My aunt wants to sell me her rental property because they will lose it in their upcoming chapter 7 proceedings (not filed yet but probably in the next month or so). In order for me to purchase it I need to use the gift of equity as the downpayment. There are three other homes on the street that are currently for sale and have been for awhile. There's no way she will be able to sell it outright as it needs some work. She owes $51k on it and we think the appraisal will come in at $80k, that means I will finance $64k. She plans on paying off the mortgage and giving the extra to the trustee to spread around to her creditors. My question is - will this be looked upon as fraudulent by the court? I don't think so since will not be pocketing any money but the gift of equity thing may be an issue. It looks like she's "giving away money" but like I said, the market being what it is plus the condition of the house, she won't be able to sell it anyway. It's not a fraudulent transfer to hide an asset and that's all I can find online when I search. She is going to see a lawyer next week. TIA
I don't think it would be fraudulent. But I would double check with an attorney or mortgage broker to see if you can use the gift of equity for your purchase. I would also double check to see if you can purchase the house since you are a family member, if they are behind on their payments. Thanks! Heather with BoostMyScore.NET
They are current on the mortgage. I'm only concerned because my mother is the tenant and I'm trying to keep her in the home (and not mine)! They're actually meeting with a lawyer tomorrow so I'll update. Thanks
Apparently it's a no go before the bankruptcy. The gift of equity would be seen as selling the house for less than market value. So, if the house makes it through the bankruptcy proceedings (second home, depends on equity), I can buy it after. Thanks for the input.
