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Adding My Name To Title
January 6, 2020
7:51 pm
Norm Nuthatch
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I declared personal bankruptcy several years ago and currently have little in the line of savings.
My common law partner and I rent the main floor of my elderly mother's house. My mother lives in an apartment in the basement, but because of poor health, she wants to transfer ownership of the house to me/us.
My Mom took out a home equity line of credit on her house some time back and she owes $160K on that. She plans to sell the house to us by having us pay off the outstanding $160K. We are also looking to borrow another $40K to do some home improvements after we buy it.
The bank has appraised the house at $280K, so the way I see it, my Mom is gifting me (us) an equity of $120K. However, because of my bankruptcy, our bank says the mortgage and title cannot be in my name. Is this correct?
How is my $120K recognized in title to the property? The way it stands is that if my relationship with my partner ever went downhill, then my Mom and I could both get kicked out of our family home as we would no longer be listed as owners of the property.

January 6, 2020
9:59 pm
Oscar
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Hi Norm ,
I will give you my advice but I know nothing and others here have knowledge about these things so I will chime in to get the conversation going.
I assume your mom wants to do this so she can rest assured that matters are settled when she passes on. But she probably doesn't know any more about these matters than you or I.

Norm Nuthatch said The way it stands is that if my relationship with my partner ever went downhill, then my Mom and I could both get kicked out of our family home as we would no longer be listed as owners of the property.

You said a mouthful.
Keep renting. Tell your mom to raise the rent. When your mom passes on you will inherit the house and it's yours including the debt on it. At that point you will own the house (almost) and should have enough of a stake in the property that a mortgage broker should be able to get you a mortgage for the outstanding $160 thousand and you will have rental income from the basement apartment .If you can't get a mortgage at that time then the house will have to be sold and YOU will walk away with $100000.00 after taxes, in your bank account and then you can both find a place to rent or buy somewhere else , especially since your spouse is deemed to be mortgage worthy by the bank.
Might be a good idea to quietly visit a lawyer for advice too.
I don't mean to offend I am just offering an outsider's perspective.
Common law partners aren't entitled to your inheritence. Unless you slip up.

January 6, 2020
10:46 pm
Loonie
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You need to see a good lawyer, pronto.
Find out where everyone stands and is going to stand in view of various eventualities.
Take advice.
This is too complicated for you and your mom to solve on your own, let alone with us anonymous amateurs!
You will need a lawyer to help with the transfer anyway.

If you don't have a lawyer, ask around for a referral. Not all lawyers are competent. Unfortunately, I have experienced this first hand.

If your partner feels threatened by you seeing a lawyer, time to re-think that relationship. He/she should be able to appreciate that everyone needs to be clear on the best way forward to honour your mother's intentions. If the relationship is healthy, you should all know where you are at, what your rights and responsibilities are.

When and if you do get to a mortgage, a mortgage broker may indeed be able to help, as Oscar suggests.
I am under the impression that bankruptcies disappear from your credit record after a number of years. I believe it's 6 or 7 but not sure. My info could be out of date. You can ask one of the credit agencies such as Equifax about that.

January 7, 2020
6:42 am
Norman1
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Norm Nuthatch said
I declared personal bankruptcy several years ago and currently have little in the line of savings.

The bank has appraised the house at $280K, so the way I see it, my Mom is gifting me (us) an equity of $120K. However, because of my bankruptcy, our bank says the mortgage and title cannot be in my name. Is this correct?

That is definitely not correct. The minute one is discharged from bankruptcy, one can own property, like cars, real estate, or livestock, and borrow money. The challenge is to find a lender willing to lend to someone who has just emerged from bankruptcy.

How is my $120K recognized in title to the property? The way it stands is that if my relationship with my partner ever went downhill, then my Mom and I could both get kicked out of our family home as we would no longer be listed as owners of the property.

There is no recognition if your name is not registered in anyway on the property.

Never mind the relationship. Your partner can actually call the police and have you and your Mom forcibly removed immediately after your Mom's name is no longer on the property's records.

January 7, 2020
7:00 am
Saver-Mom
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Agree with the advice to consult a professional.
Also, advice may vary by province.
In my province inheritances are protected even from married spouses.

Found this out when a friend got divorced. She had no claim to the family home which was bought with money from the sale of a prior home inherited by her husband.

