Long Island Deal of the Week: Half of a House

A complicated deal, to say the least. This reminds me of the story of Jeanne Calment, France's oldest woman, who, when she was 90 years old, sold her apartment to a lawyer who agreed to pay 2500 francs per month until her death, allowing her to remain in the apartment. 21 years later, the lawyer died at age 77. 22 years later, Calment died at age 122! So sometimes these deals backfire.

A complicated bankruptcy means half of a Long Island house will be auctioned off-and the 81-year-old widow living there is part of the deal, the New York Post reports.

For decades, Joan Fleming has lived alone in a modest Bay Shore ranch home. She reportedly transferred the title of the Lombardy Boulevard address to her two children, but things went awry after son Michael, 49, declared bankruptcy in April.

His share of the home is expected to be auctioned off to the highest bidder Oct. 7. Here’s the twist: Ms. Fleming can live in the house alone until her death.

And, if that’s not enough, sources tell the Post that any buyer of the son’s share can’t move in — even if Ms. Fleming dies — without striking a deal with his sister on payment of an outstanding $66,000 mortgage. “If they can’t reach an agreement on the mortgage, the buyer would have to litigate in order to sell the home,” the Post writes.

Ms. Fleming, whose house is assessed at about $300,000, did not return a request for comment.

Auctioneer Richard Maltz says he can’t get inside the home to see what will be on the block. While interest the site will likely be sold at a steep discount, this is a deal for sophisticated investors, he tells Developments.

“Basically it’s not going to produce any return on investment until the life tenant, the woman living there, passes away,” he says. “It’s kind of a morbid thing to be betting on, but the longer she lives, the lower the rate of return on your investment.”

View original article here: http://blogs.wsj.com/developments/2010/08/12/long-island-deal-of-the-week-half-of-a-house/

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.