Land contract question

[Tryton]

What is the name of your state (only U.S. law)? Indiana

Short and sweet. Brother and I inherited house. Work out a contract and settle on a price to buy him out rather than go to a bank to finance. Sign contract with notary. Contract NOT recorded at courthouse. Brother then gets into financial trouble. Has to file bankruptcy. Signs quitclaim deed. House now legally only in my name.

The question is, is the contract now null and void? I intend to pay my brother the remainder of what he is owed but he's out of work and threatens legal action if he receives the check a day late. Pretty crappy thing to do but I'm old enough to know family means little anymore. What I want to know is since the house is now legally only in my name, does that make the contract to pay go away? He's saying it only makes it go from a secured to an unsecured debt. My take on it is the contract is based on his half interest in the house which he voluntarily gave up. Am I right? The other question is does the contract have to be recorded at the courthouse to be enforceable? I feel bound by mother's wishes to pay him but am I LEGALLY obligated at this point? I only want to know so I have some leverage when he pulls his stupid stuff.

 

[OHRoadwarrior]

We would need to see the contract.

 

[HomeGuru]

What is the name of your state (only U.S. law)? Indiana

Short and sweet. Brother and I inherited house. Work out a contract and settle on a price to buy him out rather than go to a bank to finance. Sign contract with notary. Contract NOT recorded at courthouse. Brother then gets into financial trouble. Has to file bankruptcy. Signs quitclaim deed. House now legally only in my name.

**A: when did he sign the deed and when did he file BK?

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The question is, is the contract now null and void?

**A: non recordation does not make the contract null and void.
The contract is still enforceable.

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I intend to pay my brother the remainder of what he is owed but he's out of work and threatens legal action if he receives the check a day late. Pretty crappy thing to do but I'm old enough to know family means little anymore. What I want to know is since the house is now legally only in my name, does that make the contract to pay go away? He's saying it only makes it go from a secured to an unsecured debt. My take on it is the contract is based on his half interest in the house which he voluntarily gave up. Am I right? The other question is does the contract have to be recorded at the courthouse to be enforceable? I feel bound by mother's wishes to pay him but am I LEGALLY obligated at this point? I only want to know so I have some leverage when he pulls his stupid stuff.

**A: see above.

 

[NC Aggie]

Was the quitclaim deed signed to prevent the property from being considered as part of your brother's assets for the bankruptcy proceedings? Or was this done to fullfill stipulations of your contract? Like someone has already indicated, the fact that the contract was not filed in the courthouse is irrelevant, most contracts aren't filed in court. The court would still be enforceable if it's valid but sounds like your brother may have been immature in signing of the quitclaim deed. Depends on what the contract says.

 

[Tryton]

He hasn't filed bankruptcy yet but obviously that's why he signed the house over. He did that a few months ago. Last December he was involved in a wreck that was his fault and he had no insurance. So he either got or is getting a judgment against him for that. That's the biggest reason he signed it over. To be honest, I have no idea when he did what because he's a notorious liar. In fact, he lied to us when we asked him point blank if he did have insurance. We are still worried that someone may have a claim against the house even though he's assured us that signing that when he did shouldn't be a problem. He works for a lawyer who is, to put it nicely, of questionable character. My brother lives 2 hours away so I can't go confront him on a regular basis about things. He has made this whole thing a complete mess by getting in that wreck in the first place and now he's just being a complete jerk. I figured the contract not being recorded wouldn't make a difference but since it spells out payment for the property and since he no longer owns the property because he signed the quitclaim deed, does it mean that the contract is satisfied?

Incidentally, we are calling a local attorney tomorrow because we just have too many worries about things coming back on us because of what he's done.

 

[HomeGuru]

He hasn't filed bankruptcy yet but obviously that's why he signed the house over. He did that a few months ago.


**A: then when he files BK, he has committed fraud due to the transfer of asset. And you would be guilty of aiding and abetting.



