Hello.
If this isn’t the subreddit for this I apologize. I am just trying to get advice and perspective from people outside of my family. I know this is long so bear with me please. I understand I am very lucky to have grown up in the household I did, and I am fortunate this was even a possibility at my age.
I live in Northern California. During the summer of 2019, my brother and I went in together to purchase a house as co-owners in Northern California where we live. At the time, I was 21 and my brother was 20. My parents had saved up during our childhoods for my brother and I to go to college. This money was in two separate accounts, one for each of us. He and I chose to go to trade schools and got scholarships along the way, so we never had to touch those funds. We decided to use these funds, about $40,000 each, towards a down payment on a home we’d be purchasing together.
Even with the two of us coming together, we were still short on the amount for the down payment, so my grandma gave us the rest to use for the down payment. We acquired the house and agreed everything would be split 50/50 between my brother and I: mortgage, utilities, bills, etc. Our mortgage was $2400/month.
My brother immediately moved his girlfriend into the house, which I was against. I didn’t want another roommate and he forced one on me. Because she still had thousands of dollars left in student loans, she wasn’t able to pay rent or bills. The only bill my brother started paying 2/3 for was the water bill. This was the case from June 2019 to December 2019, so half a year. Starting January 1, 2020, everything was split in thirds. April 2020, my brother and his girlfriend had a baby, so now it’s the three of them and me in the house.
Because of Covid, interest rates were very low, so we decided to refinance the house with a different lender. This brought our interest rate down a considerable amount. We finalized the refinance in November 2020, and the original loan was paid off. There is no payment due for December. January 2021 starts the new reduced payment.
I had applied for a new job in April 2020, and officially got the job. I start this month. I moved out of the house in Northern California and got my own apartment in Southern California where the new job is. My brother and his girlfriend are taking over the full cost of the mortgage and bills, even though I’m still a part owner of the property. I will be paying for half of the property taxes though. We also had our sewer lateral replaced this year, which we had to finance. We split the payment equally. One of the motives for us refinancing was to make it affordable for them to live on their own in the house.
My brother and my mom put together an agreement they want me to sign. Here is the agreement they came up with. I have edited the document to exclude personal identifying information:
We, “Me” and “Brother”, entered into a mortgage agreement together for the property at “Address” on June 5, 2019. The original loan amount was $389,500, held with “First Lender”. Each party contributed equally towards the down payment.
On November 23, 2020, “Me” and “Brother” entered into a new refinance mortgage agreement together, held with “New Lender”. The new loan amount is $385,450. The new appraised value of the above-named property was $520,975.
Both parties agree that all equity before the refinance will be split equally between them 50/50 (the difference between the new appraised value and the original loan amount = $135,525) and both parties will recoup their portion of the down payment, as long as the value of the property allows.
Both parties agree that any equity after the refinance will be split 1/3 to "Me", 2/3 to "Brother", with the following exception(s):
Both parties entered into an agreement with “Plumbing Contractor” on August 21, 2020 for the repair of the main sewer line at the above property address. The original loan amount was $13,594.14, payable over five years. The monthly payment is $270. Each party agreed to pay 50% of the monthly payment until the loan is paid off, or the above property is sold, whichever comes first. “Me” will receive back 1/3 PLUS $45/month for each month of the total money he paid towards the sewer loan out of the new equity when the above property is sold.
The upkeep and maintenance of the above-named property is the responsibility of “Brother” as long as he lives on the property. Both parties agree that any major repairs needed at the above property will be the responsibility of both parties in the following amounts: “Me” will pay 1/3, “Brother” will pay 2/3.
All money due monthly for house payment expenses and sewer line loan will be paid out the joint checking account “Account Number” held by “Me” and “Brother” at “First Lender Bank”. Surplus money held in the joint account will be used ONLY for emergency house purposes agreed upon by both parties.
“Me” vacated the above-named property to live in “Southern California” for his new job on December 1, 2020. “Me”, as a courtesy, gave opportunity to “Brother” to find a roommate of his choosing to fill the vacancy. “Brother”, along with his live-in girlfriend, “Brother’s girlfriend”, chose NOT to have a roommate, and would assume the monthly mortgage payment of principal and interest in the amount of $1599.20, with the first payment due January 1, 2021. “Brother” and “Brother’s girlfriend” are responsible for all utilities expenses at the property.
Both “Me” and “Brother” agree to pay 50% of the monthly property taxes and homeowners insurance due for the escrow account held on the new refinanced mortgage. The approximate monthly escrow amount $575, and both parties understand that the property taxes are not a fixed amount and may be subject to change according to city and county taxes, and changes in homeowner insurance premiums. “Me” remains part owner of the above-named property and is entitled to the tax write-off as set forth by law.
In the event that the relationship between “Brother” and his live-in girlfriend “Brother’s girlfriend” dissolves, or “Brother” and “Brother’s girlfriend” are unable to make the monthly mortgage payment, “Me” and “Brother” agree that the above property will be listed for sale and sold immediately.
If either party decides they want to sell the property for any reason other than noted above, they must provide the other party a minimum of 90 days’ notice in writing.
If said property is sold, “Me” and “Brother” agree that all equity money will be held in joint accounts with their parents, “Mother” and/or “Father”, until either party decides to purchase a new home independently. Both parties agree the equity money is intended for the sole purpose of purchasing property.
Any future changes to this agreement must be discussed between “Me” and “Brother”, and a written addendum to this agreement must be signed and dated in front of a Notary Public.
I ask for advice on the situation. Should we have this agreement looked at by a lawyer before signing? Are the contents of the agreement fair for everyone involved? It is also my understanding that for us to sell the house, he and I both would need to agree to sell. This agreement however includes a way for me to sell the house if I wanted to as long as I give 90 days’ notice. What happens if my brother refuses to sell? Will this signed document hold up in court? We will be signing in front of a notary.
I appreciate all advice and input on the matter.
Thank you.
Submitted December 02, 2020 at 08:43PM by KentuckyFriedWombat https://ift.tt/2KWnKpP