January 7, 2020
7:30 am
Bill
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My understanding in Ontario is that if inherited funds are kept separate (e.g. own bank account) they are not part of marital assets whereas if they're mingled with joint assets (e.g. joint account) or used in a way that is not exclusive (e.g. wife inherits money that she uses to buy her own cottage but it's used for family use) then they do form part of marital assets. However the matrimonial home where both reside is exempt from the above, can't be chased from that, and both spouses entitled to 50% of it no matter who bought or owns it. I'm an amateur, I stand to be corrected as I've had no experience in the matter, but I do echo those who suggest legal advice if there's a possibility of break-up (which today goes without saying).

A very elderly neighbour either gave or loaned her daughter money to buy a home for the daughter and husband, they split and now he is entitled to stay in the home (with no intention or means to pay it back) which he is doing so the daughter has moved out to another place and her mom has to go to court to recoup a significant part of her and her dead husband's life savings. According to neighbourhood gossip via my wife who is notoriously uninterested in financial matters and likely got a bunch of details wrong.

January 7, 2020
8:00 am
Saver-Mom
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Everything is different in QC, and may vary by province, sf-coolhence need to consult local professional

January 7, 2020
8:26 am
Doug
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Norman1 said
Never mind the relationship. Your partner can actually call the police and have you and your Mom forcibly removed immediately after your Mom's name is no longer on the property's records.  

Haven't read whole thread, but isn't OP's mom listed as joint with OP's partner on the property title? Even if his mom were to pass away, at most, the title would be update to "The Estate of ". Assuming OP is the sole or one of the primary beneficiaries in his mom's estate, he has a vested interest in that interest in the property. If he has separately paid into the home, then that needs to be documented in writing, ideally while his mom is still living and can attest to this. That way, if it ever ends up in court, OP has evidence to substantiate not only his mom's recorded interest in the property but his own unrecorded equity interest in the property. One way to approach is this is written acknowledgement from his partner that his payments thus far have been recorded as "equity purchases" and not as "rent."

Cheers,
Doug

January 8, 2020
12:26 pm
AltaRed
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It is my understanding the mother took out a HELOC. That is usually not transferable so that had to be paid off at time if title transfer, and OP and partner need to take out mortgage to pay mother.

There should be no issue with OP taking title technically speaking but if OP cannot get a mortgage, then it appears OP needs partner to also be on title to qualify for the mortgage.

The issue really is whether OP and partner are comfortable taking on joint title and joint mortgage for the house.

Another option should be to simply add the OP to mother's title on the house, and re-do the HELOC to add OP to the HELOC. If mother's credit was enough to qualify for HELOC in the first place, her signature should still be good enough for a joint HELOC with the OP.

January 8, 2020
6:20 pm
Norman1
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That depends how long ago the mother was approved for the HELOC.

She may have had a well paying job when she applied. Now, in poor health, her income has dropped substantially and would no longer qualify.

January 8, 2020
6:32 pm
Norman1
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Doug said

Haven't read whole thread, but isn't OP's mom listed as joint with OP's partner on the property title? Even if his mom were to pass away, at most, the title would be update to "The Estate of ". …

OP's Mom is sole owner. Mom is proposing to sell the house to OP and OP's partner for $160K, which is $120K below the appraised value of $280K.

OP would like to obtain a $200K mortgage on the house. $160K of that would go Mom's bank to pay off the $160K Mom owes on the HELOC currently against the house. The remaining $40K would be for improvements to the house after the transactions.

Joint ownership doesn't work that way. When a joint owner dies, the deceased owner is removed from property title after the death certificate and some paperwork are provided to the land registry or land titles office. Ownership is "transmitted" to the surviving joint owners.

One needs to be careful with real estate. Side agreements not registered against the property don't always count. In some provinces, long-term leases that are not registered are void against a new owner. Existing owner can sell the property and new owner can have the "trespassers" forcibly removed.

This is done so that a new owner doesn't have to deal with any agreements some previous owner had signed but "forgot" to mention to subsequent owners, like a ten-year agreement for snowmobiling on the property in return for an upfront payment.

January 8, 2020
7:05 pm
Norman1
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Saver-Mom said
Agree with the advice to consult a professional.
Also, advice may vary by province.
In my province inheritances are protected even from married spouses.

