On homes and real estate: Paying off a private loan
Q. My husband and I are close to paying off a vacation property we purchased 15 years ago with a private mortgage. Our names are already on the deed, and we have been paying the taxes since we took possession. I have contacted the former owner to verify the last payment date. Do we need to do anything else once this property is paid off?
A. Congratulations on reaching the end of the mortgage.
The public records of the county where your vacation home is located currently show that mortgage as a lien, a financial claim, against your property. To clear the record and show the debt has been discharged, a certificate of satisfaction signed by the lender (in some states, a deed of reconveyance) must also be filed.
If you had borrowed from a bank or other institution, they routinely take care of the filing. Or they send the document directly to you, so you could take it in and record it yourself. Though when a private mortgage is involved, it's possible your lender is not aware of the procedure. When there's any concern about obtaining this important paper (lender hard to contact, for example), one solution would be for your own attorney to prepare the form and hold your final payment.
Your lawyer could then write to the lender and explain that the payment would be forwarded only after the proper discharge has been returned ready for filing — properly executed and acknowledged.
Q. I am writing this hoping to get information regarding a serious need to address the right people about refinancing our home.
We have been contacting the lower level of people and getting nowhere. Every time we get in touch with them, we get a different person on the line. Then we have to start the whole process all over. We get nowhere, and it's about a year now.
Is there any organization that will help us get some serious action? Maybe there's a federal agency that will help us?
A. It sounds as if you do need guidance. Mortgage brokers specialize in bringing borrowers and lenders together. Try working with one. There shouldn't be any upfront fee.
Q. We want to move forward with our plan to hold a mortgage for our son and his wife. Our son works one full-time job as a fireman and two part-time jobs, but he will have a difficult time securing a mortgage given his low income. My husband volunteered to hold his mortgage. We are financially able to lend him the money and will not be dependent on his repaying the amount, though we'd appreciate it. However, it would be deducted from his inheritance if he doesn't repay all of it.
I am especially concerned that we wouldn't incur more taxes beyond what we will incur in selling stock to raise the money, since we will surpass the tax-free gift amount we can give him and his wife in a year. How do we go about doing this?
A. Any lawyer can draw up the mortgage documents and see that they are properly entered in the public records. To avoid income tax complications, charge interest at a current average rate. Your son can take interest paid as a yearly tax deduction and you will report it as income.
There should be no gift tax involved, because that's a loan that will be repaid. In any event, federal law allows each of you to give away as much as a million dollars during your lifetime with no federal tax due. The amount comes off what you could leave free of estate tax at death.
First of all, though, your son should look into FHA's “Good Neighbor Next Door” program. It offers an eligible full-time teacher, firefighter, law enforcement officer or emergency responder a chance to buy a house at a greatly reduced price. He might find a bargain and even qualify, at that price level, for an FHA loan.
Q. What do you do if they will not take back your time share and you cannot find anyone to take it for free? How do I get rid of it? We would donate it.
A. Assuming there's no mortgage on the time share, you could list it on Craigslist or put it up for auction on eBay with no reserve. If that doesn't work, consult your own attorney about what might happen if you just stopped paying the annual charges.
You may also want to look at www.tug2.net, a time share users' group. I don't know anything about it, except that a number of readers have recommended it.
Q. I have a guy who is behind on his taxes and payments for his 20-unit apartment complex. He owes approximately $50,000. He says if I can get him current, he will sign papers for me to buy the property on land contract.
I don't have $50,000, and my credit is bad. Do you have any ideas where I can find help? I can probably raise half. I know lenders like it when you're debt-free. I will be completely debt-free because I plan to file bankruptcy. I own a business and make about $35,000 a year.
A. Lenders may not be too eager to finance your project when they hear exactly how you plan to end up debt-free. Forget the whole thing. Trying to do this would eventually land you and your guy in even more trouble than you are in now.
Ÿ Edith Lank will respond to questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.
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