Expert: Lori Frankfort - 10/18/2007

Question
Hi Ms frankfort

I Recently made a verbal agreement with a friend that, if he purchased a home for me because my credit was bad, i would pay the mortgage and taxes and all other expenses for the property. He applied for the loan and i put down 40 thousand for the closing cost. Now i am unable to pay the bills for the house because i was layed off. and he has payed 1 months of the mortgage and is now trying to sell the house. which means i would lose 40,000. but he holds the title. and i just have an verbal agreement with him. can i stop the sell of the house or if he sell it. Will i be entitle to get back the 40,000 that i put down for the closing cost?  

Answer
That's a very sticky situation, and most likely you will need to contact a real estate attorney for the best answer.  Did you pay the $40,000 directly to him, or to escrow?  Do you have some proof that you gave him that money?

He can sell the house if he wants to, because he is officially the owner, and you are just a tenant (renter) without a rental agreement.  Without an agreement you are a month to month renter, and the money you gave him is a "loan".  You have no legal grounds to stop the sale, and in the eyes of the law you are just a tenant.  Whether he sells the house or not, he owes you $40,000 for the "loan" you gave him.  If and when he sells the house he should give you the money back.  If there is a loss on the sale, he'll still owe you the money for the "loan".  

That's my opinion.

Best of luck,
Lori Frankfort