Q:Scott,
Five years ago, our son moved to Tennessee, hoping to start a career as a
Country & Western singer.
At that time he was fresh out of college, and after a
few attempts at fame, he came to his senses and put his degree to good use,
finding a job in the automotive-parts industry. He married and bought a
beautiful parcel in the Tennessee hills to accommodate his bride.
We, his
parents, helped them with the mortgage down payment but only verbally
discussed any repayment plan, putting nothing in writing.
Sonny is now advancing in his career and has decided to move to Mississippi
for a better job, planning to sell their Tennessee home for a profit. He has
said that any appreciation will go toward the purchase of their second home
in the new state, and he has made no mention of repaying the loan as was
verbally agreed.
While I realize Sonny and his wife need the cash more than we do at this
time, I wonder if it is wise to remind him of the repayment plan and risk a
family rift, or just write off the loan as a lesson learned – never loan
money without properly signed documents.
What do you think, Scott? Shall I be a parent to a 30-year old man and
remind him of his promise or let it go?
SCOTT: Two things.
One: you should’ve addressed the issue of repayment when you
decided to loan the money to your son, mostly because way too often, people’s
memories become fuzzy after they borrow money. Funny how that happens.
And two: If he’s selling the home for a profit, you should definitely bring up
the debt. You helped him out when he needed it and now it’s time for him to
repay you. That’s how a loan works, after all!
Tell him how proud you are that he did well with his wise real estate
investment, that you were happy to help him out with the loan and that you
look forward to the sale of the house so you can be repaid.
Simple as that.
Then, maybe you can work out a compromise where he can make payments to you
on the loan and still reserve a portion of the profit for his new home. That
should work.