I’m a recent widow. I’m building a house on my son’s and daughter-in-law’s land. Do I have legal ownership? What if they decide to sell, divorce, or die before me?
My son and daughter-in-law just moved into their new home, which is on a one-acre lot. They want me to move nearby, as I lost my spouse recently. My dilemma is this: Construction has already begun on a small one-bedroom house for me, for which I am paying cash. What if they decide to sell, or have a divorce, or worse? Do I have any legal ownership?
‘The Big Move’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.
Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Aarthi Swaminathan at TheBigMove@marketwatch.com.
Dear Thinking Ahead,
Sorry for your loss. I cannot imagine losing someone so near and so important to you. Major props for you for planning ahead for worst-case scenarios.
There are two things you may want to consider doing as soon as possible: Formalize the living arrangements on paper with a lease, and to put your assets, including the home, in a trust.
Writing up a lease is an essential move at this point. Asking your son and daughter-in-law to sign the lease may be an awkward conversation to have this late in the process, but it’s something you need to do. Put this arrangement in writing in a lease agreement, in case things go sideways.
To be clear, this is not a sub-lease. You are not subleasing the home from them.
“A sublease is when one rents out something that is already being rented,” Michal Ashley Schulman, chief investment officer and founding partner at Los Angeles-based Running Point Capital, told MarketWatch. You’d need a sublease if you rent the home to someone else for income (which you could consider in the future).
You need a ground lease, “where one leases the land, but not the structure on the land,” he said. Under this agreement, you’ll have to pay the relevant taxes over the period of the lease. You’ll also have to pay for expenses, like insurance, repairs, and so on.
After you’ve got that document in hand, look into putting the home in a trust. Putting the new construction in a trust will mean the house will avoid probate when you pass away, Schulman advised.
Probate is the legal and public process whereby after you pass, your will and assets will be reviewed and subsequently distributed to your beneficiaries (it’s a little more complicated than that, but that’s the gist of it).
It’s very sweet of your son and daughter-in-law to want to live nearby, to provide support for you during this difficult time. It’s also great that you are able to live in your own house on their lot, instead of living with them too — you get to maintain a great deal of your independence!
But remember to take steps to protect yourself and preserve your rights.
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