Georgia Home Law

Almost everyone I know has done it: borrowed money from parents to buy their first house.  In today's case, Yurevich v. Williams, the situation was no different.  What was different, however, is that the family ended up in court.  How did this happen, you ask?  Read on.

In 1998, Ms. Yurevich loaned about $30,000.00 to her son and daughter in law so they could make a down payment on their first home.  In conjunction with the loan, they executed a promissory note, whereby the son and daughter in law agreed to pay back Ms. Yurevich when one or both of them sold or transferred title to someone else.  Plus, the parties agreed that Ms. Yurevich would take title to half of the property, while the son and daughter in law would split the other half.  The Court hints in its opinion that the agreement did not contemplate what would happen in the instance of divorce.

You can probably tell where this story is headed.

The marriage faltered and in July of 2006, the daughter in law (Ms. Williams) quit-claimed her interest in the house to Ms. Yurevich.  The following year, the divorce was finalized.  As part of the divorce agreement, Ms. Yurevich ended up with a claim to $30,000.00* of the equity in the house, plus an additional $25,000.00  of the equity to reflect her half ownership in the house.  Ms. Williams received about $12,000.00 in cash in exchange for her transferring title to Ms. Yurevich.  Ms. Yurevich sued Ms. Williams in an effort to collect money from her pursuant to the promissory note. 

Now, since the Court's opinion only tells a fraction of the whole story, it is difficult to ascertain exactly what amount of money Ms. Yurevich was seeking in her lawsuit.  Maybe she wanted all the money that was given to Ms. Williams.  Regardless, the Court held that Ms. Yurevich was "made whole" by getting her down payment back, plus about $25,000.00 more for her ownership interest in the house.  Ms. Yurevich lost.

But I think that all the people involved in this case lost in a way.  Whenever you involve family members in a transaction involving lots of money, things can get sticky.  When a lawsuit ensues it gets even worse.  All lawsuits involve a high degree of emotion, stress and fear - even when you barely know the other side.  Add that to the emotions involved in family ties and you have a recipe for disaster.

If you enter into a transaction with a family member, the best piece of advice I can give you is twofold: 1) make the agreement crystal clear, trying to anticipate solutions to problems that may come up down the road, and 2) try your absolute best to work out any problems that arise.  If you can't work them out on your own, it may be worth it to hire a neutral third party to craft solutions for you.  Doing so will save your relationships, your money, and your sanity. 

*  All numbers are approximations.