I spent $20,000 on a house my brother promised but failed to sell to me. I texted: ‘Congratulations on the sale. Now is your chance to do the right thing.

In 2014, I was renting a three-bedroom duplex house from my brother in Spring, Texas. Towards the end of 2015, I remarried. In late 2016 or early 2017, my brother said he would sell the house to me for $55,000. I agreed.

In August 2017, Hurricane Harvey hit Houston and surrounding areas with 48 inches of rain. The house, which had never been flooded before, soaked up about 18 inches of water. My brother didn’t have flood insurance.

Needless to say the house was damaged along with several of my personal effects. My family and I went to stay in a hotel because the house was not habitable. I told my brother, “Don’t worry, I’ll do the repairs myself.

Because my wife and I were going to buy the house, we still wanted to do some renovations. I am in no way a professional carpenter or painter. I’m sort of a do-it-yourselfer at home and can do do-it-yourself type things.

I bought a pop-up motorhome and parked it in the driveway, and worked from home in my spare time. (I work 40 hours a week.) My wife was not working during this period. I started to put up drywall. However, I found that I was not fast enough.

“In 2019, the house was about 95% complete. That’s when my brother called me and told me he was going to sell the house.”

I hired a contractor to replace the drywall and texture it to make the house liveable faster. Long story short, the repairs were way bigger than expected and in 2019 I told my brother I would have to file for Iowa bankruptcy “}” data-sheets-userformat=”{“2″:513,”3”:{“1″:0},”12″:0}”>Iowa bankruptcy .

In 2019, the house was approximately 95% complete. That’s when my brother called me and told me he was going to sell the house. I was devastated and in shock. After giving my brother two months notice, my family and I moved in January 2020.

In June 2021, he sold the house. He owed $25,000 on the mortgage and sold it for $120,000. I texted him, “Congratulations on the sale. Now is your chance to do the right thing. Deposit $20,000 in my bank account and we’ll call it quits.

His response was, “I know you think I have a lot of money. However, I did not work and fell nine months behind on house payments. Maybe in the future.” He should still have plenty of money to honor my offer.

I kept several of my receipts. The cost was at least $20,000, not including labor. I paid him rent for the duration of the work. What recourse, if any, can I exercise? Can I sue him to recover my losses? What type of lawyer should I seek?

the other brother

Dear brother,

You have been played and, to some extent, you have also played yourself.

Oral contracts do not apply to real estate transactions in Texas. Many requirements must be met before a landlord is obligated to pay for repairs made by a tenant. “The tenant’s deduction for the cost of the repair or repair may not exceed the amount of one month’s rent under the lease or $500, whichever is greater,” according to the regulations in your state.

Your brother had the option of paying you back at least some of the money you spent on the renovations, given that he reneged on his promise to sell the house to you and your wife. Yes, that would be the decent thing to do. Did you keep him informed of the work and how much money it cost before spending it? After all, it was still your brother’s house, not yours.

You both acted in good faith, but you also both took liberties with your proposed real estate transaction and your sibling relationship. He promised to sell you a house well below market price, and you spent a lot of money on renovations, assuming that the house would one day be yours and/or that he would reimburse you if he decided to not go ahead with the deal.

“What if you bought the house and then sold it five years later for over $120,000? Do you want to repay your brother?”

Another complication: you declared bankruptcy and your creditors would have been priority number one. If you bought a property below market price post-bankruptcy, that would be hard to justify given your settlement with the bankruptcy court. Filing for bankruptcy would have freed your brother from any obligation to sell you a $120,000 property for $55,000.

Patricia Hamilton, who is a Chapter 7 bankruptcy trustee for the District of Kansas, said if you had a claim for reimbursement for repairs and improvements he made before the bankruptcy filing, that claim would be part of your bankrupt estate. “If an asset is not disclosed in bankruptcy schedules, it could still be administered even though the bankruptcy case has been closed,” Hamilton said.

If you declared bankruptcy after the repairs and you have not list the claim against your brother in his bankruptcy schedules, you have “a continuing obligation” to report this asset to the trustee in your bankruptcy filing and remit any funds you may receive to the trustee, Hamilton, who works for Stevens & Brand LLP, added. She says you should contact your bankruptcy attorney or trustee.

“If an asset is not disclosed in bankruptcy schedules, it could still be administered even if the bankruptcy case has been closed.””

– Patricia Hamilton, who is a Chapter 7 bankruptcy trustee for the District of Kansas.

People sometimes throw the rulebook out the window — based on handshakes — because they’re dealing with family. Blood is thicker than water and they act in the best interests of their loved ones. But for others, these family ties are a fiction. Your brother acted like he had your best interests at heart — and put them above his own financial interests — but he ultimately did what was best for him.

But you have to look at your own interest in this arrangement. You thought you were getting a house that was worth well over $55,000. A quick look at other properties on the street would have told you this was a bargain. What if you bought the house and sold it five years later for over $120,000? Do you want to repay your brother?

A real estate attorney can answer your question in more detail, but you’d be hard pressed to claim $20,000 from your brother for those renovations. Texting is an inadequate form of communication, especially for important matters like this. Texting “congratulations” probably rang hollow with your brother. A face-to-face conversation is always more effective.

Yoyou can email The Moneyist for any financial and ethical questions related to the coronavirus at [email protected], and follow Quentin Fottrell on Twitter.

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