Elderly in-laws refuse to sell house that needs $200k of work, are out of money, can’t get loan

[Anonymous]

We have a frustrating, stressful situation going on with my in laws. This will be long as it is complicated, but I would love some advice from anyone who may have been there before (my condolences).

* In laws are in early 80s, with moderate health problems, but can live independently and safely drive. They’re mentally competent but there are a couple signs of early dementia for one of them and they have become deeply sentimental at this stage in life. DH’s sibling lives nearby and regularly checks on them. We live across the country.

* They are terrible with finances — making poor “investments,” buying collectibles on eBay, going out to fancy dinners because keeping up with appearances is very important to them. They owe $100,000 on their mortgage. They are almost out of money. FIL works a few days a week for pocket money. DH and his sibling deposit a modest amount of money to their account on a semi-regular basis.

* They are deeply, emotionally connected to their large ramshackle house. They are terrible about upkeep and have always cut corners or done failed DIY projects. The house needs $100,000 in repairs to make it sellable/more livable, $200,000 to make it competitively sellable/more permanently livable. It somehow assessed for $600,000 (large lot with water access on coastal state). Even with the lower end of repair work done it would likely be a developer buy where the house would be torn down.

* They are in denial about their circumstances, and their plan is to stay in their house until the end of their days. They joke that will have to take them out feet first, even though, like the majority of people, especially those with health problems in their senior years, they will likely require assisted care at some point. For one, that could be within the next couple of years; the other could probably live independently for maybe 10 years.

* ALL of their problems could be solved by selling which would let them move into a smaller, safer, newer home; pay off their mortgage debt; and enjoy the remaining cash flow from the sale to help see them through the end of their days (or most of them).

* They absolutely refuse to sell. But the house is in such poor shape that they don’t qualify for a reverse mortgage. They could take out a home equity loan but wouldn’t be able to make the payments on it because they would need so much work done, and it also doesn’t help with daily expenses the way a reverse mortgage could.

* DH’s sibling just bought a house and isn’t in the position to give them the money they need to make the repairs. DH and I could make their home equity loan payments for them, but it would mean we’d have to stop making contributions to our 401k, for who knows how long. We are also saving to buy our own home and have kids who need to go to college one day, so it’s not ideal. DH is willing to do it, but I am not.

* Getting them to sell is the best choice for everyone of course. It buys them financial freedom, gives them a safer place to live, and cash to work with. But they are dead set on staying, even at the risk of continuing to minimally improve their living situation while worsening their financial situation, and even if their continued bad choices keep money out of the pockets of their children who keep financially helping them.

Outside of eventually having to get POAs to take over handling this horrible property and their finances when they eventually get too elderly to manage it, is there anything else we could possibly do? I have suggested that DH and his father meet with a financial planner to have a third party show them how selling would be a positive and staying would be a negative. I also suggested that he try to set up a meeting with a family counselor who can help walk through some of these very deep, emotional connections they are feeling to the house, as the reality of their situation just isn’t sinking in. He is game but needs to talk to his parents about both and doesn’t know if they will buy in to either. In the meantime, he is wracking his brain to see if there’s any other financial way for his parents to stay in their beloved (dilapidated) house but I truly think there’s no other option. Either they sell, or they stay and stay consumed with underfunded repairs they will constantly be in debt for. And eventually we will be too.

[Anonymous]

If you put money into the house, you should have some sort of partial ownership, or there should be loan paperwork written up where they have to pay you back. I'm not sure what the specifics should be but a lawyer might be able to advise. Maybe an estate lawyer or elder lawyer? I'm not sure. Maybe start with an estate lawyer.

Im not saying you should do that. Just saying dont do it without getting something back. And if you do that, the other sibling needs to be informed and on board.

If you think this lot is worth a lot, and they tend to be bad about spending cash, then in a way it might be better for them to hang onto it so they dont just blow the money. You could sell it down the road.

You guys need to have POA, HCPOA.

[Anonymous]

Sometimes you just have to let things play out for a little while. I understand it feels urgent to you, but if they are sound mind then they have the right to make their own choices, including bad choices.

I would focus on saving money. You'll need it one way or another.

[Anonymous]

Let it go and play out. Plan on selling house as is at the end.

It sounds like the value is the location.

FIL still works, they both drive, they are both healthy.

Let them live their life.

A lot of people are happy living in run down housing.