Found this out when a friend got divorced. She had no claim to the family home which was bought with money from the sale of a prior home inherited by her husband.

Her husband may not have inherited the home. Instead, he inherited just the right to live in the home. The estate actually owned the home.

When the previous home no longer suited him, the estate sold it with his consent in return for the right to live in another house. When the estate bought another house, the husband got the right live in it. The husband and she then lived in that home.

It is a way for someone to "rule from the grave" and keep money out of the hands of ex-spouses of beneficiaries who seem to have poor judgment in partners.

January 9, 2020
5:45 am
Bill
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Norman1, can an estate buy a home and continue to own it indefinitely? I thought an executor's duty is to liquidate and distribute assets of an estate as soon as reasonable. Are you saying estates can continue to operate in perpetuity and indeed even acquire new assets?

Note also that if property held jointly is registered as tenants in common then surviving owners do not acquire title to the deceased's interest.

January 9, 2020
6:40 am
Norman1
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Yes, an estate can transact and hold real estate indefinitely. It depends on the will.

The executor's duty is actually to follow the instructions in the will. Lots of wills are just about liquidating and distributing. But, that's not all that a will can instruct.

The counterbalance is the expense of creating and running an estate that continues for a long time. Tax returns will have to be filed each year. Executor may refuse the appointment if it looks like he or she will need to run the estate for decades and there's no provision for appropriate compensation.

January 9, 2020
7:18 am
Bill
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That's interesting, I didn't know that, I thought you had to transfer assets to a formal trust or something like that, I didn't know an estate (which is a form of trust) could go on like that.

So I could set up a Will that says my estate will pay out, say, $50K per year to an adult beneficiary (also executor, say) for the rest of her/his life instead of handing it all over on my death? Cool.

January 9, 2020
5:35 pm
Norman1
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That's a common thing to do. Pay out to a beneficiary over time instead of all at once. Usually it is over a specific period of time.

The problem with payments "for the rest of the beneficiary's life" is that it will delay the determination of the residual for estate. Beneficiaries entitled to the residual of the estate will have to wait a long time or they may be motivated to arrange an "accident" for that beneficiary. sf-surprised

January 9, 2020
5:48 pm
Saver-Mom
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Norman, nice theory but no, there was no estate or trust.
He owned house 1 which he inherited while married.
Bought house 2 with money from sale of house 1.
House 2 doubled in value during marriage.
Wife filed for divorce thinking she would get half, but no, the house was solely property of husband due to Quebec inheritance laws.
Voila, la belle province
https://www.educaloi.qc.ca/en/capsules/dividing-family-patrimony

January 9, 2020
5:49 pm
Loonie
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Just sondering, Norman, are you or have you ever been a lawyer? Bill seems to take your word at face value without attribution. I am unclear how we should understand your comments.

I am well aware, however, that estates can hold real estate. I have personal knowledge of someone who died in 1966. This was before reforms in matrimonial law. His will allowed his widow to live in the house for the rest of her life, after which it went to their only child. The wife lived there another 30 years until she died but never owned it. It then passed to the daughter who was, by then, about 50.

There are also innumerable cases of estate assets being held back until beneficiaries reach age of majority or later, as specified by will.

January 9, 2020
6:20 pm
AltaRed
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I understand though all these assets reside in a testamentary trust for all that time, as in Estate of X.

My spouse and I each have a 'life interest' in our home too, so that the survivor can live in it as long as they like. Won't be 30 years though since we are both 70+.

January 10, 2020
5:55 am
Bill
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Norman1, I suppose it's always possible to will, say, 50% to one beneficiary at time of death and the other 50% (plus any income the estate earns) to be distributed over a period of years to another beneficiary (the one with the covetous, manipulative spouse with a roving eye), so as not to hold up the first beneficiary's inheritance. Speaking hypothetically, of course!

AltaRed, I'm not sure if a testamentary trust has to be specifically established by the Will terms or if an estate is just considered by definition to be a testamentary trust. I'm guessing the latter but in the case of an extended estate the settlor would want to specify the terms and conditions of the trust going forward so would do so in the Will.

I think we all get that anything we read on a site like this is information to be verified and double-checked elsewhere before acting on it, but maybe a reminder now for some folks isn't a bad idea.

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