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Would you carry a contract on a home loan?

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MichelleCarmen

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If the property was worth X amount these days and you wanted more, but couldn''t sell it for more *and* would have to pay realtor commission, if you sold it for LESS than what it could be marketing for, making it more appealing to buyers, you would earn money on the interest, basically boosting your profit meaning you are earning closer to your desired sale price. . .would you do that if the people had 10% to put down?
 

TravelingGal

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I''m no expert on this matter (meaning I''ve done no research) but I would say no. Especially not only with 10% down.
 

TravelingGal

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Also, are you (or whoever you are speaking about) wanting more than market value out of greed? Or because you need it to pay back the lender? Because if you could get market price and be rid of the house, I''d just do it and be done with it.
 

Anastasia

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Absolutely not.

Are you considering this just to make some more money off of the deal, or is there some reason that the buyer can''t get a mortgage through conventional means? If they can''t get a mortgage through conventional channels, you can bet there is a good reason why not. I wouldn''t consider 10% a big down payment. The less the borrower has into the deal, the more likely they are to walk away from the property when the going gets tough.

Interest rates are low now, if you are giving a mortgage at 4.5% or 5% right now, you are making better money than a money market. However, as rates go up, you will be locked into that same return for the life of the mortgage, or until the borrower refinances or sells the house.

I feel like that is a lot of risk to take on as an individual. In a situation like this, I always like to look at the worst case scenario that could occur. If the borrower defaults, you then have to go through the foreclosure process. Usually when a property is in foreclosure (or headed that way), the borrower stops caring for the home, or in some cases they even vandalize them before they move out. (DH is in the mortgage biz, so he sees what happens).

I''ll be curious to hear other people''s opinions. I am financially conservative by nature, so this is not something I would consider.
 

Octavia

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MC, I'm a little confused by what you're asking, but judging by the other responses I assume you mean private financing, where the seller acts as mortgagee for the buyer. If so, make sure that you (or whomever you're asking for) talks to an attorney before doing something like this, because it's REALLY not something an inexperienced person should take on alone. I agree with Anastasia that it's a pretty risky proposition for your average individual (heck, it's even risky for banks, but at least for banks it's a regular cost of doing business). I'd be much more inclined to get a slightly smaller lump sum upfront and get rid of the house entirely, then invest it wisely and earn interest that way. I might consider it if I was selling to a trusted family member, but not otherwise -- and I'd still be wary of it even then.
 

MichelleCarmen

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Date: 5/4/2009 12:51:30 PM
Author: TravelingGal
Also, are you (or whoever you are speaking about) wanting more than market value out of greed? Or because you need it to pay back the lender? Because if you could get market price and be rid of the house, I'd just do it and be done with it.
This isn't me. My friend is inheriting a house and cannot live their because she has MS and there are stairs. I am trying to come up with alternatives for her in case she cannot sell it - she *needs* the money for long-term care. (If she rents it, then she's going to have to deal with maintaince costs.)
 

HollyS

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Are we talking owner financing? Where the buyer pays you on contract?

ABSOLUTELY NOT. My father did it - - once. My boss did it - - once. Much to their regret.

Imagine the scenario:

Your buyers default. And where will you be? Stuck with property that hasn''t earned what it should, and now requires some maintenance/major repairs to sell again. And let''s not forget the taxes they didn''t pay, which you now ow

Just say no. Nada. Nyet.
 

Hudson_Hawk

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Date: 5/4/2009 12:41:58 PM
Author:MC
If the property was worth X amount these days and you wanted more, but couldn''t sell it for more *and* would have to pay realtor commission, if you sold it for LESS than what it could be marketing for, making it more appealing to buyers, you would earn money on the interest, basically boosting your profit meaning you are earning closer to your desired sale price. . .would you do that if the people had 10% to put down?

I''m sorry, that hurt my brain...
 

