Expert: Jay Denit - 12/12/2006

Question
I want to help my brother, in Colorado, buy a house; I live in California.  I want this to be a business investment so there are no hurt feelings later on.  We are putting an equal share of money down as the down payment, he will be making all of the monthly payments, and I would like to be paid back my initial deposit in 6 years with a small amount of interest.  What is the best way to do this, I want my investment protected?  Should I buy the house with him and put my name on the note, or can he simply put me on the title once he has closed?  Thank you.

Answer
Hi Angela,

What part of Colorado are you looking to purchase.  If it's the Denver/Boulder metro areas, I would be happy to help you personally.

There are a few ways to attack this, but the simplest way is for you to "gift" your part of the down payment to your brother with an agreement that he would sign a Deed of Trust stipulating the payment schedule, interest rate etc.  You would in turn need to record that Deed of Trust with the county (after closing)and that would give you full legal rights to foreclose or be paid the full amount owed if your brother sells the home in the 6 year window (due on sale).

Don't put your name on the note because you would then be considered a co-borrower and if your brother defaulted on the payments, you would be responsible.  

As for putting you on title.  That's a personal decision between you and him, but if you have a recorded lien against the home your investment is protected.

Hope that helps, and if I can be of further assistance, please let me know.