Here's the story... I am trying to help my mother.
My mother owns her own home... she let her friend move in. The friend lent my mother $5000.00 with a verbal agreement that my mother could only pay her back through a reduced rent for 2+ years... so instead of paying 500 a month the friend could pay 300.a month
The friend moved out because she got upset with my mother when my mother let my sister stay there for a few weeks while she transitioned to a new house.
Now my mothers friend has a lawyer is has stopped by and told my mother that she is sueing her for 1500.00 and is going to make my mother sell her house.
My mother is in tears, works for home depot and lives paycheck to paycheck... my mother told her friend that she didn't have to leave and she is welcome to stay there with the same agreement... but my mother has nothing and the house is worth less then what she owes. The friends lawyer has sent my mother a letter of some sort regarding payment... my mom has NO money.
Any advice?

First, it is unlikely that your mom will be forced to sell her house. Even if she is sued and loses. The worst that is likely to happen is she loses and the "friend" gets a lien against the house. Tell her to write a letter to the attorney stating that the friend CHOSE to leave voiding their agreement.

Agree, your mom borrowed the money, and part of the payment was reduced rent, but will owe the balance if they move out, You can not force someone to stay living there to pay the loan back.

So yes they can sue for the balance of the money owed. They may even get a garnishment if your state allows and get part of her pay.

They may get a lien on the house, but I see no way they can make her sell it, ( does not work like that) if the friend told her that, it is a threat, and actually illegal. You or mom needs to try and work out a payment plan, since the money was borrowed.

Update: it should say $15,000.00-(not 1500 above) Im not sure why she is trying to sue more than the $5000 borrowed.

Thank you so much for your help- I greatly appreciate your input. My mom offered to give her $20.00 a month
(I know that isn't much but she doesn't have much) but the friend got really upset. Thanks again.
~Crystal~

She's just blowing smoke. She has no grounds to recover more than she loaned, since your mom was fulfilling her end of the agreement. If she does go to court, the most she would get is the balance owed.

Again, I would write a letter as I described.