Bro freeloading in elderly parents home! Have POA can what I do??

Question

Advice please!  My husband and I are not new to real estate, but are really looking for advice on this one.  Ill see if I can simplify the situation and question here...

- Just moved elderly (80 and 91) parents to assisted living near us in South Florida from their home in rural western NC

- Parents still also own a 3/2 townhome in Badin NC.  I has been occupied by my brother and his wife for over a decade.  They raised her children there and one adult child is still living there with them.

-They have NEVER paid rent, taxes, or insurance to my parents...who have allowed this to happen.

- My parents, now in assisted living, are requiring a lot of financial assistance from my husband and I to make up the diff in their living expenses.

- Its time for my brother (58) and his freeloading family to contribute $$, but I need advice in knowing what to do...

I just got durable POA, but not sure if that helps in this situation. I have told parents that brother should choose to pay rent, buy the home, or I sell it occupied and as-is.

Question is, how difficult is this going to be for me to enforce any of these since I don't technically own the property??  Even though they are supportive of me getting $$ from him, or would love to see him out of the house, my mom has early dementia and making decisions/signing things makes her nervous.  I'm willing to be the bad guy here, but I want to make sure I have this clearly organized before I execute the plan.

I have thought of asking them to transfer title to me, but then would the tax implications negate the benefits? (My elderly parents no longer have to pay taxes)

I'm open to any and all suggestions!  Advice needed and appreciated!

Joe Splitrock · Answer

@Lori Hunter my uncle was a freeloader on my grandparents well into his 50's when my grandmother passed away. Unfortunately well meaning parents enable the behavior. The best thing for your brother is cutting the cord ASAP and making him survive on his own.

Tell your brother the property is being sold. Give him a chance to buy the property or move out. If he refuses to move out, sell the property with the "tenant" in place. Find a cash buyer and fully disclose the situation. They will get a discount to deal with the problem.

I would strongly advise selling the property right now. With dementia, it is very likely your mother will need full time care in a nursing home. I am not sure if you plan to keep funding that, but it will be expensive. To qualify for Medicaid to pay the nursing home expenses, they need to prove financial need. Assets such as a second home will be considered and they will be expected to liquidate. There is also a look back period, generally 60 months, where proceeds from a home sale can be taken. They should sell the home and pay you back all the money you paid. They could even gift extra money to you, so you control and manage it.

You should be able to negotiate a sale and have your parents sign the paperwork with a mobile notary present. The POA would only become necessary if your parents were not cooperative.

Alternately, your parents could transfer title to you and gift the property to you. They would need to disclose the sale on their taxes, but this will be well below the lifetime gifting limit so most likely no gift taxes. The down side is dealing with your brother, which I would avoid for your sanity.

Best wishes on your difficult journey.

Lori Hunter · Answer

Lol.  No @Scott Wolf, I'm not adopted.  And they definitely don't "like him more", but I can see where one could assume that. They would have done the same for me (sadly), but I'm not one to exploit my parents' good intentions.  We have talked many times about what they want done with the house.  They want him OUT asap or contributing some rent, but for whatever reason they have chosen to do nothing over the last decade except stockpile resentment toward him.  And now, given their age and changes in needs this has become my problem.

@Joe Splitrock, you hit the nail on the head.  Its the well meaning-parents-turned-enablers who now resent him for what they feel is him taking advantage.  He no longer even calls them unfortunately.  But, now its up to me to be the bad guy.  And, after a lot of thought I believe you have the best suggestion.  We also have a good Elder Law Attorney here with whom we have discussed medicaid pre-planning.  So, if they (we) do choose to sell the house she can help us do that properly.

@Jonathan Bombaci I like the idea of trying to maximize the proceeds, but even if he moves out willingly I'm left trying to clean/repair/renovate then list and sell a property three states away from me.  I'm almost thinking taking a profit cut may be worth alleviating the headache.  Plus, telling him its going to be sold to an investor who will then proceed to evict him may be the catalyst I need to get him willing to purchase it.

I'm thinking the best way to handle this is to simply ask for a monthly monetary contribution for Mom and Dad's care.  If he refuses or says he cannot contribute... I will tell him they will sell the apartment to him a market price (which I will explain will be in his best interest), or it will be sold to an investor as-is and he make his future arrangements with them.

Thank you to all who have contributed.  It has definitely helped to organize my thoughts into a better plan of action.

Jonathan Bombaci · Answer

@Lori Hunter I don’t envy your situation. Dealing with family, especially free loading family, is the absolute WORST.

My suggestion keep it simple, try to keep it impersonal, and do not give any A/B options. I would just say hey mom and dad need to sell the property to pay for assisted living. You can either buy it at appraised value or you need to vacate before 1/1 so we can put it on the market.

I don’t think you’re going to want to try to sell it occupied to an investor. The tenant isn’t paying rent so it’s not a real tenant. If I were going to buy something like that up here (MA or NH) I’d probably offer 70% of the value if I was inheriting a tenant that isn’t paying rent. Your goal, for you parents, should be to MAXIMIZE sale proceeds so they can afford the assisted living facility. That’s the story stick to it and best of luck. best,

Jon

Scott Wolf · Answer

@Lori Hunter, were your parents living in the townhouse with your brother, or did they have another residence?  If they lived there for two of the past 5 years, any appreciation up to $500k will be tax free. This will help with the assisted living costs, and add some oomphf to the proposal @Jonathan Bombaci suggested (which is a great suggestion).

Lori Hunter · Answer

You're very right.  And thanks for the response Jon.  Sometimes whats needed it good advice from a neutral party.  I like the KISS method and the idea of limiting the options.  Keeping it simple is usually the best way to go.  Thanks again for the contribution.

Bill B. · Answer

Try an Ibuyer who will a) buy as is b) give you a long lead time for him to move out.

Lori Hunter · Answer

@Marian Smith that is a very interesting suggeston.  I see where you are going with that. But given all the responsibilities on my plate at the moment I think keeping the situation as simple as possible is the best way to go, and I'm afraid that could get more complicated than I'd like.

Marian Smith · Answer

@Lori Hunter  Can your parents cash out refinance?  Then tell your brother to make the payments, tax and everything or you will let it go to foreclosure.  Just an idea.

Scott Mac · Answer

Ask your mother and Father what they want done about the house--he has been living there free for a reason--maybe they will just deed it over to him.

Maybe they like him more than you--or maybe he's the kind of person that needs more help than you (in your parents estimation).

He has been living there free and clear for a long time.

Here's an odd thought--maybe you were adopted and don't know it (seriously).

Somehow he received a free house and you did not.

Also you might want to look into living trusts (done by an attorney).

Bro freeloading in elderly parents home! Have POA can what I do??

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