Many Connecticut residents may enter real estate deals with their families and friends.
Usually, these deals are mutually beneficial. For example, when parents sell a home to their children, the children can get a good price and, if they do seller financing, generous repayment terms from their parents
The parents also may stand to benefit financially, and both sides might be able to save costs, including the real estate agent’s commission and other common closing fees.
There are many other real estate transactions that might involve family and friends. Friends and relatives may provide private financing for a home purchase or, at least, money for a substantial down payment. They also offer a home or apartment for lease to their loved ones.
Again, aside from love and affection, there are often mutual financial benefits to these private real estate transactions between friends and family.
Family real estate transactions still require legal care
But it is important to resist the temptation to take an overly informal approach to these deals.
Unfortunately, close friendships and even solid family relationships can sour, even amid a real estate deal that was supposed to help all involved.
The reality is litigation over real estate is always a possibility even between loved ones, but carefully worded agreements and detailed attention to the process can minimize the risk.
Furthermore, even if relationships between family members or friends stay warm, a sloppy real estate transaction can cause problems with others, including taxing authorities or third-party creditors who might claim an interest in the property.
Most of the time, it is better if a real estate transaction includes all the proper legal steps. At a minimum, it would be important for a northeastern Connecticut resident who wants to do a deal with friends or family to make sure they understand what steps they might be able to gloss over and what steps are essential.