Friday, May 06, 2005
PARENTS!
No matter how old you get, it seems that some parents just never stop seeing you as their child. Are you 18? 20? 25? and still struggling to prove yourself to your parents?
Give it up. Just stop worring about it.
Here I am, age 42 and my parents STILL persist in treating me like a little boy. I get no respect in my own familey!
The current issue is the sell of our old house in which both of us are invested. This house had its good points but it was built around 1915 and was in need of major renovations when we bought it ten years ago. My parents fronted the down payment, well, to be honest, they bought the place and put our names on the loan as fist signers. I did not like the house at all, but what are you going to do when your mom has the control of the money and will not listen to you? Like I said - I get no respect. You see SHE fell in love with the place and put money down on it before we even had a look at the place... basicly forced us into it because of the "great potintial" the place had.
Well the plan was good. They had money and I had time and ability. They were going to fund the remodel, and as owners we were going to do the work. The first problem was that between us, no one could come up with a game plan that was acceptable to all. Then, the next thing you know, their money for the remodel was gone! Spent! (They always seemed to need a new car or truck ?!?) So I was stuck in a house that was too small for my growing familey, that needed remodleing but had no money for it. We made repairs as needed of course, and I did a lot of work to improve things. I cleaned out a mess in the basement, put in a circle drive, added some fencing and enclosed the carport. All at my own expence.
There were problems too with the initial loan agreement we had. I had never gotten a lone on a house before so I let mom and dad walk us through the procedure. As the years past, it became clear that what we thought was an assumed morgage with some four payments having been made.. was an assumed morgage that was already in default four payments behind! We strugled to get it caught up (which should have been resolved by legal means, because the purchase was missrepresented in the contract that we signed) but my parents (supposedly savy to all of this) preffered to do nothing until (after I'd paid a ton in late fees) the move to forclose was made and my parents (concerned that they would loose their investment) refinanced the place and took our names off the new loan. They also took a lot of equity out of the house at the same time. About $8,000 and not a penny of that was given to us!
So now we have moved out, and they need to sell it and part the procedes from the sell. How should we divide the net gains?
There is income from the appreciation of the property.
There is income from the accrued equity from our house payments.
There is income from the improvements I did out of my own poket.
There is the issue of their initial down payment.
We statred with a $40,000 loan and a $10,000 down payment.
We are hopeing for a resale around $80,000.
One more item I need to mention here. I have in my file a document that states that we agreed to split the net profits of the sell of the home 50/50. We both signed it in the presence of two christian witnesses. Should not this agreement be honored?
My parents want to throw it out the window because,
just like in the first loan, the new loan was fouled up too. When they refinanced they made they mistake of assuming that taxes and insurance were included in the monthly payments. We agreed to make the monthly payments and signed off our rights as owners in exchange for the reduced monthly terms. *Then* it turned out that taxes and insureance were *not* included, and never were. Inspite of my warnings.. and I did plead with them to READ the contract before signing it... (I get no respect see)... they still did not read it. So this caught them in the shorts. We had already agreed to the terms and it was too late to start renegotiating them.
As it stands now, they are pissed that they have had to carry insurance on the house.. and the taxes are almost three years in the rears because they have not paid them. I should have known...
They are the elders here. If I should have known.. shouldn't thay have known and been doing something to prevent the problem?
I hate to say it, but I know them. They are my parents and I've had to live with them as long as they have had to live with me. The reason they are pissed right now is beacause, when they had the new loan contract in front of them, all they could see was the bottom line that put money in thier pockets. So they can just eat it for once and perhapps become the wiser for it.
Now I must sound like a spoiled child in light of all this. I mean they did front a lot of money to put us in a home and they deserve something for thier sacrifice - right?
Consider this - After running the numbers, they could walk away from this house with about 22,000. Not a bad return after only 10 years. I should see about 11,000... 8,000 of which is from equity that our monthly payments have accrued, and the rest from the improvements we funded ourselves. So is a 50/50 split too much to ask? I ask you.
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4 comments:
Brandon to the rescue. Okay. Here's what's equitable.
First ...everyone has to "eat" their mistakes. Nobody gets to complain, now. What's past is past.
Next ...no one (that's you, Dan) gets any "sweat equity" for the work done: your labor, for example, was free ...you don't get paid for mowing your own lawn, or fixing your own plumbing (if you hired a plumber, and you have a receipt, that's different: read on).
Next ...add up EVERY payment made, ONLY for those things that you either have receipts for, or that you (and Pat & Carl) remember as paying out AND you ALL agree WITHOUT ARGUMENT were paid out.
