Grandfathers Property I want to Rent

[Andrew Grimmett]

This is actually my Grandfather's property that I am trying to get him a monthly cashflow since he is now in an assisted living situation. He gave me the property (through a Quit Claim Deed) but his name is still on the mortgage (which I have now taken over payment for). It didn't feel right to take the income so I am giving it all to him. I put 35k of my own money to rehab the property and get it rental ready and opened up an LLC.

Really what I want to know is:

1. If this is legal for me to rent it out for him and handle all the money side of things? (he is fully in the loop and appreciative

2. What sort of issues could I have by taking over the mortgage and renting the property out with the lender

3. Can I write off any of these rehab expenses on my taxes?

4. If I have had a notary sign the Quit Claim Deed as well as my grandfather, is it a problem that I have not filed it yet or can I do that some time in the future? Is there a best way to handle that?

[Chris Seveney]

@Andrew Grimmett

Technically you do not own the property because you did not record the deed - so my guess is you cannot write off any expenses on it since you don’t own it.

You probably want to talk to an attorney about this - as also if something were to happen to your grandfather and there are other family members they could contest the quit claim deed - but this will have tax and legal consequences so you should seek those two specialists for this specific situation

[Andrew Grimmett]

Quote from @Chris Seveney:

@Andrew Grimmett

Technically you do not own the property because you did not record the deed - so my guess is you cannot write off any expenses on it since you don’t own it.

You probably want to talk to an attorney about this - as also if something were to happen to your grandfather and there are other family members they could contest the quit claim deed - but this will have tax and legal consequences so you should seek those two specialists for this specific situation

 I appreciate the advice. I probably need to get downtown to file. Just always seems to be put on the back burner. Not a great excuse, but the truth lol

Thanks again! :)

[Theresa Harris]

I'd talk to an attorney to make sure you have all the paperwork in order.  Otherwise, I can't see it as being a problem as your grandfather is in the loops and it sounds like the mortgage is being paid.  I would find out who gets the rent-if it goes to him, he needs to report it on his income and it may affect his benefits (if he gets any).

[Ron S.]

You own the property but anything can happen between the time you executed the quitclaim and recorded it. If someone jumped in front of you, well, there's that. Not recording doesn't make it not legit but, you'll need to record to protect yourself.

Once you do record, be prepared for the due on sale clause if there is a lien on it. If you are his guardian or somehow legally representing his interests as his successor, you may be able to avoid the due on sale provision in the note. Note, you don't "Take over" the mortgage typically, you just pay as the successor once you legitimately establish yourself as the successor (Will, Trust, Court Order). Short of that, he transferred the property in violation of the promissory not so, the lender could accelerate the loan and declare the full balance due and payable.

If your grandfather and notary didn't sign the quitclaim, you don't have one so, umm...have them sign it and record it. Better yet, have him just add you to title so you don't trigger the due on sale clause.

Just my Humble Opinion.

[Andrew Grimmett]

Quote from @Ron S.:

You own the property but anything can happen between the time you executed the quitclaim and recorded it. If someone jumped in front of you, well, there's that. Not recording doesn't make it not legit but, you'll need to record to protect yourself.

Once you do record, be prepared for the due on sale clause if there is a lien on it. If you are his guardian or somehow legally representing his interests as his successor, you may be able to avoid the due on sale provision in the note. Note, you don't "Take over" the mortgage typically, you just pay as the successor once you legitimately establish yourself as the successor (Will, Trust, Court Order). Short of that, he transferred the property in violation of the promissory not so, the lender could accelerate the loan and declare the full balance due and payable.

If your grandfather and notary didn't sign the quitclaim, you don't have one so, umm...have them sign it and record it. Better yet, have him just add you to title so you don't trigger the due on sale clause.

Just my Humble Opinion.

 Wow. Lots of good thoughts here. Thank you. I somehow didn't even think about the due on sale clause. Putting myself in the title might be easier.