Even with family, consult a lawyer about real estate

Q: Our grandfather has offered to do a lease-to-purchase agreement for a house he owns. Can we take care of the paperwork ourselves without a lawyer? -- C.B.

A: You could all end up in a real mess if no lawyer is consulted. Many things must be decided between landlord-seller and tenant-buyer, and then everything should be set forth properly in a contract. Even though this is a family transaction, you can head off problems by keeping things businesslike. You need professional help so the contract is fair to both parties.

If part of the rent will go toward the eventual purchase, where will that money be held? Will it be credited if a payment is late? Will you forfeit it if you don't eventually buy?

If you wanted to move, could you sell the contract to another buyer who would step in where you left off? Who will pay property taxes? What if the taxes aren't paid on time? What if you are later unable to get the financing you'd need to buy? Who will be responsible for what kind of repairs? Could your grandfather place a new mortgage on the property?

A real estate lawyer can address all possibilities.

Using a reverse mortgage

Q: My husband and I are 62 years old and we currently live in a four-bedroom home valued at $300,000. We are considering taking out a reverse mortgage on this home and using the funds to buy a smaller, less expensive home. We could then move out of the larger home, put it up for sale and pay off the reverse mortgage. What is your opinion? -- C.

A: It's a complicated way to go with unnecessary expense, and I don't see what you would accomplish. Placing a reverse mortgage involves considerable closing costs. While you can add them to the loan amount, they'd have to be paid off along with the mortgage when you moved out and sold your present house.

Simply sell your home and use the proceeds to buy your next one. Agents are used to arranging it so the two transactions dovetail. People do it all the time.

Turning over to the bank

Q: I was just wondering what would happen if I turned my house back over to the bank? I am not in danger of a foreclosure; it's just getting too much to handle and we have another house that we want. What happens to our credit? What are the consequences of doing this? -- e-mail

A: You can't just give your house to the bank. Right now, they have all the real estate headaches they can handle.

If you can sell for enough to pay off your mortgage, put the house in the hands of a real estate broker at a bargain price for a quick sale.

Edith Lank will respond personally to any questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.