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Vague Deeds And Real Estate Transfers

by | Nov 1, 2019 | Title Issues

A couple of people walked into my office. They were siblings. And they had a problem. And so it turns out it went something like this. Here’s an old guy. He’s 75 to 80 years old. It was grandpa. He owns the lake house. The lake house is beautiful. All the family went out every year, for years and years. And, for decades ever since Second World War, his family’s been going to the lake house. And it used to be that they would all go visit grandma and grandpa up there and they would use the motorboat and grandpa would be in the wooden boat races up there in Coeur d’Alene. And they would spend all kinds of time with the hot dogs, and the grill, and the summertime and the bare feet and the sand in the bed at night. And the whole thing was just on and on. The grandkids loved it. The families were raised there. It was a fairly typical situation.

Then, Grandma and Grandpa, they pass away. But they were smart. They had gone to an estate attorney who asked them, what do you want to do with the lake house? Grandma and grandpa said, we want to give it to the kids. So he did. And the deed was essentially this, grandpa gifts the lake house to the five kid. It was straightforward. And it was a property, and there were all the details, etc. But eventually, it came to pass that two of the kids came into our office and said, the other three siblings, our brothers and sisters, the people we grew up with, were having trouble with the lake house. I said, what kind of trouble? What are you running into? Last year, the roof needed fixing. And, you know, Julie lives in Illinois, and she doesn’t get out that often she didn’t have the money to pay for the roof. And, you know, Tom lives in San Diego and he’s kind of a wealthy guy. He’s been with the Navy for a number of years down there in San Diego, and he got promoted, and he’s just doing fine. But he doesn’t get up that often and when we asked him to help pay for the roof, he was a reluctant, like why do I want to put into a property that I don’t visit, and so on it went. All the kids had reasons about how they couldn’t fix the lake house.

But they loved the lake house, you know, their heart was in the lake house. And so what are they to do? And so I said, well show me the deed. I mean, what do you got here? They showed me the deed. And it was like I said, it was grandpa to the five kids, First Name, Middle Initial, Last Name. And the family name was Jones. So I was really glad that they had full names and initials. And so we could differentiate these folks. But there was no percentage of ownership assigned to each sibling. And so when you and I said, well, how much of it do you guys own? And they said, we think one-fifth. I said, why do you think that? And they said, well, because on the deed, it’s got five names. And I said, well, that’s a reasonable assumption. But what if it’s not true? What if? What if you only own 5%? And the rest of the siblings own 95% split some way between them? Oh, well, Grandpa wouldn’t do that.

Well, how would you know, do you have a copy of his will? Well, no, we don’t because it was actually Tom in San Diego. That was the administrator for grandpa. And he wouldn’t give us a copy of the will. Okay, so what we’re faced with is, you don’t really know how much of this property you own, but you do own a piece of it. Well, that’s right. Okay, so when it came to fixing the roof, how did you fix the roof? They said, ellw, we haven’t fixed the roof yet. Well, how long does the roof have? Well, the roof’s been on since the mid ’80s. And I said, Holy cow, we’re going up over 30 years, how’s the roof doing? Well, it’s covered with moss and it’s just a mess. And it’s a house on the east side of the lake so late in the afternoon, it doesn’t really get much sun. So there’smoss on there and the gutters are getting a little sketchy. I said, well look, the physical asset is obviously deteriorating and you have to pay for the roof. How do you suggest we resolve this? Can you talk to your siblings? Well, we can talk to some of them. And I said, well, do you think it’s safe to assume that everybody owns one fifth of the lake house? What would happen to the price of the roof? Say we just divided the cost in five? How much does the roof cost? Well, we don’t know. Well, have you gotten estimates? You should get at least three estimates. And then you need to decide whi we should go with. You know, what company should we use? And are you communicating with your family? Well, kind of. Then you find out that this thing happened five years ago, and Tom doesn’t talk to Jill. And Fred has just been on the outs for a long time because when he did it at Susan’s wedding, and you wouldn’t believe that guy after a couple of drinks, holy cow. They’re not really communicating.

