Hi everyone, I will try to be as clear as possible:

My father passed away and although he raised me I was not legally adopted by him. He owned a house in his name and has 3 "real" kids. When he passed away because I am not "legally" his I am not part of his inheritance (there was no will). So as far as I can see the 3 real kids have no issues with me being a fourth inheritor. The only real property is a house worth about $300,000.
My sister (who has terrible credit and low income) has lived in the house the last 2 yrs wants to buy the house, fine, we all agree on a price, she needs to get a mortgage. 2 of us are willing to wait for our share but want to get an additional mortgage to protect ourselves. So I guess this is how it would lay out.
House worth 300,000-(fair share between 4 people 75,000 each)
So sis gets a mortgage for 75,000 (to pay brother #1)
In addition to that mortgage to the bank she would grant a "mortgage/promissory" note to me and brother #2-75,000 each (so she can afford payments on first mortgage to bank)

Few questions-how can my brother and I make sure we receive our share in a timely manner?
Can we demand payment by a specific date?
Do we have to pay taxes on money paid to us in this manner or is it still considered inherited?

Hello Babs:

I think you should be asking other questions about this money - like WILL you ever get it!!

IF you take the note you're talking about, it would be in second position. That means that if she missed any payments, all you can do is file a lien against the house. WHEN the house is sold, if it ever is, you'll get your money - maybe.

IF she can't afford the payments (and you admit she can't), then somebody isn't going to get paid. Who do you think that person is?

excon

Here's how it normally happens, the Estate sells the house, the proceeds are divided among the surviving heirs, the sis buys the house, I understand her credit issues but if she cannot afford the house and can't qualify why should you or the other three have anything at risk. I love my brothers and sister but would NEVER be responsible for their obligations. I have never heard of several mortgages on one piece of property but hey I guess it's possible. So what about insurance, 4 polices on the same house? I am an agent and would never ask an insurance company to write several policies. Taxes ? The state or county where the home is located will send, I guess, one tax bill, to whom ? Each of you ? If one tax bill, then who is responsible? All of you ? Just not the way I or most others would handle this.

So what you are saying is your sister can't get a mortgage for $225K. What if one or more of the brothers co-signs? I would be more inclined to go that route so the money is clearly part of the inheritance and wouldn't be taxable. You could then invest that money as a hedge if sis doesn't pay.

I would say what you have is a mess and most likely only the brother who is getting paid from the loan has the right idea,

If you are OK with taking 20 years to get paid you are OK, Are if you are OK with perhaps losing all of your investment if they go bankrupt and the first mortgage latter forecloses for some reason and the house is sold at auction for the 1st mortgage.

That lien is about as good as that persons word to pay you, and a to be legal it has to have a payment plan, or a date it becomes payable in full.

And if they are going to have trouble paying off the first 75 mortgage, how do you ever expect them to pay you.

They need to mortgage as high as they can get, divide that money equally, with everyone else havving a share in a second mortgage.

This just sounds like a disaster just waiting to happen in a few years