Legal Question in Real Estate Law in Maryland

Loan to parents - Pay off their mortgage?

My parents are retired and living on a mostly fixed income. My father was an military physician and draws a modest pension. He still does some consulting to supplement their income.

They live in suburban Washington, D.C. and their house is probably worth close to $500k. I believe they owe approximately $80k on a first mortgage on the house.

My mother was just diagnosed with cancer and I am considering whether I should loan them enough money to pay off their home, freeing up some of their income to ''enjoy life'' and deal with this problem. I don't have a lot of spare cash, but could swing the $80k.

I would need to earn a very modest return, the minimum needed to keep the IRS from imputing interest & would also need to secure the loan with a lien on the house. My intention is that they not make any payments to me at all - that I'd just get paid back from their estate.

Is this feasible and if so, how would I go about getting the proper documents drafted?


Asked on 10/30/07, 10:28 am

1 Answer from Attorneys
Robert Sher Wagshal and Sher

Re: Loan to parents - Pay off their mortgage?

Since you don't intend to require any payments during your parents' lifetime, you could have a promissory note prepared to require repayment upon their death, which would be from the estate of the last to die. Also they would execute a deed of trust to you to protect your right to recover your "loan". This trust would be recorded. Once the current loan is paid off, it would be released, and if there are no other current liens against the property, yours would be in first position. I recommend you have an experienced real estate attorney help you with this to ensure it's done properly.

Robert Sher

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Answered on 10/30/07, 11:22 am


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