Hudson_Hawk

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Date: 5/4/2009 1:39:11 PM
Author: MC
Date: 5/4/2009 12:51:30 PM

Author: TravelingGal

Also, are you (or whoever you are speaking about) wanting more than market value out of greed? Or because you need it to pay back the lender? Because if you could get market price and be rid of the house, I''d just do it and be done with it.
This isn''t me. My friend is inheriting a house and cannot live their because she has MS and there are stairs. I am trying to come up with alternatives for her in case she cannot sell it - she *needs* the money for long-term care. (If she rents it, then she''s going to have to deal with maintaince costs.)

she might be better off trying to sell it to a management company...
 

TravelingGal

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Date: 5/4/2009 1:39:11 PM
Author: MC

Date: 5/4/2009 12:51:30 PM
Author: TravelingGal
Also, are you (or whoever you are speaking about) wanting more than market value out of greed? Or because you need it to pay back the lender? Because if you could get market price and be rid of the house, I''d just do it and be done with it.
This isn''t me. My friend is inheriting a house and cannot live their because she has MS and there are stairs. I am trying to come up with alternatives for her in case she cannot sell it - she *needs* the money for long-term care. (If she rents it, then she''s going to have to deal with maintaince costs.)
Again, I am no expert but if she is inheriting a house, is it paid off already? Or much of it paid off? Why does she need to get above market value? Just sell it at market value and get rid of it.
 

MichelleCarmen

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Date: 5/4/2009 1:44:01 PM
Author: Hudson_Hawk


she might be better off trying to sell it to a management company...
Sell it to a company or have them rent it out for her? She hasn''t inherited it yet. . .it''s been in probate for a while and she doesn''t know how much is still owed on it. There is also a second house, as well, but she thinks she''ll only get one of the two.
 

Loves Vintage

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I agree with Holly.

These deals (sometimes referred to as land contracts) are more common in some areas of the country than others. The only reason this type of sale provides more incentive to a buyer is because the buyer cannot get financing otherwise. The only land contract that I am personally aware of ended in the homeowner having to foreclose on the buyer. Not fun, or efficient.

Is your friend paying rent elsewhere? Could she possibly live only on the first floor of the home? Perhaps until the housing market improves?
 

Hudson_Hawk

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Date: 5/4/2009 2:04:09 PM
Author: MC
Date: 5/4/2009 1:44:01 PM

Author: Hudson_Hawk



she might be better off trying to sell it to a management company...
Sell it to a company or have them rent it out for her? She hasn''t inherited it yet. . .it''s been in probate for a while and she doesn''t know how much is still owed on it. There is also a second house, as well, but she thinks she''ll only get one of the two.

Either. Some management companies will buy a house as an investment property and others can be hired to manage an investment property. I guess it would depend on what the rent is and if she could afford it. The maintenance aspect is really not that big of a deal (though I don''t know what shape the house is in now). Handymen can be hired to take care of small things.
 

Mara

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i''d just rent it out and use the $$ as income until the market recovers, its out of probate and she can sell it.
 

rainwood

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I would never carry a contract on a house I was selling and I''m a lawyer! You have to administer the contract - make sure payments are made promptly - and you have a huge hassle if they default on the contract. Especially if they don''t take care of the house in the meantime. And if the contract is for 90% of the sales price and the sales price is higher than the market value, the buyers are probably under water before they move in. Plus they could turn out to be deadbeats or victims of a bad economy and just walk away.

If your friend has MS and needs the money for long-term care, she doesn''t need the risk or the hassle of carrying the contract. It''s possible she could have a management company rent out the house, but she still would have the responsibility to make repairs and she has to pay the management company. My guess is she''d be better off selling the house for whatever the current market value is and investing the money wisely.
 

Italiahaircolor

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I agree that this sounds like a bad idea.

If she decided to rent it, she could draw up a contract in which it is stated that the renter is responsible for a certain portion of the maintence...like landscapping care. The rest could potentially made up in monthly sums added to the "ideal" rent rate she''d be charging...in case of an emergency, it''s a cushion fund padded enough to buy her peace of mind that she could afford the repairs. She could do this for the term of one year and then reopen the issue based on market values at that time.
 

