My wife and her sister bought a house for their mother—then it all went wrong


Dear Moneyist,

Five years ago my wife entered into an arrangement with her sister to buy a house for their mother and split it 50/50. My wife put up $25,000 for the down payment. They planned to split the mortgage 50/50. The deal was contingent on their mom selling her existing house in a few months and assuming most of the mortgage.

That never happened.

Their mother is a procrastinator and my wife’s sister went along with the plan to buy the house regardless. After 18 months, my wife had enough, and gave the sister a quit claim deed on the property. The sister has now sold it. I think we are entitled to our down payment of $25,000. My wife says it is a sunk cost. Her sister needs a new quit claim to close. Should we hold it hostage until we get the $25,000?

Standing on the Sidelines

Dear Standing,

If your wife contributed $25,000 to the down payment and your sister-in-law is now taking over the house then she should repay the money and any quit claim should be contingent on that. Generally, mixing money and family is a bad idea. In situations like this, you’re hoping that no family dynamics will move the goal posts when you’re at the bank depositing the check.

There are two moving goal posts here: Firstly, your mother-in-law decided not to sell her home. Was that her intention all along? (ii) Did your sister-in-law merely want help buying a home for herself? Is she banking on your wife not pursuing her for the $25,000 because she has always been given a break because she didn’t earn enough or life didn’t go her way?

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One member of the Moneyist Facebook Group suggests: “Show up at the closing and sign the deed there. Require a copy of all the paperwork 48 hours in advance so you can review at your leisure to verify everything is correct. Then take your review copy with you to the closing to compare to the final documents. And do not allow anyone to pressure you at the closing.”

Also, nice try on the “sunk cost.” Your sister-in-law is mistaken. A sunk cost is money that was poured into a bad investment and it cannot be recovered or else recovering it would be too costly or troublesome. In this context, it could be money spent on a renovation or a new roof in a home that’s in negative equity and where the owner cannot keep up the mortgage repayments.

I agree that it’s better for your wife to get out now, but don’t let a sister who muddies the water with family entitlement and financial jargon get in the way of that.

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Source : MTV