[Anonymous]

Thank you for your reply. Yes, that was something DH mentioned. That if we were to pay their home equity loan payments they would leave us the house. Other sibling is OK with it. The issue is 1) I don’t want to risk our financial future making these payments, 2) we truly want nothing to do with this property. We would never live in it, and I frankly do not see eventually having this property as any type of asset. I only view it as an absolute liability. Trying to sell it, have it torn down and sell the land, and doing it from mini thousand miles away. If that’s our first foray into real estate, I certainly don’t want it to be that. If we were entrepreneurs, or had a history of flipping houses, or made much much more money, maybe… But I want nothing to do with, the risks of this property and being saddled with having to deal with it. DH is more open but he often is.

[Anonymous]

Anonymous wrote:Let it go and play out. Plan on selling house as is at the end.

It sounds like the value is the location.

FIL still works, they both drive, they are both healthy.

Let them live their life.

A lot of people are happy living in run down housing.

Thanks for your reply. We definitely don’t try to control their decisions but the big problem is they need some pretty immediate repairs, like a new roof before the next hurricane season. They don’t have the money for it, so they would have to take out a home equity loan for it. But they won’t be able to make the payments. They truly have no plan to how to cover the expenses other than asking us for it… it’s just bad.

[Anonymous]

Anonymous wrote:Let it go and play out. Plan on selling house as is at the end.

It sounds like the value is the location.

FIL still works, they both drive, they are both healthy.

Let them live their life.

A lot of people are happy living in run down housing.

This. Their health will put them out of the house eventually. Just wait it out and resist your DH's impulse to give them money.

You need to understand you are asking him to potentially damage his relationship with his parents and emotionally hurt them very badly. Take it seriously.

[Anonymous]

Take out a home equity loan, do the repair work, then qualify for a reverse mortgage? Do the numbers work out if you do it in that order?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Let it go and play out. Plan on selling house as is at the end.

It sounds like the value is the location.

FIL still works, they both drive, they are both healthy.

Let them live their life.

A lot of people are happy living in run down housing.

Thanks for your reply. We definitely don’t try to control their decisions but the big problem is they need some pretty immediate repairs, like a new roof before the next hurricane season. They don’t have the money for it, so they would have to take out a home equity loan for it. But they won’t be able to make the payments. They truly have no plan to how to cover the expenses other than asking us for it… it’s just bad.

Well, it would preserve the value of the asset. But you don't have to just hand it over. You can make it really difficult for your DH first. I feel for him, it's a hard position to be in.

[Anonymous]

Has anyone actually identified this new “safer place to live”? If the expectation is that your in laws will sell their home without any idea what the future options might be, I don’t think that’s realistic, or healthy, or kind. Perhaps some in — or outside of — the family could take the step of identifying for them what their wish lists and non-negotiables might be — should they leave their home, and identify a few options that might meet these criteria. This might be a long and laborious process, but it probably will be anyway. If they can see some positive aspects related to moving , that might help a bit.

[Anonymous]

Anonymous wrote:Take out a home equity loan, do the repair work, then qualify for a reverse mortgage? Do the numbers work out if you do it in that order?

That was my suggestion, not not exactly. They need so much to do the work that when they can qualify for the reverse mortgage they’d just be spending it to make the payments on the home equity loan, and the interest and such. And I think they would have to begin making payments on the home equity loan before they could get approved and get disbursements from the reverse mortgage? Or perhaps not. I’m not yet a homeowner, so don’t know all of this very well.

[Anonymous]

Anonymous wrote:Has anyone actually identified this new “safer place to live”? If the expectation is that your in laws will sell their home without any idea what the future options might be, I don’t think that’s realistic, or healthy, or kind. Perhaps some in — or outside of — the family could take the step of identifying for them what their wish lists and non-negotiables might be — should they leave their home, and identify a few options that might meet these criteria. This might be a long and laborious process, but it probably will be anyway. If they can see some positive aspects related to moving , that might help a bit.

Thank you. This is a very thoughtful comment. Yes, we have spent time looking at other properties in the same small town they live in and have found several really great options. Their area has not been too severely impacted by the real estate crisis; you can get a 2500 square-foot one level new construction house for under $300,000. They could even continue to have water access with a home in the range of $400,000.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Let it go and play out. Plan on selling house as is at the end.

It sounds like the value is the location.

FIL still works, they both drive, they are both healthy.

Let them live their life.

A lot of people are happy living in run down housing.

Thanks for your reply. We definitely don’t try to control their decisions but the big problem is they need some pretty immediate repairs, like a new roof before the next hurricane season. They don’t have the money for it, so they would have to take out a home equity loan for it. But they won’t be able to make the payments. They truly have no plan to how to cover the expenses other than asking us for it… it’s just bad.

Well, it would preserve the value of the asset. But you don't have to just hand it over. You can make it really difficult for your DH first. I feel for him, it's a hard position to be in.

