Looking For Some Legal Advice

Discussion in 'Community Discussion' started by Huntn, Jun 5, 2012.

  1. Huntn macrumors G5

    Huntn

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    #1
    3 brothers have inherited a house. I am one of them. The house should be on the market for sale by July. One of my brothers is experiencing financial difficulties and has asked us for an advance on the sale of the house. We checked with a lawyer who wanted to charge 3 hours ($750) to write up what I consider to be a fairly simply document.

    So and so agrees to take an advance on the house which will be deducted after expenses from his 1/3 share of the proceeds. It does not sound complicated to me.

    I am talking to a lawyer about this. I am a LegalShield member and might be able to get the firm to review the document if we draft it, but I thought a resource like legalzoom.com might be a good option? Any thoughts or advice?
    Thanks!
     
  2. balamw Moderator

    balamw

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    #2
  3. dejo Moderator

    dejo

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    #3
    Probably want to put the amount of the advance in there, at least. Also, "on the house" is too vague. Needs elaboration, as does "expenses" and "proceeds". IMHO.
     
  4. Koodauw macrumors 68040

    Koodauw

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    #4
    My advice would be to either 1. Buy him out or 2. have him wait till the sale happens.
     
  5. balamw Moderator

    balamw

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    #5
    Yeah, that's basically why I was suggesting the language of a loan.

    Brother #1 agrees to loan Brother #3 $XXXX with Brother #3's share of the home as collateral.

    Brother #2 agrees to loan Brother #3 $YYYY with Brother #3's share of the home as collateral.

    I don't like the buy out idea. Especially in a volatile market this would be hard to account if the buy out was not for the brother in need's full share and and either the advancer or the advancee can end up "ahead" in such a deal and this can lead to unnecessary family strife.

    B
     
  6. Demosthenes X macrumors 68000

    Demosthenes X

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    #6
    Why not just have him go to a bank and take out a loan, using the house as collateral? This has the added benefit of helping his credit score, which I take it might need a boost?

    Failing that, from my extensive legal experience (watching Judge Judy and the People's Court), any written documentation is better than nothing. Make it as specific as you can - include amount of the loan, when it was given, that that amount will come from his share of the house sale proceeds, the address of the property, etc. etc. etc.

    How much money is it? If it's a few thousand, then it would go to small claims court and this kind of paperwork would likely be more than sufficient. If it's bigger and went to a higher court, I can't say.

    (Obligatory "I am not a lawyer" statement).
     
  7. iStudentUK macrumors 65816

    iStudentUK

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    #7
    Obligatory "I am not a US (whichever state you are in) lawyer" stuff.

    Generally people thinking things are easy and cheaping out on proper legal advice is not a good idea. Seriously, laws can be very odd as well as strange wording or formalities that need to be adhered to. Especially with property law, at least here in the UK. My advice- try negotiating with the lawyer or getting another quote. Don't try and do something yourself when you know really a lawyer should be involved.
     
  8. Huntn thread starter macrumors G5

    Huntn

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    #8
    Thanks, I'll check this out!

    The amount of the advance would be deducted from his 1/3 portion of the proceeds from the sale of the house after expenses of the sale, investments into the house to make it ready for sale, and any expenses associated with settling the estate.

    Based on the shaky state of the housing market a buyout would have to be much less than what might be expected in a sale.

    We don't want a loan on the house that he would be expected to pay. The amount of the advance will be somewhere between $10-30k. Actually we are still deciding that one. A reasonable value on the house would be about $200k, that is if it sells. ;)

    If we draft a document, we plan on submitting this document to my lawyer for review.

    Thank you all for the advice! :)
     
  9. Rodimus Prime macrumors G4

    Rodimus Prime

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    #9
    I understand you wanting to protect your rear and what not. Depending on your relationship with your brothers you could easily do this on a hand shack deal.

    That is you all give him money now and when the house is sold you all take it out of his cut. It really depends on a lot of stuff though. My dads family yeah it would of taken some legal documents as some of them would of back stab (and did do some of it) my mom family on the other hand it would of been a here the money we will square up later. No paper work at all.

    I am willing to bet between my brother and sister we would fall on the hand shake side of things.
     