And so eventually, I I tried to give them the best advice I could, but it wasn’t legal advice. It was counseling on human relations between adults that have not communicated well in years for various life circumstantial reasons. But it really all started with that deed. Because, you know, Grandpa thought he was doing the right thing. And, and maybe he was, but he didn’t do it clearly enough. So that 20 years down the road, and you know, you’ve seen these bumper stickers, we’re spending our grandchildren’s inheritance. Everybody’s seen that on the motorhome. Right? Well, and a lot of people when they get older, they’re like, well, I’m just gonna die. And you guys can figure it out. Which means they don’t figure it out, and they end up in my office. But the end result is that grandpa probably thought he was doing enough. But enough, didn’t suffice over time. So this is one of the problems that that we run into.

We had one last year where there were folks very close to the lake house. A beautiful lake up in North Bonner County in Idaho, just spectacular. And the people that would use it every year lived a-half hour away. So they were on title, they were one of three siblings on title, and two of the siblings lived close-by and used it all the time, loved the lake house, raising their kids, they’re going out on the boat, teaching Sonny Boy how to fish. You know, they got great fish up there. But the client that called us lived in Texas. She never went to the property. She had great memories of the property. There was nothing on the deed that said anything about percentages of ownership. She was pretty sure it was one third, but nobody really knew.

Turned out that’s what the group of three owners decided would be proper for working things out. But she had to sue them to sell the house through the court process. And of course, they were poor as church mice going into this. They didn’t have the proverbial pot. I mean, they were really poor. You’ve heard the litany. And suddenly, before the beloved lake house was sold by the courts, suddenly this money appeared out of nowhere. Nobody knows where it came from. But suddenly, they had the money to buy our client out. So my client in Texas got the checks. She executed the deed, it went to the other two parties. And in that deed, guess what our office did, we put in 50% ownership and 50% ownership because that’s what they had paid. And it actually that’s the way the shares ended up. So you have to be able to do a little math with the whole thing.

And sometimes you have to get people into a court process to resolve these things. And one of the beneficial things about court is, frankly, you don’t want to go to trial because the judge has a stack of cases just like yours 20 feet high and no time to do it. And they have no skin in the game. They’re just gonna make the call and you live with it, bang the gavel, and you’re done. So you don’t really want to end up in front of the judge for the final decision. But you also want to have some result that works, like in your lifetime. And so what you want to do is push it. So you push it into court, you sue them, and now you’re on the court schedule. Then everybody’s on a timeframe. And if they want to partition the property, and they can’t buy each other out, then you put them into court, you put them on the timeframe. And about 95% of the time, the money comes out of the woodwork at the last minute, just before the judge gets involved. And sometimes it doesn’t. Either the property goes on the auction block and sells for a song and the siblings hate each other forever, never that the twain shall speak again, or we get them to agree to use a realtor to sell it if nobody can buy each others out.

With the first thing where the money comes out of nowhere and somebody ends up buying it and somebody else has a bunch of great memories and probably some pictures and things to share with their family. And that’s all they really wanted. So the these things are resolvable, but frankly only about 30% of the lawyers job is the legal work. And about 70% is counseling people from an objective standpoint, what they’re up against, what the timeframes are, what the costs are, what they have to give up, and what they have to give to, to work things out. So, you know, why do you

Why does this even occur? It occurs because grandpa put together a vague deed, just two pieces of paper. And, you know, the second page was the the legal description and the notary. And the first page was the deed. All avoidable, completely avoidable. And you know, we all love our grandmas and grandpas, but gosh darn it, they really need to look ahead into the future for their kids. So they don’t leave a court case. Hi, I’m giving you the lake house and I’m bequeathing you a wonderful court case for 50 grand with money that I know you don’t have, but at least you’ve got the lake house. I mean, that’s just not right.

To avoid the problems of vague deeds, visit TimelyContract.com and learn more about the TC Drafting service available online in Idaho and Montana.

At Timely Contract, our primary legal services include: real estate contract review, real estate contract drafting, legal opinions for title insurance exceptions, and research, due diligence, and legal opinions for properties.

At Timely Contract we have local real estate attorneys who have experience throughout Idaho, including: Boise, Post Falls, Coeur d’Alene, Lewiston, Moscow, and Sandpoint.

We also have local real estate attorneys who have experience throughout Montana, including: Missoula, Billings, Bozeman, and Kalispell.

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