True. It is just a difficult position. I am very practical and am struggling to comprehend how they can be so adamant about staying in this house, at any cost, especially because they cannot support the cost. It is just bad decision after bad decision, and they don’t seem to realize or care that their continued bad decisions are causing so much undue stress and strain in the family, financially harming their children, and not solving the longer term problem that living in this house forever is not going to be possible. It just super stinks.

[Anonymous]

Anonymous wrote:We have a frustrating, stressful situation going on with my in laws. This will be long as it is complicated, but I would love some advice from anyone who may have been there before (my condolences).

* In laws are in early 80s, with moderate health problems, but can live independently and safely drive. They’re mentally competent but there are a couple signs of early dementia for one of them and they have become deeply sentimental at this stage in life. DH’s sibling lives nearby and regularly checks on them. We live across the country.

* They are terrible with finances — making poor “investments,” buying collectibles on eBay, going out to fancy dinners because keeping up with appearances is very important to them. They owe $100,000 on their mortgage. They are almost out of money. FIL works a few days a week for pocket money. DH and his sibling deposit a modest amount of money to their account on a semi-regular basis.

* They are deeply, emotionally connected to their large ramshackle house. They are terrible about upkeep and have always cut corners or done failed DIY projects. The house needs $100,000 in repairs to make it sellable/more livable, $200,000 to make it competitively sellable/more permanently livable. It somehow assessed for $600,000 (large lot with water access on coastal state). Even with the lower end of repair work done it would likely be a developer buy where the house would be torn down.

* They are in denial about their circumstances, and their plan is to stay in their house until the end of their days. They joke that will have to take them out feet first, even though, like the majority of people, especially those with health problems in their senior years, they will likely require assisted care at some point. For one, that could be within the next couple of years; the other could probably live independently for maybe 10 years.

* ALL of their problems could be solved by selling which would let them move into a smaller, safer, newer home; pay off their mortgage debt; and enjoy the remaining cash flow from the sale to help see them through the end of their days (or most of them).

* They absolutely refuse to sell. But the house is in such poor shape that they don’t qualify for a reverse mortgage. They could take out a home equity loan but wouldn’t be able to make the payments on it because they would need so much work done, and it also doesn’t help with daily expenses the way a reverse mortgage could.

* DH’s sibling just bought a house and isn’t in the position to give them the money they need to make the repairs. DH and I could make their home equity loan payments for them, but it would mean we’d have to stop making contributions to our 401k, for who knows how long. We are also saving to buy our own home and have kids who need to go to college one day, so it’s not ideal. DH is willing to do it, but I am not.

* Getting them to sell is the best choice for everyone of course. It buys them financial freedom, gives them a safer place to live, and cash to work with. But they are dead set on staying, even at the risk of continuing to minimally improve their living situation while worsening their financial situation, and even if their continued bad choices keep money out of the pockets of their children who keep financially helping them.

Outside of eventually having to get POAs to take over handling this horrible property and their finances when they eventually get too elderly to manage it, is there anything else we could possibly do? I have suggested that DH and his father meet with a financial planner to have a third party show them how selling would be a positive and staying would be a negative. I also suggested that he try to set up a meeting with a family counselor who can help walk through some of these very deep, emotional connections they are feeling to the house, as the reality of their situation just isn’t sinking in. He is game but needs to talk to his parents about both and doesn’t know if they will buy in to either. In the meantime, he is wracking his brain to see if there’s any other financial way for his parents to stay in their beloved (dilapidated) house but I truly think there’s no other option. Either they sell, or they stay and stay consumed with underfunded repairs they will constantly be in debt for. And eventually we will be too.

If you do not yet own your primary residence, and 401ks and 529s are not fully funded, then you CAN NOT afford to help financially. You have to bring DH around to grasp this. It is incredibly poor judgement to put your own financial future and the future of your children at risk in order to fund your in-laws' preferences. It would be a different call if you were using the funds for groceries or critical medications or to keep the heat on.

[Anonymous]

OP, the reason there is no path to making the finances work is because the house is a tear-down. Your inlaws got into this situation over YEARS and YEARS. Any money spent to improve the house is throwing good money after bad.

And the best answer their kids can give them is to tell them you are really sorry that there is not a financial option that will let them stay in the house. It is too bad there is a bunch of deferred maintenance and they can't afford to fix it, but there are all kinds of things I want and can't afford.

You guys are not in a position to help, not really. (If helping is at the exclusion of college and retirement savings.) This is a huge problem and if you start throwing money at home repairs you might as well be lighting it on fire. Your inlaws have a path out. They just need to know that there is no money fairy coming to let them have everything the way they want.