Not According To Plan…


by Brandi Savitt – October 1, 2014

Borrow_Lend-Money-to-Family-or-Friends

When Georgia and Leonard’s mother fell ill, Georgia moved back to their childhood home in Chicago to take care of their mom.  When she passed away a year later, Georgia stayed in the mortgage free house. Single, with a great job, Georgia was making good money. So, when Leonard’s wife got pregnant with their third child, and they decided to move to the suburbs, he went to his sister for help…

After buying their condo at the height of the market, in not the most popular part of town, Leonard and his wife were having trouble selling it.  They desperately needed to sell if they were going to be able to make the move. Knowing Georgia was looking for an investment, Leonard asked her if she would be willing to purchase the condo, and then she could rent it out as an investment property.

Eager to help her older brother, the deal made sense to Georgia at the time, and the siblings proceeded according to plan.  But when Georgia was unable to rent the apartment for three months, and then had to evict the tenant she did get after eight months for not paying rent, she was forced to sell the condo in a short sale.

Georgia is not upset about losing the money – it was risk a she knew she was taking – but she is upset that her credit is damaged. While she tries not to hold it against Leonard, it has put a strain on their relationship. And while Leonard openly has expressed how horribly he feels that the deal went south, he has not made any overtures to try and soften the blow for his sister.

Georgia wants to ask Leonard to sign over his share of the family home to her in exchange for the debacle, but she doesn’t want to damage their relationship any further.

What would you do in this situation? What is fair?

Tell us what you think!

 

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6 Responses to “Not According To Plan…”

  1. Louie says:

    This is a really tough problem. If Georgia’s brother was a “Mench” he’d offer to do this himself, without hesitation. I don’t see the problem of them discussing how the shortfall could be made up by their both contributing.

  2. Summer says:

    Although Georgia did this to help Leonard…unfortunately I do not think he owes her his portion of the family home. Leonard and his wife COULD have stayed where they were until they were able to sell. Not optimal perhaps, but do-able. Georgia took a risk and got burned, however it is not Leonard’s FAULT and as a father of three, he should not be asked to give his share of the family home away. That said, Georgia should be able to live there until she is ready to consider purchasing something else…and she should not owe him “rent” during this time. In the end, however, the home is inheritance that should be split. And lesson learned….

  3. Sue says:

    As always insufficient data has been provided. Was she aware that they had tried to sell it for a while and not been able to get it sold? Did she have an appraisal done on it to find out true worth, it appears so since it stated short sale but possibly the particular lender allowed her to take over his loan which was probably upside down and his lender would know that. The brother was desperate to sell and in all probability would have had to sell in a short sale himself and would not have been able to purchase another if he had done so. She saved his credit but putting her own in the ringer even if she did not realize that she did so at the time. She just wanted to help….they need to settle this up and even though she was not too smart, she deserves something. If he signs over his share of the inheritance though there may be some income ramifications now or in the future that they should both think about. In other words do not just jump into anything without getting more information.

  4. Alice says:

    It’s the old story…family and financial deals generally don’t go well. Too much emotional investment distorts everybody’s thinking. Georgia acted hastily to help her brother without all the facts. Leonard knew better but wanted to extricate his young family. He really did take advantage of her largess. The family home belongs to both, but Leonard should make a deal with his sister to defray some of her lose . It is not required, but would be the loving thing to do for the sister who jumped in to help him without worrying about what might happen to her. Bet you he doesn’t , though.

  5. Molly says:

    Agree with both Sue and Alice.
    As Sue says, there’s not enough information given to give a good answer.

    As Alice said, Georgia acted in order to help her brother, so in my opinion, he does owe her something. Not likely his full share of the house inheritance, but definitely something. His sister stuck her neck out for him and his family and got burned. She deserves something. And for sure, she should be allowed to live in the home rent free for as long as she likes. Although it then begs the question, who pays the taxes on the house, and for major repairs should the house need a new rood, boiler, etc? Georgia and her brother need to settle this now, so that there are no nasty surprises down the road.

  6. Glynda says:

    I have to agree with Summer in that Georgia’s loss is not her brother’s fault. Any investment carries risk. As an independent real estate investor, I understand the learning curve Georgia is experiencing. We can’t blame the seller for our lack of insight in any case. Georgia seems to have believed she would a) be helping her brother and b)have cash flow from the property. So she is 50% successful! Lesson learned. Move on.

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