Expert: Sue Bernstein - 10/18/2007

Question
QUESTION: Hi Ms. Berstein

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?

Thanks for your time Ms. Berstein

ANSWER: Dear Dee,

You may want to consult an attorney but I don't believe you can do anything to stop your friend from selling the house as he is the legal owner.  You should have had some agreement in writing for the $40,000. Your friend tried to help you because of your bad credit and right now your friend is in the position of ruining his credit if he does not step in and do something.  If you had been the legal owner and stopped paying your mortgage the bank would step in and foreclose on you and you would lose any equity you have.  You might want to talk to your friend and see if he is able to sell the house if he is willing to give you back some of the investment you made.

I hope this helps.

Sue Bernstein

---------- FOLLOW-UP ----------

QUESTION: Well I had my daughter and my daughter's mother living there from the time the property closed escrow and received the keys and now as of 3 weeks ago they had vacated the property because the title holder the friend had been paying the mortgage for the last month and now going on 2 months I still owe him the advanced payments but I still have possession of the keys to the property. My friend wants the keys back to get into the unit and take photos so that he may sell property but I would rather find a tenant to rent the unit which I might have a prospect to help cover the the cost of the mortgage. Do I have the right to keep possession of the keys and rent the unit even though I can not pay my friend back at this time. If the title holder changes the lock is there anything I can do to oppose that since I have invested the initial closing costs and down payment plus the payments that I have made to the mortgage and HOA and some taxes.

Thank you for your immediate response.

Dee

Answer
Dee,

There are several things you should have done when you entered into this agreement with your friend to protect your interest.  Your friend is the legal owner of this property.  I strongly recommend that you consult an attorney to see if there is any way you can lay claim to any part of your investment.  I don't believe you have any legal claim to the property so your friend can just change the locks if the property is vacant.  Once again, I strongly urge you seek the advice of an attorney.

Sue Bernstein