########
. Last December he was involved in a wreck that was his fault and he had no insurance. So he either got or is getting a judgment against him for that. That's the biggest reason he signed it over. To be honest, I have no idea when he did what because he's a notorious liar. In fact, he lied to us when we asked him point blank if he did have insurance. We are still worried that someone may have a claim against the house even though he's assured us that signing that when he did shouldn't be a problem. He works for a lawyer who is, to put it nicely, of questionable character. My brother lives 2 hours away so I can't go confront him on a regular basis about things. He has made this whole thing a complete mess by getting in that wreck in the first place and now he's just being a complete jerk. I figured the contract not being recorded wouldn't make a difference but since it spells out payment for the property and since he no longer owns the property because he signed the quitclaim deed, does it mean that the contract is satisfied?

**A: by virtue of the quit claim, the contract is now null and void for now. I say for now because when he files BK, the court will deem the deed transfer a fraudulent transfer disallow the quit claim deed. This will result in the reversion to the status quo meaning the land contract would still be in effect.

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Incidentally, we are calling a local attorney tomorrow because we just have too many worries about things coming back on us because of what he's done.

**A: yes, that is the best course of action at this point.

 

[NC Aggie]

I figured the contract not being recorded wouldn't make a difference but since it spells out payment for the property and since he no longer owns the property because he signed the quitclaim deed, does it mean that the contract is satisfied?

Incidentally, we are calling a local attorney tomorrow because we just have too many worries about things coming back on us because of what he's done.

Well you still would have to satisfy your conditions of the contract even if your brother fullfilled his prematurely and despite having ulterior reasons. What he cannot do is accelerate payment from you if the contract spells out payment.

However, based on the complicity of this situation, I would definitely recommend you talk to an attorney.

 

[Tryton]

Well, if he committed fraud, he did it on the advice of his attorney (also his employer). Trust me, I questioned him when he decided to sign it over. He assured me it was not a problem. Thing is I don't know if he's actually filing bankruptcy or if he really has gotten a judgment against him for the wreck. He's lied about so many things I don't believe a word that comes out of his mouth.

 

[HomeGuru]

Well, if he committed fraud, he did it on the advice of his attorney (also his employer). Trust me, I questioned him when he decided to sign it over. He assured me it was not a problem. Thing is I don't know if he's actually filing bankruptcy or if he really has gotten a judgment against him for the wreck. He's lied about so many things I don't believe a word that comes out of his mouth.

**A: and if he does file BK, I bet his employer attorney will sing a different tune.

 

[Tryton]

Thanks for all the replies. I contacted an attorney who is going to review the contract for a reasonable price. I have informed my brother that I will have legal representation and I told him I informed the attorney of the issue with the quitclaim deed. He has done a complete about face and has actually apologized for his behavior. That tells me he knows he could be in some kind of trouble. All I want right now is to be out from under him. I hate that things are like this. I love my brother but when anyone threatens legal action, you have to do what you can to protect yourself.

 

[HomeGuru]

Thanks for all the replies. I contacted an attorney who is going to review the contract for a reasonable price. I have informed my brother that I will have legal representation and I told him I informed the attorney of the issue with the quitclaim deed. He has done a complete about face and has actually apologized for his behavior. That tells me he knows he could be in some kind of trouble. All I want right now is to be out from under him. I hate that things are like this. I love my brother but when anyone threatens legal action, you have to do what you can to protect yourself.

**A: did his attorney employer do an about face also?

 

[Tryton]

Not sure. I'm actually meeting with mine on Friday so I'll probably know where things are some time next week. I'm not sure if he'll communicate with his lawyer or not. As I said, I don't know the real status of any kind of judgment or bankruptcy because he's such a liar. Maybe my guy can get to the bottom of things. If it is determined that the contract still stands AND the quitclaim deed is ok, we're going to do our best to get a loan using the house as collateral just to pay him off and get out from under him. Then let him explain to the bankruptcy court where that large sum of money came from. My wife and I both feel it should go toward his judgment anyway because the other parties in that wreck didn't do anything wrong.

