Dear Rev. Mike,
My new fiancé owns a house with her sister. Due to some inconceivably poor financial decisions on the sisters part, we (my fiancé and I) are left holding the bag. The bag being a six hundred dollar a month payment on the house. We know that when the house is sold we will make all that money back, but for a few years we are losing on it, we are contributing everything while the sister is giving nothing. Now here is my question, when we sell the house and make a "gang of paper" how do you tell the sister she gets a LOT less for years of no contribution. I am a nice guy and dont want to screw her over, but shit!
Signed, In the red
Dear ITR,
I’m working under the assumption that you aren’t going to sell the house right now because the housing market is in the shitter and you can afford to pay for this house for long wait and gamble that things will get better.
I’m far from an economist, but the way I see it there are two fair options to get back what you put in and make a profit. One to benefit you, the other to benefit the sister. When you’re talking about the kind of money houses are worth it would be ridiculous for her to ask you for the money for it now so you can A) promise her half as much as the house is worth now when you do sell it or B) promise her half as much as the house is worth when you sell it minus whatever you and your fiancé have had to put in over the last few years. Option B is more fair on paper, but taking care or landlording a house is more trouble than just writing out a check every month. Only you can put a dollar amount on that hassle (not to mention the hassle of actually selling the house) and you can probably work out a compromise between A and B.
But what you really want to know is how to tell the sister. The answer is YOU don’t. This is a family matter, a family that you are not yet a part of. By the house is sold you will be a part of the family, but you need to tell her exactly what is going to happen now. It needs to be very clear to her, like maybe ever on paper, with legal letterhead atop it. You can’t leave this ambiguous and then make her feel like she is getting screwed five or ten years from now when she sees how much more you guys are getting.
Sit down with your fiancé and figure out what kind of deal you want to make the sister and have your fiancé talk to her. Not only would having both of you there seem like your ganging up on her if she doesn’t like the deal (she probably won’t, nobody ever does, but when one goes into financial agreements, even with their sibling or not, the person who can’t keep up their end of the bargain is the one that has to make the most concessions), but she’s going to think that you are the one manipulating your fiance into screwing her over. The tactic can even be used by your fiancé that you are kind of an innocent bystander in this that expected to make payments now, and thank god, that you are there to help with the payments or they’d both be screwed. A case that can’t be made as effectively with you there to be seen as looking smug or wounded. If need be you can even be made out to be the bad guy who is unwilling to comprise, again you aren’t going be there for that, but it’s better for the sister to learn to like you over the years than have her start hating her sister now.
So: figure out your finical plan together, prepare your responses to her complaints together, send your blushing bride into an extremely uncomfortable situation, and do it soon.
