Expert: Dick Dennis - 8/5/2008

Question
My unlce recently paid off his home which he was buying on contract from his friend. Now that the total amount has been paid the friend said my uncle can't have the deed and title until he pays all the back taxes and insurance accured during the years he was making payments. Is this legal? What can my uncle do?

Answer
Assuming your uncle lived in the property from day one of his agreement, Penny, and treated the property as his own, your uncle owes every last dime of back taxes and insurance. Just make sure he gets a copy of the billing when those taxes and insurance were due.

Let me explain. Your uncle's friend basically was doing your uncle a favor. While all that time the property was in your uncle's friend's name, the friend was paying for all obligations (mortgage, if any, taxes, etc.) If, however, their agreement (and it should have been in writing) said that the monthly payments included taxes and insurance, then the friend would have to convey title to your uncle without any trouble. If there was no written agreement saying that the taxes and insurance was included, then your uncle must pay. After all, he treated the property like it was his, including fixing, painting, etc.

With the absence of a written agreement, Penny, your uncle must pay because your uncle did not pay the total obligation. And the total obligation includes everything - - - purchase price, taxes, insurance, etc. Just make sure that the conveyance of title is handled through a title company or real estate attorney. Friends are friends, but that has nothing to do with making sure everything is kosher. That includes that the friend conveys a clean marketable title to your uncle without any liens or obligations (other than county taxes) to your uncle. Yes, it is possible for the friend to have created a lien on the property without your uncle's knowledge. And if he does not go through a title company or real estate attorney then your uncle would have to pay those liens off later on. I wish you well.



Dick Dennis