MichelleCarmen

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Okay, thanks everyone. I''ll relay all your thoughts to her.
 

DivaDiamond007

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Date: 5/4/2009 2:05:08 PM
Author: Loves Vintage
I agree with Holly.

These deals (sometimes referred to as land contracts) are more common in some areas of the country than others. The only reason this type of sale provides more incentive to a buyer is because the buyer cannot get financing otherwise. The only land contract that I am personally aware of ended in the homeowner having to foreclose on the buyer. Not fun, or efficient.

Is your friend paying rent elsewhere? Could she possibly live only on the first floor of the home? Perhaps until the housing market improves?
They are gaining more popularity around here due to the number of foreclosures the county I live in has.

DH and I were supposed to buy our former house on land contract, but the "sellers" (DH''s family) basically sold it out from under us. Who knows what they did with the $$ we had in escrow. They screwed around with us so much about the purchase price and whatnot that we agreed to let them put it up for sale knowing that we had a binding three-year lease (the house was in an estate). After our son was born a bunch of other things happened involving my family and the estate agreed to let us out of the lease without penalty. About a week later we learned that they had sold the house. They weren''t planning on telling us
23.gif


In the end it worked out because a bar moved in next door and they finished their smoking/music patio soon after we were moved out. Phew! I am so glad now that we got out of there when we did. It was a blessing in disguise.

I think a land contract is only a good idea if the buyers have a fair amount of their own money invested into the property; and if you are able to find a good attorney to help in enforcing the contract. I also wouldn''t do anything long-term. Maybe let the buyer escrow their "rent" for two years and then they either have to get their own financing or they lose a certain percentage and have to move out for not fulfilling their end of the bargain. That''s how it usually works around here.
 

MichelleCarmen

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Date: 5/4/2009 7:54:52 PM
Author: DivaDiamond007
if you are able to find a good attorney to help in enforcing the contract. I also wouldn''t do anything long-term. Maybe let the buyer escrow their ''rent'' for two years and then they either have to get their own financing or they lose a certain percentage and have to move out for not fulfilling their end of the bargain. That''s how it usually works around here.
Thanks. She''ll need to see a proper attorney. It''s not as easy as it sounds. She cannot drive and because her hands are so numb, sometimes drops the phone when I talk to her. She''s fighting over assest with her step-mom right now, however, there are two homes and one will be coming to her when her case goes to court soon. It''ll go in front of a judge next month.

She is married, but that is an entirely different situation (i.e. he doesn''t care for her properly and spends all the support funds she gets). She wants to give me Power of Attorney and is constantly asking me for advice! It''s more than I can take on. I barely can balance my checkbook and no way can oversee someone''s fianances, but I''m still trying to come up with as many options for her as possible.
 

Loves Vintage

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MC,

Are there any support services in the community that can help? Perhaps you can go with her to speak with someone? Is there a local chapter of the National MS Society that you can go to for help?

The husband situation makes me very sad. Any chance she will drop him? He sounds like dead weight that needs to go. (Sorry, just basing my response on the few words that you posted about him, but I can also infer from your post that he cannot even help her with these financial decisions. Uggh.)

You are a very good friend to try to help her through these things.
 

MichelleCarmen

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Date: 5/5/2009 12:32:28 PM
Author: Loves Vintage
MC,

Are there any support services in the community that can help? Perhaps you can go with her to speak with someone? Is there a local chapter of the National MS Society that you can go to for help?

The husband situation makes me very sad. Any chance she will drop him? He sounds like dead weight that needs to go. (Sorry, just basing my response on the few words that you posted about him, but I can also infer from your post that he cannot even help her with these financial decisions. Uggh.)

