Personal property may not be tied to business

Q. My husband and I have owned our home for over 30 years. Recently, his business has gone downhill and he now owes a bunch of money to a number of people. These are people he has done business with for a long time, so no one is putting any pressure on yet, but I'm not so sure things are going to get better and I am scared about what happens down the road.

Our home is the only real asset we have. Can we lose this house if he cannot pay his bills? What about transferring the house out of his name to mine or out of both our names to our children? We need the equity in this house for our retirement.

A. The question regarding losing your house cannot be answered without first determining who (or what entity) owes the money. If your husband's business is incorporated and all the obligations are corporate obligations and your husband has done all the things required to legally maintain a corporation, then those obligations presumably cannot be shifted to your husband personally. Presuming your home is owned by you and your husband, as a general rule, your and your husband's personal or real property cannot be used to satisfy a corporate obligation.

If your husband is not incorporated or he has personally incurred some or all of these obligations or they are corporate obligations but he has not been diligent in legally maintaining the corporate entity, then the possibility exists that some or all of these obligations could end up personal obligations. In the event a party obtains a judgment against your husband personally, one option the judgment creditor would have would be to record a judgment lien against the house. The judgment creditor could even force the sale of the house to pay the judgment, though your half of the equity in the home would be protected.

In regards to transferring ownership of the property, this is probably not a good idea. The Fraudulent Conveyances Act states that property cannot be transferred for the purpose of avoiding a debt.

There may, however, be action you could take which could help your situation. If you do not own your home as tenants by the entireties, a form of joint ownership, I would suggest contacting an attorney and making the appropriate conveyance. Although a judgment creditor could still record a judgment lien on the property, this form of ownership will probably prevent the judgment creditor from forcing a sale.

Q. I purchased a home from an estate about four months ago. The guy that had owned the house died and his brother handled the sale.

His brother made it clear that the house was being sold "as is". He told me he never lived there, was only in the house a couple times and knew very little about the house. I had a friend of mine do an inspection and he found some things, but nothing major.

After being in the house a few months, I have discovered major problems with the foundation, furnace, windows and air conditioner. The cost of repairing these items will be well over $30,000.

I realize the brother never lived in the house, but shouldn't the seller be responsible for problems that existed before the sale? I would have never bought the house if I knew about these problems.

A. The seller has a legal duty to disclose to you any defects involving the property that he was aware of. Unless you could establish that the brother was aware of these issues, you would probably not be successful in pursuing a legal claim based on fraud or a violation of the Residential Real Property Disclosure Act.

It is possible, however, you could be successful in pursuing a claim based on breach of contract. Some form contracts contain representations regarding such things as foundations, windows and mechanical equipment. If your contract contained such a representation and that representation was not superseded by an "as is" provision in the contract, you may have a valid breach of contract claim. I would suggest you contact a real estate attorney to review your case.