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Sell Or Lease Home To Faithful Caretaker

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By ILYCE GLINK Tribune Media Services

The Tampa Tribune

Published: August 28, 2008

I inherited a home from a family member, and it has no mortgage. The house is in California and I am in Georgia. The caretaker, who was instrumental in taking care of my elderly aunt before her death, wants the house but would not qualify for the mortgage based on her income or assets.

I will be happy to hold the mortgage to make the house a viable option for her; she was a "godsend" during my aunt's illness. I think you mentioned a company on your radio show or in one of your columns that can help with the transaction.
Document preparation is my primary concern, although I could probably get a good real estate lawyer to help me with that. I do not need a middleman to handle the payments as I have a number of rental properties. I want to ensure I am completely informed of all issues surrounding this transaction.

You're trying to reward someone who helped you out in a time of need, and that's a good thing. What you need to focus on is whether you should sell the home to this person or rent it to her.

If you rent the home to the caretaker, you might give her time to get her finances in order until she has enough assets and/or income to qualify to purchase the home from you. You and the caretaker can decide on the rent you would be paid and the responsibilities each of you would have for the maintenance and care of the home.

If you simply want to sell the home to the caretaker, you and she could agree on a price for the home, the amount that you would finance for the purchase and the interest that you would earn on the loan amount. If the interest is well below market interest rates, you could run afoul of Internal Revenue Service, and some of the terms of the loan could be considered a gift to the caretaker.

In terms of financing the home, you would have two options in most places. One option would be to sell the home outright to the caretaker and take back a mortgage or deed of trust on the amount she would owe you from the sale of the home.

The second option would be to sell her the home on an installment basis or contract for deed. In that arrangement, you would remain the legal owner of the home and your caretaker would pay you over time for the title to the home. When the caretaker satisfies the terms of the contract, title to the home would be transferred to her.

Since there is no mortgage on the property, and you don't have to worry about covering expenses above and beyond real estate taxes, insurance and simple maintenance, the finances of the property should be relatively easy for you. Depending on the circumstances and what your intentions are for the home and your late aunt's caretaker, you and she will have to agree on a price for the home and monthly mortgage/home payments or monthly rental payments she can afford.

But you should draw up a proper lease or sales document that conforms to California law. My suggestion would be to go to the California Department of Real Estate to see if they have a lease form you can buy or use. Or hire a real estate lawyer in California to draw up the sales documentation along with the mortgage documents.

Write to Ilyce Glink at Real Estate Matters Syndicate, P.O. Box 366, Glencoe, IL 60022; or e-mail thinkglink@aol.com.

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