 

[HomeGuru]

Not sure. I'm actually meeting with mine on Friday so I'll probably know where things are some time next week. I'm not sure if he'll communicate with his lawyer or not. As I said, I don't know the real status of any kind of judgment or bankruptcy because he's such a liar. Maybe my guy can get to the bottom of things. If it is determined that the contract still stands AND the quitclaim deed is ok, we're going to do our best to get a loan using the house as collateral just to pay him off and get out from under him. Then let him explain to the bankruptcy court where that large sum of money came from. My wife and I both feel it should go toward his judgment anyway because the other parties in that wreck didn't do anything wrong.

**A: it is one or the other and not both on the contract and quit claim deed.

 

[Tryton]

I would like to thank those who replied and I thought I'd follow up since that probably doesn't happen a lot here. My lawyer reviewed the contract. There are some issues with the language. The issue that started this whole mess is we were a few days late with the payment and my brother FREAKED out. This was before he had gotten rehired by the attorney he works for. He was out of work and was depending on the income. Essentially, he blamed me for causing him to be in the financial mess he was in when he was the one who was out of work. When we signed the contract, it was all extra money for him but since he wasn't working he freaked out. He resorted to legal action almost immediately which is why I chose to take the route I did. He is now at least working for that attorney again so he has relaxed some. My problem was that he freaked out about a payment that we had never missed in the past and then went straight into wanting to file suit which is ridiculous.

The biggest problem with the contract is the paragraph that spells out the payment terms. This contract was supposedly reviewed by his lawyer before we signed it. After my attorney's review and after re-reading it myself, the issue is the payment terms are vague. The contract spells out the number of payments, the amount, and the beginning date. But it doesn't say anything about a due date. It also doesn't give a date for the last payment due or say anything about paying each month or in consecutive months. There is no timeframe for the payments. I called my lawyer to confirm I was interpreting the letter he sent me correctly. Basically, I still have to pay him but if I choose to skip a month, there's really nothing he can do because the payment terms are vague. In other words, there's no way to be "late". I never really doubted I still had to pay him but after he threatened me with legal action, I had to find out where I stood. My lawyer has said that according to Indiana law, any ambiguities in the contract would go against the person who prepared it which was him.

The only thing the lawyer said about him signing the house over was that it clouded the situation. I'm still waiting on a response from my brother regarding the actual judgment and bankruptcy and where exactly that stuff stands.

 

[HomeGuru]

I would like to thank those who replied and I thought I'd follow up since that probably doesn't happen a lot here. My lawyer reviewed the contract. There are some issues with the language. The issue that started this whole mess is we were a few days late with the payment and my brother FREAKED out. This was before he had gotten rehired by the attorney he works for. He was out of work and was depending on the income. Essentially, he blamed me for causing him to be in the financial mess he was in when he was the one who was out of work. When we signed the contract, it was all extra money for him but since he wasn't working he freaked out. He resorted to legal action almost immediately which is why I chose to take the route I did. He is now at least working for that attorney again so he has relaxed some. My problem was that he freaked out about a payment that we had never missed in the past and then went straight into wanting to file suit which is ridiculous.

The biggest problem with the contract is the paragraph that spells out the payment terms. This contract was supposedly reviewed by his lawyer before we signed it. After my attorney's review and after re-reading it myself, the issue is the payment terms are vague. The contract spells out the number of payments, the amount, and the beginning date. But it doesn't say anything about a due date. It also doesn't give a date for the last payment due or say anything about paying each month or in consecutive months. There is no timeframe for the payments. I called my lawyer to confirm I was interpreting the letter he sent me correctly. Basically, I still have to pay him but if I choose to skip a month, there's really nothing he can do because the payment terms are vague. In other words, there's no way to be "late". I never really doubted I still had to pay him but after he threatened me with legal action, I had to find out where I stood. My lawyer has said that according to Indiana law, any ambiguities in the contract would go against the person who prepared it which was him.

The only thing the lawyer said about him signing the house over was that it clouded the situation. I'm still waiting on a response from my brother regarding the actual judgment and bankruptcy and where exactly that stuff stands.

**A: ok, thanks for the update.