gut.

I put a 4-wheeler and a computer in my name for my brother because his credit wasn't good enough. He swore up and down he wouldn't miss one payment.
He quit paying on both items mid-way through, and I couldn't afford the payments, so now my credit is fubared, as well.

Like Charlie says, don't loan your family money or your credit.

"To deny him the financing would cause issues that I don't want to deal with. He can be a bully and could make life unpleasant."

This would be the lesser problem.

The surest way to screw up a close relationship (family/friend/significant other) is to lend them money. It will ALWAYS end up badly (well, there are RARE exceptions). There's almost no way to avoid resentment.

DO NOT lend money to friends/family/SO's that you cannot afford to give them.

just tell him you don't have it in your budget. end of story.

And even with kids, you can usually kiss it goodbye.

If he can't qualify for financing, you are under no obligation to provide it. For your own financial well being, you must be firm here. If he is pressuring you to move fast, I would say that's a warning sign.

Money and family is a bad mix, I won't get in to my story, but I am owed 80k now by my brother.

Only get in to it if you are willing to accept that it may be a write off.

Sell the property, and if you are feeling incredibly generous and ballsy take some percentage of your share and loan it back as a second mortgage to help Mr. Lucky swing something with another piece of property. But be ready and willing to let that bit of your share you loan back go. And be willing to let your brother go at the same time, because this has Family Hell written all over it.

Personally, I would just take my share and use it to enhance my own life. Let Bully Boy go screw someone else around. If he chooses to be unpleasant try to look at it as an interesting example of interpersonal malfunction on his part and not something to take on personally.

My .02

He has no idea about your financial situation, tell him things are really bad. Heck turn it around and ask to borrow money from him. A preemptive strike!

I've lent money to family before. I am lending someone money I really never expected to be paid back in my head. I just assume the person is going to fail to repay, I never tell them that though! I try and make a habit of giving off the impression I am broke so people don't ask.

Although if you don't like your brother might be a great way to get him out of your life, lend him the coin, he never repays and now you have something over him!

On a side note, if you ask to borrow money from me and tell me you are going to pay me back. If I have to ask for the money back because you've failed to repay it, the relationship is over because you obviously don't respect me enough.

My sister borrow a couple grand off me a few years ago, I've never asked for it back. I just expected her to have enough respect for me to pay me back. Now if she comes for more, too bad so sad.

It's all been said. I've seen it in action. My father loaned money to his best friend from childhood and lost everything he had to recover from that loss.

And I know a couple of people just like your brother. They charm and manipulate their way throughout life. It may be unpleasant to deal with the consequences of saying no, but I can assure you that the cost of saying yes would be much greater. Don't enable him.

I've never lent my family money. And when I do give them money, I have little expectations of getting it back. It's usually the argument I use for not having to give them any more.

This story sounds exactly like my current situation, except substitute your brother with my sister-in-law, add a kid, and minus a spouse. If you find a way to get through this smoothly, let me know because I could use the tips.

PS - Don't give your brother any money.

Simpler than what I replied with, :thumbsup:

I give not lend. My sister who works full time, her husband makes 3x what I make still had to borrow money from me. All because they can't live within there means. I bring my lunch everyday to work, she eats out. She has really beautiful things, I own ok things. Her couch was repo'd last year. Yes they repo furniture lol. Loved it.

She can starve before she gets another dime from me. My poor mom keeps handing them money, she'll never learn.

No, No, No ... never ever

Nothing good can happen by tying your finances to your brothers.

As far as appraisals go, they are just a guess, property is worth what you can get for it.

Don't loan it to him. This isn't, "I'm stuck in prison, can you bail me out?" He doesn't "need" this money, he just wants it. The urgency is really scary, as well. It is as if he wants to get it over with before you realize what a bad idea it is, OR he has gambling debts or something.

Don't loan it to him. If he were a stranger on the street and had his credentials, would you loan this money to this person? That's the criteria you use. Shared DNA doesn't matter in business decisions.

Don't loan it to him. Have we all not learned enough from the last 10 years as to what happens when money is knowingly loaned to people who can't pay it back? You are not FDIC insured, you will not receive a bailout. You are the steward of your children's futures and this wealth is yours and theirs. Gambling with it on a brother is morally irresponsible to your immediate family.

Don't loan it to him. Maybe things fall into place with him because others don't have the courage to say no to him. He's simply unworthy of such good fortune. You've worked hard and played by the "rules of life." He hasn't.


The only way I would do it is for him to make payments into an "escrow" account. When that account balance reaches your third, you will withdraw the money from the account and do a quit claim on the deed. It's basically a layaway plan. Don't relinquish your ownership until you are paid in full.

Don't loan it to him. (I think I said that enough...okay...one more time)

Don't loan it to him.

An interesting/amusing/outrageous example of how lending money to family can get out of hand:

Miss Manners

This is a good time to JUST SAY NO.

Just gonna pile on with another "Don't do it!".

If you end up letting him bully you into this for some reason, just give him the land. That's what's going to happen anyway, so you might as well be honest with yourself and him about it.

