Q: I owed $425k on my house . its value is around $1.4 million. My son needs $200k to start a business so i'm refinancing .
So my new mortgage is $640k . If my son formed a llc. My question is if he by chances get sued for a lease hold or food poisoning .. God forgive. Can landlord come after our house? How can I protect most of my interest of the house.
A: Your son should have insurance to cover these situations. In any case, as long as you didn't guarantee the lease or anything else in the business, as long as your son's name is not on the title to the house, or as long as your son's name is not on the mortgage, then I don't see a way for a creditor of the business/son to get to your house. There may be other factors here that I don't know about that would change this answer.
I think you want to keep your son's business away from your house title. Increasing your loan on the house does not cause exposure to his creditors. One thing ,make sure your son has no interest ( like a remainder) interest in your house.
Just because you help your son get funds for business it does not make you liable. I would be more worried about your son's business failing and you loose your right to recover the $200k. Do not ever lend to family unless you are willing to give them that same amount without it causing a family rift.
A: Responses to your question by my colleagues have provided a good summary of the issues. The key is keep you and your son's assets and debts separate from one another. Be very careful and specific about this. You may want to talk with an attorney in your area for more details.
As long as your son does not have any interest (i.e. legal or equitable) in your house then his creditors or potential creditors should not be able to go after your assets such as your house.
On the other hand, if you ever decide to file a bankruptcy, you could run into issues with the Trustee about giving away $200,000 to a family member. If you are thinking about bankruptcy down the road, you would want to consult with a bankruptcy attorney first before giving away any money.
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