My daughter, my son-in-law and I are in Virginia. Once they close the house and the funding is secure, I plan to move into my beach house full time and visit the “granny suite” on the weekends to see my grandkids. How can I do this?

We have a lot of information on this subject at ThinkGlink.combut we would like to address some specific concerns.

First of all, we are happy that you can lend your daughter and son-in-law the money to buy their dream house. Being the bank is potentially good business for you and for them. For you, if you have money in a bank account, it may not earn much interest. If your children pay you 3%, that could be three times what you currently earn on that money in the bank. And, assuming you know your kids are good at it, it’s a solid investment backed by the property itself.

You must now create and file the documents that will allow the world to recognize that you have the first lien on the property.

You should find a real estate attorney who can establish a loan document between you and your children. The house must be listed as collateral, and you, your daughter, and your son-in-law must sign the document.

The loan document must show an actual interest rate, such as 3%, so that the loan complies with the IRS requirement for arm’s length transactions between family members. You can have your attorney draw up a promissory note for the loan amount and a mortgage to secure the note and place a lien on the property. You will need to register the mortgage on the property to let the world know that you hold a lien (mortgage) on the property that needs to be repaid.

With this paperwork, you will become a lender. At the same time, your children will need to own the house, so ideally there will be a fence where all parties will come together. You will need to pass your ownership of the house to them, and you can usually do this by warranty deed. A real estate attorney can also help you with this documentation.

You should also be aware that your state, county, and municipal governments may have documents to file. You must have in mind a purchase price that they have agreed to, and you may need to report that price to these government agencies. Frequently, and depending on where you live, government agencies may require the payment of a transfer tax for the sale of the house. In some cases the tax may be payable by the seller, but in others by the buyer.

In some states you may have a mortgage tax – a tax due to the government based on the amount of the mortgage. You will need to register the deed and mortgage with the local office that handles the registration of real estate documents where the property is located. Document registration fees are usually not that high, but transfer and mortgage taxes can be quite high.

Although you may think you’re done, some municipalities will require you to get approval from the local municipality that the home meets zoning and building requirements. They may issue you a Certificate of Conformity to allow you to register the Deed of Title Deed. You may also need to pay any water charges owed to the municipality as well as any outstanding parking tickets, alarm permits and other fees before they issue you the letter you may need to register the property. ‘act.

Although in theory what you plan to do is quite routine and could be simple, you should get professional help to help you through the process. Finally, we suggest talking to an estate planning attorney if you have significant assets or other estate planning issues. Now that you will cease owning your home, you may want to consider what this does to your estate, your retirement plan, and how it benefits or affects your future.

Ilyce Glink is the creator of an 18-part webinar and ebook series titled “The Intentional Investor: How to Succeed in Real Estate” as well as the author of numerous real estate books. It also hosts the “Real Estate Minute” on its Youtube channel. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact them at ThinkGlink.com.