Wow, I can't believe that you referred to Cam Newton as "property" and that you "inherited" him. Also, I'm pretty sure that the NCAA ruled that you guys don't have to pay for him anymore. So maybe this "loan" isn't necessary....

OK, serious now. I have a hard and fast rule when it comes to loaning money to family and friends. I will do so with a written contract. I will do so only when I'm comfortable with the entire scenario. And I will ONLY do so when the amount of money is equal to one that I would consider giving as a gift.

My guess is that you're dealing in sums much larger than what's possible in my last caveat. So what I'd do is tell your brother that he needs to convince you like you're an investor. He needs to show you a concrete plan on how and when you'll be paid back. If he can't do that, you can't afford to part with that much money. I've made this scenario work too, but I've never said "yes", mainly because I knew the folks asking couldn't meet my standards.

Oh, and under no circumstances should you ever sign on to a loan with someone else unless you can afford to make the payments yourself.

First of all, this has to do with inherited property. He isn't asking for any money from you, only to buy you out of it. Therefore, it isn't the typical situation when a family member needs money.

Why can't you hire a lawyer to draw up a payment schedule for the property. You can "sell" to him based on that and let him obtain a new deed for the property in his name but you and your other brother can put your own liens on the property that will only be released when the payments are met.

That way you will be protected. If he fails to pay, you still retain control of it and he can't sell it without you releasing the liens on the property. You should still get your own independent appraisal done but don't be surprised when it comes back as less than you thought. Property has lost lots of value recently.

Who needs to pay for a financial advisor when I've got such great advice coming from the experience of the members of TFP? I was really starting to feel guilty about being reluctant to get involved with my brother financially. But you people, and I can comfortably say 100% of the responses, have given me some extra backbone for this. I'm going to have to go back and count the "don't do it's". I'll tell my brother that I talked to my financial advisor and that I was strongly advised against this. That will get him to back off a bit.

Jazz, thanks for the lighter side. How did you know I was talking about Cam? And I like your idea about a concrete plan, but as soon as I tell my brother to give me a plan he'll think I'm agreeing to the whole thing. So, my advisor's NO is my best bet right now.

Cimarron, I wish I had you in my earbud saying "don't loan it to him" when I talk to my brother again.

Grasshopper, if it goes smoothly I'll let you know.

Sticks Man - I hear you.

Greywolf, great link.

The rest of you, great advice and great details.

Jazz, any advice on playing Oregon?

---------- Post added at 04:12 PM ---------- Previous post was at 04:07 PM ----------

Good advice, but my only recourse if he didn't pay would be to evict him and his three kids? Not sure I could do that to the kids, and deep down I know he won't pay what he owes. I'll have to think about this some more.

grancey, why would you be evicting him and his kids? i thought you said he owned the other house that got gifted to him?

hes probably using this house as an investment property by the sounds of it

grancey,

I was actually coming back here to type the same plan as kutulu proposed, and now I don't have to. I feel as if there is a piece of the picture we are missing. What is his proposal exactly? Is it that you sign the property over to him, and then he will make payments to you of X per month until you get your third? So, in effect, you don't risk losing any money, you simply lose your inheritance - a sum which is not yet realized?

So, his credit is shit and he can't borrow the money from a bank and wouldn't anyway because he thinks he's entitled to an interest free loan from you. He would also be "purchasing" this property from you during the lowest property values in 20 years - how convenient. What does he intend to do with the house he's living in? Is he going to sell it? What's he going to do with that money? (Hint: he's not going to pay you with it.)

Quite frankly, why would you enter into a business deal with anyone when you accept 100% of the risk and get absolutely zero reward for that risk? What was that phrase? Don't loan it to him? That's the one!

I might be the first to say this but, go ahead lend/give him the money.

That way you won't ever see the freeloading low life ever again!

Don't feel guilty - he'll carry on bullying whatever he can off somebody else - that's how he finds things work.

If you love your brother tell him how you feel, if he loves you he will understand and apologise. If he doesn't.......

To me this doesn't sound firm enough. Just tell him that your trusted financial advisor said not to do it, so you won't. And don't get into why with him. He'll ask why, of course, and maybe who as well. Just say no again. Or "What is it about NO that you don't understand?" It sounds like you've been intimidated by Big Brother for a long time. You need to do more than just "get him to back off a little bit."
As an aside, you could offer to buy him out instead. Then you won't have to deal with this scenario again some time in the future.:) You really don't want to be in a long term relationship (business or personal) with someone that you can't trust.

Lindy

Have to disagree, I think it would have the opposite effect. He'll keep coming back for more.

He wants to move into this property and, I assume, sell the house he is living in. But that didn't come up in our conversation so I don't know for sure. If he did sell the house he is living in, moved into the subject property and couldn't make payments, then that is where eviction came up.

---------- Post added at 09:24 PM ---------- Previous post was at 09:09 PM ----------

You have raised so many interesting questions. He never mentioned what he wants to do with the house he is living in or what he would do with the money if he sold it, assuming that he would and could sell it.

We never got into a detailed discussion of how this would work. He mentioned us financing the house for him, and that is as far as we got. He did not offer any details. So, you are right, there are pieces missing. I wasn't prepared to ask questons when he called me as I was caught off guard.

