I am frothing at the bit on this one. My in-laws rehabbed a home. My husband's name and his mother's name are on the deed. The in-laws intend for this to be a rental property (it has renters as of April 1st). Apparently I am the only one involved (and I am not really involved but like I said my husband's name is on the deed) who sees the need for a rental permit and inspection. I want my husband to quit claim his interest in the property so that only his mother's name is on the deed. I do not want my husband to be held responsible financially (or otherwise) if something happens and a tenant decides to sue (or deity of your choice forbid that there is a fire or accident and someone dies) because the house is an illegal rental. Am I crazy? Should I just stay out of it? At this point I don't care about receiving any kind of income from this property (about 8K would have been coming our way if the place were sold and I am not sure how or even if that is going to be addressed since it has now become a rental) if everyone is just going to handle things in a blatantly illegal fashion. What would you do?
I guess I was chomping at the bit for nothing. After pointing out that this directly impacts himself, his wife and children, and after I explained to my husband that he (WE) would be held responsible and get our butts handed to us if anything happened, he agreed wholeheartedly that an inspection and rental permit are necessary. He told his parents this and they said they don't want anything inspected because they are afraid it won't pass. At that point he decided to wash his hands of the whole thing because he and I both feel it is irresponsible to rent something you think or know will not pass inspection (why not just do it the correct way?) so he is going to quit claim his interest so only mom's name is on the deed and insist that the loan be refinanced so his name is no longer on it either. I also pointed out that the homeowners insurance needs to be changed and that they probably will not insure it if it is an illegal rental. The in-laws think that because they are renting to "friends" that there will be no issues. I think they are in for a world of hurt in the long run and we won't be a part of it. I am sure they are going to get pissy about the interfering daughter-in-law but our children come before his parents. As to the permits for the work already done....no issue there since nothing that was done is considered construction by the local code/zoning office (on existing properties you only have to have permits for detached garages, fences and swimming pools....strange, but whatever). Thanks for your opinions!
My husband's name is on the loan because his mom needed a cosigner because her credit it pretty far extended as she pretty much pays for my SIL's entire existence and that of her two children (including SIL's house and taking out loans so SIL could pursue another college degree). I guess when they closed on the house my husband's name was put on the deed per his attorney's advice because his name is on the loan.
Incidentally, after my husband explained to his parents that they would be held legally and financially responsible for anything that happens, they decided to get the inspection and permit. I'm glad everyone has come to this conclusion.
I'm with you - I wouldn't want my name (or my husband's name, since that would directly affect me) on any illegal proprty usage.
Girl!! He MUST know the rental laws of the state and county.
If he doesn't know this - then he can get screwed BIG TIME!!! If the mortgage was given with the knowledge this would NOT be the deed holder's full time residence - the insurance would be set up differently.
DO NOT BUTT OUT!!! If it is NOT set up right - you could lose a heck of a lot....do the research and find out what needs to be done with the mortgage, property, etc. if there is a certificate of rental required for the county and they don't have it - you could risk losing your house too if the renters sued - worst case scenario - but it happens!!!
COVER YOUR BUTT!
If your husband's name is on the property it is your business too because if he is held liable for anything it directly impacts your immediate family. However, it is his place to deal with his mother and the specifics. If they aren't going to do things legally, urge him to sign the property back to his mom. If he has money invested, maybe he should draw up a paper whereas his mom owes him whatever amount and pays so much back per month until he is completely bought out (but sign it over now).
Why isnt it a legal rental property?? That is a huge concern right there. We had a legal rental property and it was a disaster. Even with a legal contract. We had to take them to court for non payment and get them evicted. If this ever gets to that point what are you going to do? If the insurance company finds out you have renters in there, you could also get in huge trouble if thats not disclosed to them. Please dont tell me they will lie on the occupancy permit??? You could lose everything and have every right to be worried.
I understand your anxst. Depending on the kind you tenant you have it may reveal itself in time the kind of set up the house truly is. The fact that unpermitted construction was done on the property may come out at a later point in time too.
Here where I am if you had a tenant on public assistance, inspectors come out to see if the property is up to code or not. Lovely not so well meaning neighbors may out the illegal apartment.
Are you certain the apartment is or will be considered illegal? My girlfriends mom converted her one family house to a two family with a bonus studio basement which she could legally rent to anyone other than family (no two separate exits).
I wouldn't want to be in this situation but I would really try to hope for the best while preparing for the worse. If you husband won't listen to you reason, don't press him on this issue just get prepared and if the worse comes to pass you have your ducks in order on how to handle this with the resources of people and money needed to fix this.
Non-permitted work is going to cost a fortune in fines and tax hikes down the road. If the house is not properly insured and something happens... in plain terms, you're screwed!
I would talk to your husband about having your MIL buy him "out" of the property if the proper paperwork is not in order by a certain date.
Can you make an anonymous call to the proper authority, and have them (your husband and MIL) warned before the house is occupied?
It sounds like your in-laws did construction on the house without permits or building inspections. Does this also mean that the property is not insured as a rental?
This has "kicking myself after something bad happens" written all over it. If you and your DH remove yourselves from the deed, make sure that you are also removed from any financial documents, since you can still be liable if they default on a loan even if you are not an owner..
I am one of those folks that think that it is almost never a great idea to go into a business venture with family...too many hurt feelings if something goes wrong. How did your husband's name get on this in the first place? I am with you...find a way to get off of this and wash your hands of it!
Glad you resolved this but just curious why your hubby's name was on it in the first place?
