Legal Question in Real Estate Law in California
My brother purchased my mothers property. He was making interest only payments by agreement and also a few balloon payments of principal that my mother claimed as such on her income tax. For the past two years he hasn't been able to make payments and now is calling the balloon principal payments interest to make him up to date and not default. Is this legal? There is a title and note but we don't know what it says. He has been the trustee and has all paperwork. He admitted being late and then reneged and said he was current until January 2011 due to balloon payments made prior to the last two years of no payment. My mother has alzheimers and has had no capacity to take care of finances since September of 2008. Was he legal in what he is doing? Can you legally change principal to interest?
2 Answers from Attorneys
What is he trustee of? Is the house in the Trust? He must give periodic reports on the Trust assets, expenditures, income, etc. Your mother needs a conservator to take care of her financial problems. Your brother has a conflict of interest if as Trustee he has control over any assets that he also is involved in personally. Once a payment is made, it s nature can normally not be changed; if he stated the were principal payments that is what they were and your mother's conservator could foreclose on the property. That she claimed it as a return of principal on her income taxes means that is what she felt it was, but when wre the tax filings in regard to 9/08 as she may not have had a sound enough mind to knoiw what was being said on the tax returns.
It looks like you are going to have a legal fight with your brother. It is best to solve problems among the siblings and not have attorneys involved, unless they ar in the background merely to advise you as to what the law is as to a certain matter. If he is relatively honest, you mlight be able to bring in an attorney to objectively try to straighten things out.
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It sounds like this is a situation that has the potential to escallate badly. An agressive litigator would be talking about removing your brother as trustee for conflict of interest, and possibly charges of elder financial abuse, which the Santa Clare Co. DA is very agressive about. An agressive litigator for your brother would be incensed and your brother insulted and would vigorously defend that he has done nothing wrong and is in his rights under the relevant documents. Then the lawyers get rich and your family gets ripped in two. That is the exact situation where a mediator can help. I am a trained and highly experienced mediator, and have served for years as a volunteer temporary judge in Santa Clara Co., presiding over settlement conferences. I maintain mediation conference faclities in San Jose and Cupertino. If you and your brother would like to consider using my mediation services, you should each independently send me an email or give my office a call. Once I hear from each of you separately that you would be interested in discussing mediation, I can contact you to provided more information and assist you both in deciding whether you want to retain my services to help sort out this situation to make sure your mother's finances are kept in good order and everyone in the family is on the same page about how they are managed.
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