---------- Post added at 09:27 PM ---------- Previous post was at 09:24 PM ----------

Agreed

He wants to live in the property, so buying him out is not what he is after.

hang on...

if he sells his current house, and buys anotehr one within a certain time period, isnt there a tax law that exempts him from paying tax?

so basically he's getting you to finance his new house, he doesnt pay tax, and he frees up all his money to do as he pleases..make more money, start a business...buy another house...

sounds like theres more to his plan than first thought. but im with jazz on this one, if i were you id make him draw up a business plan and set the bar so high that youd have to say no. that way you can blame him for not convincing you it was a good business proposition.

Just gonna shout my "DON'T DO IT !!!!!" too.......Just makes an already bad situation worse....

Actually, that's EXACTLY what he's after. He's not buying anything, is he? It's something you inherited together, right?

I'm not sure I understand your question. Yes, the three of us inherited the property, and he wants to buy out my other brother and me. Since he can't get a loan, he wants us to finance our thirds.

Yeah. You aren't a bank, but are you his bitch? Because that's what he's going to make you, if you go through with this.

Grancey, if he pursues this any more, you need to figure out what it is he wants to with the property. Is he going to live there? Sell it for triple the value? Bury bodies there? His answers are going to dictate what you want to do to help him.

If you decide to help him, there are some relatively risk-free ways that you can do so and still get paid. The lien idea is one, and you should consult an attorney for others. With the lien, if he stops paying you back, he can't sell or borrow against the property without your consent or knowledge. If he sells, you're automatically first in line for any payment - including in front of him. But there are other options, should you decide that this is something you want to do.

And if you do decide to do it, there's no law, rule or manner that says that you can't charge him interest on the deal. Actually, I would suggest that you absolutely charge him interest.

With the personality type described, legal recourse would be costly and lengthy, not to mention more drama and tension within the family.

Ever think about buying out his third of the property (with or without your other brother) instead? Give him a chunk of change and maybe he'd do something on his own?

jewels' idea is pretty good.

not sure of your financial situation. but if you own your current house, ask to buy him out. take a loan out against your house and buy your brothers out. if you own a third of it, then your rental return may cover the repayments. not sure about US tax law but you may have some other tax benefits because of this too.

Wait a minute. Let me make sure I understand this.

When someone wants to buy someone out it implies they have the funds or means to do the buy out. If they don't then they can't.

I don't get how one can finance your thirds in order to allow him to "buy out" your share. Basically what it sounds like to me is that he'll get to move into a place and now have positive cash flow since you both will be paying him as part of the buy out.

So big dick swinger over there says,"I'll buy you out of your share" better actually have that means other wise. He doesn't get nothing without having means.

What makes most sense is to buy him out if you have the means. This will free you up to do what you want with the property without his poor or bad ideas cluttering up the runway.

If I understand this right:

The Three of you inherited a Property.
There is a dwelling on the property.
There is no outstanding debt on the title of the property (you 3 own it, not the bank).

If this is correct.

1. What is stopping him from just moving in and squatting? If he's as nefarious as you suggest, he's probably thought about it.
2. Owning a communal property is a PITA for everyone involved, get out if you can.
3. What was the value of the property when you inherited it?

My suggestion.

The two of you, whom he wants to buy-out, need to determine a fair price to sell. That price should not be based on today's market, but an average of the high and low since the property was inherited. Leaning toward the high end.

Get a bank appraisal of the loan value of the property, if that value falls near your 'fair price'. Send him to the bank to finance the property. If a Bank has the property as collateral, his credit or lack of, should only influence the interest rate of the loan. He should also be able to use his current home as collateral if there is no outstanding loan.

IF he isn't willing to take on the financing, he isn't willing to pay the debt.

The only other option I would look at, is suggested above. Hire a lawyer, draw up a contract and open an escrow account. He can then pay into the account until the agreed upon amount is reached. Then and only then, you take the money and sign a quit claim deed giving him full title. At which point he may occupy the property, not before.

Either way, the two of you get your inheritance and he gets the property, or the bank gets it. With no loss to you or your other brother.



..

Thanks, Rogue. Given me some things to think about. And as for the suggestions of buying him out, I really don't want to. I want to be rid of the property without any entanglements.

---------- Post added at 12:57 PM ---------- Previous post was at 12:53 PM ----------

I will check into the lien idea. Thanks

Grancey,

If you want to get rid of the property, then put it up for sale. you can force the sale of the property, or your brother could get a loan and buy you out. As you said, you are not a bank. Under NO circumstances to you put your prosperity at risk so your brother can take ownership of this property.

While the lien protects you, the safest thing to do is the escrow account. That way, you alway retain ownership of your inheritance until the exact moment you get its monetary value. With the lien, its lawyers, lawyers, lawyers were something to go wrong. Trust me, the only ones who win in those situations are the lawyers. The property will be forcibly sold by a judge and by the time you pay your attorney fees, the inheritance is gone. I've seen it happen twice now.

My fear is that your tone is still a bit wishy-washy. You sound like someone who could waffle and get taken advantage of by him.