Property In “Other Peoples’ Names”

It is generally a bad idea to place or to receive other peoples’ real estate into the names of any person other than the name of the true owner.  There is a long tradition of this in the so-called Latino community.  This is often done out of “trust” or confidence in the person receiving the title.

Generally speaking, the person receiving the title is the new owner, with few exceptions.  It is surprising to hear so commonly, “it is my house, but it is under my cousin’s name.”  It is normally the case that the house now actually belongs to the cousin.  The cousin can gift the deed back if he chooses and, most importantly, if he is able.  The problem is that often the cousin finds himself unable to do so.

There are many reasons people decide to do this.  Often, this is a bad idea for many reasons, but here is one reason why.  These names are fictitious, but the facts are very close to a real case.  We do not represent any party in this story, and do not write about our clients without permission.  Nonetheless, it is based on real-life events.

Mr. and Mrs. Arce were happily married.  They purchased property A, and everything was fine.  Years later, Mr. Arce was approached by Mr. Barrientos, a friend of his, to place property B in Mr. Arce’s name.  Mr. Barrientos needed a loan, but he was not credit worthy.  Mr. Arce was credit worthy.  Mr. A agreed to accept property B, procure the loan, give the loan funds back to Mr. B, and Mr. B was supposed to pay the loan.
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Mr. B did pay the loan.  There was less than $10,000 owed when Mr. A and his wife decided to get a divorce.  Mrs. A is now claiming property B, the property supposedly belonging to Mr. B, as part of her community property.

The biggest mistake is always assuming that trust between two parties can solve anything.  Mr. B trusted Mr. A.  He did not see the divorce coming, just as he could not have seen any potential IRS judgment coming or many other things which often limit the ability of the grantee to grant the property back to the former owner.  Trust is often irrelevant when the original owner is unable or finds it difficult to claim ownership of “his” property. Look to a trusted real estate attorney (abogado de bienes raices) for help.