I own two homes. I live in one. My second home is rented to my nephew, his wife and two kids. They are current on their rent. They have no lease. This home was meant to be my retirement money.
We had verbally agreed that they would buy the home in two years, as they were expecting a fairly large settlement. They spent the money and did not buy the house.
It was already a hardship for me, but I loved the idea of my nephew being able to raise his family there. Long story short, their credit is 591 and they are now not capable of buying.
I am now considering selling this home. I have $150,000 equity. The eviction process may take months. My credit is not good. I cannot refinance.
I am on Social Security Disability and unable to work. Can you please advise?
Dear House Poor,
If you want permission from me to give your nephew and his family the boot, done. Permission granted.
You tried to help out, even though you couldn’t afford to. Now you’ve joined the club of people who have learned the hard way that helping out family often goes awry.
Your nephew didn’t hold up his side of your agreement. Without knowing the specifics of the situation, I’ll avoid casting too much judgment. Obviously, I’d feel a lot more sympathetic if he spent the settlement money on medical bills than I would if he spent it on Super Bowl tickets and a fancy new car.
But really, his reasons for not following through don’t matter here: You can’t afford to be helping anyone else if your retirement is contingent on the $150,000 of equity you have in this home.
Your first priority is to do whatever you can to secure your own retirement. If selling your home would improve your financial picture, by all means, do it. If generating rental income from the home instead of selling it would likely yield more money over time, consider that as well.
Regardless, you’ve got to squeeze as much cash as you can from this home. And it sounds like the only way you’ll do that is by finding a buyer or renter who isn’t your nephew.
Before we go any further, a disclaimer: Landlord/tenant law varies widely by state, so you should probably consult an attorney licensed in your state, particularly if you think eviction will be necessary.
But my non-lawyerly take is that everyone involved will probably benefit if you can avoid eviction proceedings. You’ll save money on court costs and attorney fees, and your nephew and his family avoid having an eviction record, which would make renting a lot harder.
Your best approach depends on where you and your nephew stand at this point. Are you still on decent terms, or is the relationship broken beyond repair?
If the relationship hasn’t completely soured, try talking with him about how you need to sell the place, and since he’s not in a position to buy, you need to work out a move-out date. If you can, try to be flexible and give him as much notice as possible so he can find another place to live — which could be difficult, given his credit challenges.
But if the relationship has gone south or you’re anticipating a fight, you need to talk to an attorney ASAP, especially since there’s no lease.
Regardless, be prepared for all the usual things that happen when you cut off support from a loved one: the excuses, the promises that are unlikely to ever come to fruition and the worst-case scenarios. Don’t be surprised if you hear that you are about to make him homeless.
You certainly don’t owe your nephew anything, but some landlords find it easier to bypass the courts and take the cash-for-keys approach, where they give the tenant cash to move out in order to avoid a long eviction process. Again, you’d want to consult with a lawyer first, but this may be an option if you’re worried that this could drag on for months.
Whatever you do, I hope you’ll put your own needs first here. You had an idyllic vision of your nephew raising his family there. Your nephew is the reason that won’t be happening. So move forward knowing that your No. 1 priority is a comfortable and secure retirement.
Robin Hartill is a senior editor at Codetic and the voice behind Dear Penny. Send your tricky money questions to [email protected]