I want to buy a condo for my son to rent. Should it be in both our names?

UPDATED: Sep 30, 2022

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I want to buy a condo for my son to rent. Should it be in both our names?

I have made an offer on a condo for 57,900 in an up and coming area. The
condo will need about 10,000 in upgrades/renovations. My father died last year
and left me an IRA. I’m trying to decide if I should pay cash using some money
from the IRA or mortgage this property. I want my son to live there and he will
pay rent to me to put the money back or pay the mortgage. Should the property
be in both our names? Should I pay cash or mortgage? He makes less than 20k a
year and probably wouldn’t qualify for the mortgage. Do we put the mortgage in
both our names? What are the tax implications?

Asked on May 30, 2016 under Real Estate Law, North Carolina


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

If it is in both your names, if you pass away, it becomes his automatically. And if he stops paying rent and causes you financial distress so that you have to sell, he will be entitled to a share of the equity, because he will be part or joint owner. And if he is sued for any reason (e.g. bad debt, car accident), the plaintiff (if the plaintiff wins the suit) could put a lien on the property. And furthermore, if he stops paying rent, he can still live there, as an owner; and you would need his consent to any sale of the property--again, because he will be an owner Based on the above factors, you need to decide if is right or wrong for you to purchase in both your names, or only your own.
As to mortgage or cash: look at what mortgage rates you could get, then decide if, based on the rate you'll be paying, if you have a better use for the cash or not. If not, you may wish to use pay cash and save the interest.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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