Legal Question in Real Estate Law in Indiana

Re: Buying out my 2 sisters' portions of the condo we inherited when Mom died

I'm sorry for your mother's death.

None of what you want to do requires a lawyer. But you have many issues, fairly complicated, and after you work on them yourselves, you will probably cheerfully pay a lawyer to help wrap things up.

If the title to the condo was gifted to you three sisters before your mother died, then your tax basis for that property will be your mother's basis. So there could be a substantial capital gain, probably all taxable. (Had the property been conveyed through her estate, then the tax basis would be the current fair market value.) The capital gain is usually realized at the time of the sale or transfer of an interest("realized" is tax talk for when you have to compute and report a gain or loss). So if you buy out your sisters in 2006, they have to report their gain on their 2006 federal and state tax returns. Each sister's gain, assuming the pre-death gift, would be one-third of your mother's purchase price (and this assumes each sister received a one-third interest) plus any allowable adjustments (like capital improvements and selling expenses, such as well-earned attorney fees, don't forget) subtracted from the amount you pay them.

Conveyance of property would be by deed. Disclosure forms are also required. Deed and disclosure forms can be acquired at most business supply stores.

You need to check with the condo association to make sure you comply with its sale requirements.

You should buy a title insurance policy to make sure your rights to the property are what you think they are. Sometimes, especially where someone has been throwing deeds around, like your Mom, there are surprise liens and encumbrances. Property transfers have to be recorded with the County Recorder, and they are reported to the appropriate taxing authorities.

If you sell the property on contract, you need a real estate purchase agreement, plus all the disclosure forms, and to protect your buyer the purchase agreement should be recorded. You might be able to report the gain on a contract purchase as an installment sale.

Good luck. And don't forget, I'm available for cheerful customers.