Legal Question in Real Estate Law in Illinois
Can I add my brother to the house title after he completed a short sale? My brother completed a short sale in December 2012. I'm about to secure a home loan, and want to add my brother to the title. If I do so, will the lender from the short sale come after my brother? His credit report states that the loan was paid in full for less than full balance, showing $0 balance. I'm the only one that's going to be on the mortgage. Must he wait at least two years before I can add his name to the title? The following was part of his short sale agreement:
"Upon completion of all requirements by borrower(s), Seterus, Inc. will execute a release and a discharge of the deed of trust/mortgage and, if necessary, will dismiss any pending legal action to collect this obligation. As required by law, Seterus, Inc. may issue a 1099C, Forgiveness of Debt, as a result of this Settlement Agreement. Borrower(s) acknowledges that there may be tax implications resulting from debt forgiveness. Borrower(s) should consult with a tax advisor."
A 1099-C was issued, so the tax was waived.
2 Answers from Attorneys
Without reviewing the entire short sale agreement, it is impossible to give you specific advice in this situation, but here are a couple of thoughts: If you add your brother, any judgments against your brother will become liens against your real estate. Also, if you have a mortgage on your property, adding your brother may violate the due on sale clause of the mortgage, so depending on certain circumstances, you may need the lender's permission to do so. Perhaps it might be more appropriate to have the property devised to him via your will, since this would avoid both of the problems mentioned. In any event, you should discuss your situation in detail with an attorney before you do anything.
I agree w Mr. Moens. Also if the house you want to add him to title to is the house he sold at short sale to you, there could be issues of fraud, and there can be gift tax consequences as well. Have the entire situation reviewed by counsel.
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