You are a very good friend to try to help her through these things.
Yes, I could post a huge long thread about her husband. He''s dead weight and waiting for her to get her inheritance. She may be getting over a million! Or, maybe not. I''m often confused with what she says. The deal is she gets income through a few sources, but is too sick to even go to the bank, so she has absolutely no control over the money. I sat her down one day and asked WHERE is the money coming from and going and how much. She didn''t know. Finally, she gave the information to her husband''s MOM, which perplexes me because again, she wasn''t provided a definitive answer as she (I believe) is biased. Her husband won''t go buy her new undergarments, but somehow has the cash to buy a Starbucks coffee w/whipping cream on it every day!

She hasn''t been receptive to going to any MS organization because she''s still not wanting to accept her situation and she says all that is depressing.

I wish I was a better friend. I''ve had to take breaks from her because her problems are just too deep for me to handle. It''s often a burden. She''s so sick and I cannot make things right and when I cannot, I feel SO guilty, you know?
 

Loves Vintage

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I understand completely. My sister has MS. She is young, 37, and was diagnosed in her early 20s. She has stablized physically because she is on excellent medications that work for her. They will not necessarily work the same for everyone. However, she suffers mentally and emotionally and is often not well in those regards. She refuses to work on these issues, and it can be very, very frustrating. There is only so much that you can do to help someone else.

Anyway, I hope your friend is receiving good care and treatment. I am worried that she has the numbness in her hands, and I hope she is taking the best medications. The newer medications can really halt the progression of the disease. Do you know what kind of medications she takes? Are any injectables that she adminsters at home herself?

Regarding the husband, if I were her, I would make sure he is history before any inheritance comes through. She needs her own attorney now. She needs to have a third party who is acting in her best interests and who is qualified to handle these matters. Perhaps, she can find an attorney who will accept payment after the estate is finalized so that she will have the resources to pay him.

I am sorry that she is so sick. You shouldn't feel guilty. I am sure she sees you as a great support.

How recently was she diagnosed? It sounds like it could not have been too recent. She really needs to come to terms with her MS so that she can battle it aggressively. It is so hard. I know.
 

Hudson_Hawk

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I know this is going to sound extreme, but I would report him to the state. He''s her primary care giver and it sounds like he may be neglecting her.
 

MichelleCarmen

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Date: 5/5/2009 12:52:43 PM
Author: Loves Vintage
I understand completely. My sister has MS. She is young, 37, and was diagnosed in her early 20s. She has stablized physically because she is on excellent medications that work for her. They will not necessarily work the same for everyone. However, she suffers mentally and emotionally and is often not well in those regards. She refuses to work on these issues, and it can be very, very frustrating. There is only so much that you can do to help someone else.

Anyway, I hope your friend is receiving good care and treatment. I am worried that she has the numbness in her hands, and I hope she is taking the best medications. The newer medications can really halt the progression of the disease. Do you know what kind of medications she takes? Are any injectables that she adminsters at home herself?

Regarding the husband, if I were her, I would make sure he is history before any inheritance comes through. She needs her own attorney now. She needs to have a third party who is acting in her best interests and who is qualified to handle these matters. Perhaps, she can find an attorney who will accept payment after the estate is finalized so that she will have the resources to pay him.

I am sorry that she is so sick. You shouldn't feel guilty. I am sure she sees you as a great support.

How recently was she diagnosed? It sounds like it could not have been too recent. She really needs to come to terms with her MS so that she can battle it aggressively. It is so hard. I know.
Sorry about your sister. The ages are close between your sister and my friend. She was diagnosed at 18 and now is 36.

She's tried many medications and was getting Tysabri as a monthly infusion. A few months she decided to quit taking it because she says it gives her anxiety. She also takes Endocet (pain killer) for her "creepy crawlies!"

The attorney handling her estate is doing it so she pays after court (I do not know the term - it's where she hasn't put any money up front, but he will take a portion after everything is settled). She wants me to be the third party and that is why I was asking about alternatives to selling the house she will get because there's the possibility I may be handling all this stuff!!!

What medications is your sister taking? She isn't on any pain medications, is she? It doesn't seem right that a dr. prescribed narcotics to my friend.

Also, what kinds of therapy/treatment(s) is she doing? My friend found benefit going to the pool, but of course her husband decided it was a hassle.
 

