Expert: Dick Dennis - 6/9/2006

Question
I have been told that it is legal for a family member to purchase a house for only a $1, almost as a gift.  My question is, a good family friend of mine is looking to sell his home, but doesn't want to go thru a real estate agent and asked if I'd be interested in purchasing the home for much less then the market value.  There is an existing open home equity line against the house with a zero balance, but with a very attractive 5.5% fixed lock in rate for up to 110k.  My question is can a non family member add me to the deed as a part owner, or alow me to buy in for a dollar.  And then to avoid closing cost etc.. on a mortage to purchase it, I can either be added to the line of credit, or open a new line of credit in my name only, cut a check to him and then remove his name from the deed(or buy his portion out).

Answer
When there is no specific value placed on a property, a monetary consideration of a dollar or ten is quite common, Michael, no matter if it's family or not. However, some counties when they record the purchase need to have a value so they can tax the property fairly, and they know darn well the property was worth more than a $1 and they will ask what the price was. If no answer is coming, then they will ask the amount of the loan on the property. From that they will be able to get a value. Or they will look at values in the neighborhood or a similar house.

As for you to be able to be added to a line of credit, it just isn't going to happen. That 5.5% rate is for your friend only because of his good credit. By you being put on the title of the property, that is possible, and you might be able to go along with you friend on the note, but no matter what IT IS HE THAT WILL BE RESPONSIBLE FOR THAT LOAN.

And if you screw up on the payments in any way, his credit is going to be ruined. Then you will see how good a friend he really is.

I wish you well. Michael.