So ...you & Pili have a paid-out list, and Pat & Carl have a paid-out list.
Next ...from YOUR list, take out the actual amount that you and Pili paid for on the loan itself (so what you're going to do is subtract out and identify things like the taxes, the penalties, insurance, receipts for repairs, etc.
Okay. Now we have:
#1. A list of ALL money that Pat & Carl paid-out.
#2. A list of ALL "payments only" that Dan & Pili paid-out.
#3. A list of "OTHER monies" that Dan & Pili paid-out.
Got that?
Now, take the final net sale price (that's the "profit" on the sale, after points & necessary fees &tc have all been paid out).
Pay Pat & Carl EXACTLY what they paid-out (as listed in #1) from this net profit.
PAT & CARL GET PAID THEIR "INVESTMENT" COSTS FIRST!!! - Because, well, they didn't have to do this for you and Pili. But they did it because they're great parents. And so even if they made mistakes (which it sounds like they did), They Didn't Have To Do This.
So they don't get "penalized" for their screw-ups (or what you see as a screw-up ...even if I'm sympathetic to your interpretation: but YOU didn't HAVE TO go along ...you could have kept renting, eh).
Next, pay EXACTLY what Dan & Pili paid out (as listed in #3) from this (rapidly diminishing, I'd bet) net profit.
Divide any remaining funds as per your original 50/50 split agreement.
Done. Fair. And in keeping with the terms of the original agreement.
(What about #2 of what you spent? - Well, that was your "rent" payment. As if you were renting. And you know that "rent money" is NEVER "recovered". It's just "gone". Dittos for your "sweat equity".)
Do NOT forget to include the yearly taxes YOU paid, and the insurance payments paid. COUNT the penalties paid out, and who paid them. All this stuff gets "refunded" back prior to divvying up the "profits", because these are all legitimate "business expenses".
Now ...that wasn't so hard, eh?
Oops ...I forgot something. Pat & Carl have already been "reimbursed" something like $8000.
THAT $8000 MUST BE INCLUDED IN THE NET PROFIT AMOUNT.
...in essence, they've already got some of their return on investment years back (i.e., they took part of their net profit and spent it years ago).
See, according to the original agreement, BOTH parties should have received $4000 at that time.
In essence, they "owe" you $4000 in "back profits".
Probably the best way to deal with that, is to take your "owed" $4000 in profits - that weren't and should have been - paid several years back, out of the net sales profits PRIOR to doing every thing I mentioned in the first post.
Yeah, you & Pili get $4000 up front according to the original agreement your parents went into this with.
...which probably makes everyone mad at me for butting in. (But you & Pili do deserve $4K first from the net profits of the sale, before dividing things up like I previously posted ...and it should have been given to you years ago ...I've no idea what Pat was thinking then. Prob'ly wasn't thinking it out at all.)
Thanks Brandon,
I was begining to wonder if anyone bothered to read all that.
I think I follow you, and for the most part I agree. But because it is awfully hard to dig up every reciept for things paid out after 10 years, if not impossible, I was hopeing to make it easier.
I'm not interested in squeezing it for every dime as much as I am in seeing things done open, honest and above board. (Not to mention correctly, we don't need to get taken -again- )
But because it is awfully hard to dig up every reciept for things paid out after 10 years, if not impossible, I was hoping to make it easier.
Well, after the $4K you guys have a legitimate up-front claim to (and which I'm sure Pat & Carl would both agree is reasonable, if they think about it for a half second ...direct 'em to my posted reply if you want), it should be entirely non-confrontary to sit down with them at the table and go over the major ticket repairs/materials bills that you know you put into the place, but don't have receipts for.
But other than that, there's no way to "make it easy".
And nobody should want to get in nickel-and-dime stuff with anyone over this kind of thing (if you didn't save receipts); that is a sure way to engender some acrimony.
They need to see that when they took out $8000 (which was profit on the "business"), they should have divided that amount 50/50 with you and Pili ...and I think they will; they're pretty smart and pretty honest.
And you need to understand that ALL your "sweat-equity" is free (well, it is in this case, because you guys didn't sit down at the very beginning and clearly state the terms of the agreement for details like "sweat equity" ...other than the 50/50 split at least). Umm, slap yourself and say "I won't do that ever again." [[grin]]
...at least, since this is a "major expenses" kind of thing, you should have all the papers, all the taxes, all the insurance stuff, all the various mortgage and liens info in a "special papers box" someplace (along with your various birth certificates, military discharges, citizenship papers, etc., etc), yes? You'll just have to eat it on things you don't have receipts for, and that they don't agree with you about when y'all sit down together and discuss all this.
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