MichelleCarmen

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Date: 5/5/2009 12:57:21 PM
Author: Hudson_Hawk
I know this is going to sound extreme, but I would report him to the state. He's her primary care giver and it sounds like he may be neglecting her.
She did have a state-provided care giver, but every one of them was lazy and would actually sit around and watch TV. They're paid very little money, leaving them unmotivated to do their job. After she went through a few of them, she decided to have her husband take over, but then recently, she decided to ask for another state care-giver and now there is a waiting list!

I wouldn't report him. She's told me numerous times that if he leaves her, then I will have to take care of her! I'm trying the best I can with figuring out long-term care (with coming up with financial ideas), but actually physically taking care of her, as being her nurse, I couldn't do that properly!
 

Loves Vintage

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Date: 5/5/2009 2:44:52 PM
Author: MC


Date: 5/5/2009 12:52:43 PM
Author: Loves Vintage
I understand completely. My sister has MS. She is young, 37, and was diagnosed in her early 20s. She has stablized physically because she is on excellent medications that work for her. They will not necessarily work the same for everyone. However, she suffers mentally and emotionally and is often not well in those regards. She refuses to work on these issues, and it can be very, very frustrating. There is only so much that you can do to help someone else.

Anyway, I hope your friend is receiving good care and treatment. I am worried that she has the numbness in her hands, and I hope she is taking the best medications. The newer medications can really halt the progression of the disease. Do you know what kind of medications she takes? Are any injectables that she adminsters at home herself?

Regarding the husband, if I were her, I would make sure he is history before any inheritance comes through. She needs her own attorney now. She needs to have a third party who is acting in her best interests and who is qualified to handle these matters. Perhaps, she can find an attorney who will accept payment after the estate is finalized so that she will have the resources to pay him.

I am sorry that she is so sick. You shouldn't feel guilty. I am sure she sees you as a great support.

How recently was she diagnosed? It sounds like it could not have been too recent. She really needs to come to terms with her MS so that she can battle it aggressively. It is so hard. I know.
Sorry about your sister. The ages are close between your sister and my friend. She was diagnosed at 18 and now is 36.

She's tried many medications and was getting Tysabri as a monthly infusion. A few months she decided to quit taking it because she says it gives her anxiety. She also takes Endocet (pain killer) for her 'creepy crawlies!'

The attorney handling her estate is doing it so she pays after court (I do not know the term - it's where she hasn't put any money up front, but he will take a portion after everything is settled). She wants me to be the third party and that is why I was asking about alternatives to selling the house she will get because there's the possibility I may be handling all this stuff!!!

What medications is your sister taking? She isn't on any pain medications, is she? It doesn't seem right that a dr. prescribed narcotics to my friend.

Also, what kinds of therapy/treatment(s) is she doing? My friend found benefit going to the pool, but of course her husband decided it was a hassle.
The main medication she takes for MS is copaxone. It seems to have halted the MS symptoms for years now. She had several bad relapses in her late 20's that required hospital stays and very high doses of IV steroids, which I believe caused many of her current mental issues. She has not had any relapses since the copaxone. She still walks and can drive, but she cannot work due to cognitive issues.

She takes more drugs for depression and anxiety at this point, than she does for the MS itself. She has never been prescribed pain killers. What kind of pain is your friend experiencing?

My sister did find benefit from an aquatics class that was specifically for MS patients, but she stopped going. I am not sure why. Is there a bus company/van for people with disabilities/or elderly that could take her to the pool, if it is for therapy?

I hope her attorney is good, and I hope that they are not taking a flat percentage off of the estate (well, certainly not 1/3 of her inheritance, right?) Maybe the attorney can set up a trust so that the assets can be used only for her care? Maybe you can meet with your friend and her attorney to discuss some of these things? I wonder if your friend might have issues relaying information she receives -- do you think she has any cognitive issues?

