We buy a house. Can the seller still take out a mortgage?

Q. We have been buying a house from my wife’s cousin for a few years. We have a contract to pay her monthly until the total has been paid. A few weeks ago she asked my wife if we would be okay with her taking out a loan on the house so she could pay some of her own bills. We told her no because she was not good with money. For example, we helped her repay taxes that she could not cover. Anyway, she tells my wife that her name is still on the bill of sale, so we’re worried she’ll take out a home loan, not pay it off, and then leave us to pay or lose the house. We’ve almost got the house paid for. What can we do?

— Buyers

A. We are sorry to hear that.

It’s an unfortunate example of what can happen when things go wrong when you do. business with the family.

You have limited options, said Jerry Lynch, a certified financial planner at JFL Total Wealth Management in Boonton.

“I think the easiest way is to buy him the house, transfer the deed in your name and give her the money you owe her so she’s not the bank anymore,” he said.

This will solve several problems, he said.

First, it puts the house in your name.

“Right now, if she has problems with creditors and the house is in his name, that may be your problem,” he said. “We have to solve this problem.”

Second, she’ll get her money and third, you won’t have any problems with loans on the property, he said.

“People change their minds over time and it’s very important that the agreement is defined in advance and that it is structured correctly,” he said, wondering if your contract was structured correctly.

“In her mind, she gets her money today because she needs it. In your mind, it takes the equity in a home you own,” Lynch said. “Set things up correctly avoids these problems and is usually inexpensive to make.

You may want to have a lawyer review the contract to see if there are other steps you can take.

Send your questions to [email protected].

Karin Price Mueller writes the Bamboos column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. To find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.comit’s weekly e-newsletter.