  10. Huntn thread starter macrumors G5

    Huntn

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    #10
    Handshake agreements with the brother who needs help have not been honored in the past. We need a legal agreement. :(
     
  11. Macky-Mac macrumors 68030

    Macky-Mac

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    #11
    since he didn't honor his agreements in the past, it's probably worth having a lawyer draw up a document.....and make your brother pay for it since he's the one wanting the money (the lawyer's fee can be deducted from the brother's share when the house finally sells)
     
  12. balamw Moderator

    balamw

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    #12
    If nothing else, also having the document signed in front of a notary public for a minimal fee, unless you know one couldn't hurt.

    B
     
  13. ThisIsNotMe macrumors 68000

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    #13
    Never lend family money.
    You are just asking for trouble.

    Tell him to weight or buy him out.
     
  14. Huntn thread starter macrumors G5

    Huntn

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    #14
    I've all ready learned this the hard way. However this loan would be backed up by equity in the house.
     
  15. iJohnHenry macrumors P6

    iJohnHenry

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    #15
    Then have him go to a different "financial institution".

    I would distance myself from this one, because the question of how much equity could get ugly.

    And you are on the hook for market volatility as well.
     
  16. Zombie Acorn macrumors 65816

    Zombie Acorn

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    #16
    Id make him wait if he has dishonoured agreements in the past. If it were my brother I would just give him the cash though.
     
  17. ThisIsNotMe macrumors 68000

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    #17
    Whatever the loan is I would make sure that the value is below whatever your states maximum limit is for small claims court.

    If you have to take him to real court it can get VERY expensive quickly regardless of a contract.
     
  18. balamw Moderator

    balamw

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  19. joec1101 macrumors 6502

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    #19
    I wouldn't do something like this yourself. With things like this, it's always best to have a lawyer do it (as much I despise them!).

    If you do it yourself and use the wrong language, you may find that your "agreement" doesn't hold up in court and you certainly don't want that to happen if you have any inkling that your brother might try something underhanded (it sounds like you don't really trust him already).

    If anything, maybe you should try to find a lawyer who will charge a little less. $750.00/hour is pretty steep. That's typically what high end attorneys charge. I'm sure there are competent lawyers out there that can do this for you for a lot less.
     
  20. Huntn thread starter macrumors G5

    Huntn

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    #20
    It was $750 for 3 hours, but this type of agreement would take about 30 min for a paralegal to type up.
     
  21. joec1101 macrumors 6502

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    #21
    Oops...my bad. :eek:

    so it's $250/hour; still a lot but that is a pretty common hourly rate anymore for attorneys. a woman i know pays $500.00 each time she wants to go in and change something in her will/trust. :eek:
     
  22. Huntn, Jun 8, 2012
    Last edited: Jun 8, 2012

    Huntn thread starter macrumors G5

    Huntn

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    #22
    The plan is now to write up the agreement ourselves and running it by the law office for their review of it's legal soundness. That's free. :)
     
  23. iJohnHenry macrumors P6

    iJohnHenry

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    #23
    And speeling too? ;)
     
  24. Huntn thread starter macrumors G5

    Huntn

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    #24
    I need a smarter spellchecker that looks at context, lol. Anything like that out there? :p
     
  25. snberk103 macrumors 603

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    #25
    Whatever the final amount of the loan, make it an amount that you and other lending brother can afford to lose.

    Even with a legal agreement... (and personally, I'd be more comfortable with a lawyer writing up the agreement and passing that cost on to the borrowing brother. The costs of a loan are traditionally borne by the borrowers not the lenders...) the borrowing brother may still try to get out of the loan (based on your earlier comments). Even with an iron-clad contract you and 2nd lending brother may need to just walk away from the money. It could either be because there are no assets to collect on, or it would cause an irreparable rift, or leave him homeless, leave his kids poverty stricken (if he has a family), etc . Anyway... for any number of reasons it's possible that you will decide that you aren't collecting on the loan so make sure it is an amount you an walk away from.

    Who is the executor on the estate? The executor has a fair bit of latitude on when and how the estate is settled, at least in my jurisdiction (which is not the same as yours). But they also have certain obligations. So make sure your legal advisor is aware that it is an estate.

    Sorry you are going through this. What is it about these situations that can bring out the worst in people, eh? Good Luck.
     

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