ETA: I also wanted to mention that my sister has been on every other medication out there for MS. She is lucky that the copaxone is working for her. I didn't mean to imply that your friend or anyone else should be taking copaxone. The treatment options for this disease are highly individualized. I will also say that my sister has had at least 4 different neurologists. She has been with her current neurologist for over 10 years, I'd say. If your friend has any reservations about the care she is receiving, another opinion might be in order.
 

MichelleCarmen

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Date: 5/5/2009 3:20:24 PM
Author: Loves Vintage

The main medication she takes for MS is copaxone. It seems to have halted the MS symptoms for years now. She had several bad relapses in her late 20''s that required hospital stays and very high doses of IV steroids, which I believe caused many of her current mental issues. She has not had any relapses since the copaxone. She still walks and can drive, but she cannot work due to cognitive issues.

She takes more drugs for depression and anxiety at this point, than she does for the MS itself. She has never been prescribed pain killers. What kind of pain is your friend experiencing?

My sister did find benefit from an aquatics class that was specifically for MS patients, but she stopped going. I am not sure why. Is there a bus company/van for people with disabilities/or elderly that could take her to the pool, if it is for therapy?

I hope her attorney is good, and I hope that they are not taking a flat percentage off of the estate (well, certainly not 1/3 of her inheritance, right?) Maybe the attorney can set up a trust so that the assets can be used only for her care? Maybe you can meet with your friend and her attorney to discuss some of these things? I wonder if your friend might have issues relaying information she receives -- do you think she has any cognitive issues?
I''m not entirely sure I understand the concept of "congitive issues." She will say "I know," when I tell her about how she needs to consult her attorney to square certain things away - and tell her that she MUST ask her husband to wait outside while she''s talking to her attorney, but then she lets him come in. It''s the same way with the money flow. She agrees with what I suggest she do, but then doesn''t do that. I even give her solutions to her many problems, but she will just call back a few days later repeating the same situation. . .Is that cognitive? She''s constantly confuse & leaves tons of voice mail messages for me about her husband and her pain meds!

She did try copaxone, but quit taking it. I forget why!

I''ll ask her exactly how much her attorney is taking! Hopefully she knows.

The pain she describes as tiny zaps or something like that. I cannot remember exactly how she describes them. Sometimes they''re bad enough she hangs up on me and then calls back about 10 minutes later!

My husband has predicted for years now, that eventually we will be taking care of her!
 

MichelleCarmen

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ETA: I also wanted to mention that my sister has been on every other medication out there for MS. She is lucky that the copaxone is working for her. I didn''t mean to imply that your friend or anyone else should be taking copaxone. The treatment options for this disease are highly individualized. I will also say that my sister has had at least 4 different neurologists. She has been with her current neurologist for over 10 years, I''d say. If your friend has any reservations about the care she is receiving, another opinion might be in order.
Yes, I completely understand what you''re saying about Copaxone being right for some and not others. My friend tried most as well and felt Tysabri works the best, but then later changed her mind. Neurotin was another that she was prescribed for many years - that may have been what she took before switching to Endocet.) She''s seen at least two neurologists. The names have switched over time as have the treatments! Oddly, she was sent to some sort of pain management center and they recommended even "harder" pain killers. The whole thing seems wrong to me!
 

Loves Vintage

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Yes, I would say some of those are cognitive issues -- like the forgetting and repeating messages. Here is one article I found about cognitive dysfunction and MS:

http://www.mult-sclerosis.org/cognitivedysfunction.html

There are probably better articles out there.

The issues you mentioned re: money and asking her husband to leave the attorney's office could fall under "impaired planning skills."

I've never heard my sister mention anything about zaps of pain.

I am sure whatever the attorney is charging is legitimate. They have to follow rules of professional conduct regarding fee arrangements and the court probably needs to approve it too. I was just surprised to hear it was a percentage, at first, but the more I think about it, I think my husband's lawyer first proposed a percentage of his father's estate.

ETA: Also, just looked this up. If it is a will contest, then a contingency fee arrangement (if case is successful, atty gets a certain percentage) is typical.
 
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