If a loan is not reduced to writing, what is the borrower’s obligation?

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If a loan is not reduced to writing, what is the borrower’s obligation?

My mother-in-law had taken a mortgage out against her home to help us out with a down payment on our home. We signed nothing but were making the payments. Since then, we lost our home, and she has passed away, and my sister-in-law is living in the home. There was not a Will leaving the house to anyone, no one else was on the deed, her house is now going into foreclosure. Can my brother-in-law sue us for the amount of the mortgage? We want to pay it, we just are not able to right now.

Asked on August 20, 2012 under Bankruptcy Law, Wisconsin

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

So long as your mother-in-law is alive and has not made any claim for reimbursement as to the apparent loan she made you with respect to your home then it would appear that what she gave you may have been a gift from what you have written. If the loan became a gift, then you have no obligation to repay it. Your brother-in-law has no basis to sue you for the money since he did not make the loan to you.


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