Posted on: 30th May, 2007 02:41 pm
i am wanting my mom to loan me money for a down payment on a home purchase. i have a friend who drew up an agreement which includes the use of a quit claim deed. in the agreement i will be "quiting" 50% of the title to mom on the close of escrow. why would my friend have included this in the agreement? from what i gather about quit claim deeds it wouldn't make much of a legal difference since mom wouldn't be on the title of the home. if i quit half of the title to mom and shes not co-signing the loan or anything, what is the significance?
This is a sample of an agreement for an equity share in purchasing a property. In sharing this agreement please note: I am not an attorney and in sharing this agreement I am not giving legal advice of any sort. This agreement was written to accommodate an equity share between parent and child where the parents are not on the mortgage.
This is an agreement between (parent) and (child) regarding the purchase of said home.
Parent agrees to lend(blank dollars) to child as a down payment on the above mentioned property with the following terms:
1) The terms of this agreement is five years and one month from the date of acceptance of the money, or upon any default of the loan on the property, or upon sale of the property, whichever comes first. This agreement can be extended if agreed upon by both parties.
2) No interest is to be paid on the principle during the term of the loan.
3) After close of escrow child will prepare a quit claim for the property giving 50% of the title to parent.
4) Parent will not be responsible for payments made to cover (PIT- payments, interest and Taxes), Insurance or any Homeowner Association costs.
5) Child agrees to maintain appropriate insurance on the property including Renter’s Insurance and a Liability Umbrella Policy.
6) At the end of the agreement child agrees to pay parent (blank dollars the original amount) and 20% of any appreciation of the property.
a. Appreciation is defined as the” Sale Price” minus cost of selling the property plus any principle paid by parent, minus the original price of the property.
b. The “Sale Price” will be determined by the sale price of the property if it is being sold or by an appraisal of the property prepared by a licensed property appraiser if the property is not being sold.
c. Any principle paid by child will be allotted to child.
This agreement is to be signed and notarized by (blank) by August 27, 2005.
We agree to the terms stated in the above mentioned agreement between parent and child.
Parent Child
_____________________________ ___________________________
Date:_________________________ Date:________________________
Notarized by:_____________________________________
This is an agreement between (parent) and (child) regarding the purchase of said home.
Parent agrees to lend(blank dollars) to child as a down payment on the above mentioned property with the following terms:
1) The terms of this agreement is five years and one month from the date of acceptance of the money, or upon any default of the loan on the property, or upon sale of the property, whichever comes first. This agreement can be extended if agreed upon by both parties.
2) No interest is to be paid on the principle during the term of the loan.
3) After close of escrow child will prepare a quit claim for the property giving 50% of the title to parent.
4) Parent will not be responsible for payments made to cover (PIT- payments, interest and Taxes), Insurance or any Homeowner Association costs.
5) Child agrees to maintain appropriate insurance on the property including Renter’s Insurance and a Liability Umbrella Policy.
6) At the end of the agreement child agrees to pay parent (blank dollars the original amount) and 20% of any appreciation of the property.
a. Appreciation is defined as the” Sale Price” minus cost of selling the property plus any principle paid by parent, minus the original price of the property.
b. The “Sale Price” will be determined by the sale price of the property if it is being sold or by an appraisal of the property prepared by a licensed property appraiser if the property is not being sold.
c. Any principle paid by child will be allotted to child.
This agreement is to be signed and notarized by (blank) by August 27, 2005.
We agree to the terms stated in the above mentioned agreement between parent and child.
Parent Child
_____________________________ ___________________________
Date:_________________________ Date:________________________
Notarized by:_____________________________________
Hi Chas,
Welcome to Mortgagefit forum.
"From what I gather about quit claim deeds it wouldn't make much of a legal difference since mom wouldn't be on the title of the home."
After you quit claim 50% of the title to your mom she will get ownership rights over the house.
Colin
Welcome to Mortgagefit forum.
"From what I gather about quit claim deeds it wouldn't make much of a legal difference since mom wouldn't be on the title of the home."
After you quit claim 50% of the title to your mom she will get ownership rights over the house.
Colin
"If I quit half of the title to mom and shes not co-signing the loan or anything, what is the significance?"
You mom will be giving you the loan and to secure that you repay the amount this agreement is been made.
If you read point 6 it says that you will have to repay the amount at the end of agreement period.
Miller
You mom will be giving you the loan and to secure that you repay the amount this agreement is been made.
If you read point 6 it says that you will have to repay the amount at the end of agreement period.
Miller
Hi Chas,
Welcome to Mortgagefit discussion board.
This is a common equity-sharing arrangement where a person is not in a position to make the required down payment. Parents lend their children the required amount and the repayment is with interest or related to future appreciation in the value of the house.
Here equity sharing partner (your mom) puts the money and in exchange gets an interest in the property (you quit claim 50% interest). You will live in the house and make the loan payments and also look after maintenance of the house. After a certain number of years (5 years 1 month as per your agreement) you will need to repay the loan that your mom will be providing you.
Do let me know if you have any other questions.
Thanks
Blue
Welcome to Mortgagefit discussion board.
This is a common equity-sharing arrangement where a person is not in a position to make the required down payment. Parents lend their children the required amount and the repayment is with interest or related to future appreciation in the value of the house.
Here equity sharing partner (your mom) puts the money and in exchange gets an interest in the property (you quit claim 50% interest). You will live in the house and make the loan payments and also look after maintenance of the house. After a certain number of years (5 years 1 month as per your agreement) you will need to repay the loan that your mom will be providing you.
Do let me know if you have any other questions.
Thanks
Blue