Q: My husband and I loaned our son money years ago to buy a home on Vashon.

We let him pay small payments all these years to help him out.  My husband has since passed away, and I am almost glad he isn't here to see what a mess this has become. I found out that my son is about to lose the house. He hasn't paid his taxes for three years and the County is going to foreclose. In addition, he went out and got a loan on the place somehow and hasn't been keeping up with his payments, so the bank is going to foreclose on him too. The money we loaned him was part of our retirement so I need to know how I can get it back if the bank sells the house.


A: I am so sorry to hear your story. The sad truth is that you will probably not see any money out of the sale of this property. The County will probably get their money first. That will include the back taxes and penalties, which really add up. Then the bank that holds the first trust deed will get the rest. Your son owes more than the property is worth so the bank won't even get what is owed. It's also possible that he owes the IRS who will certainly be in line for money.


I checked with a title company and it appears that when you loaned him the money you didn't secure the loan with the property. You made an unsecured loan. I would recommend you see an attorney right away, but it doesn't look good, I'm afraid. Your son clearly owes you the money if you have any kind of a written contract, but if he has no assets there's not much chance you'll get paid back.


When family members loan each other money it's always a good idea to treat it lake any other business transaction. If you had a recorded contract secured by the real estate you would be able to see some return on your loan. I'm so sorry.