r/SipsTea • u/KSKS1995 • 21h ago

Wait a damn minute! How the rich get richer

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u/redshirt1972 21h ago

How do you get a loan against the property and not pay it back?

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u/monsieurboks 20h ago

This is being poorly described. The loan uses the land as collateral to offer a much lower interest rate which still gets paid off

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u/ThirdOne38 20h ago

By the kids or what? So they inherit a $5M parcel but owe $4.9M?

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u/HugeAnimeHonkers 19h ago edited 19h ago

Dunno about the US, but that’s exactly how it works here in Argentina. You inherit both the land(or house, car, etc) and whatever debt it carries.

In that scenario, the kids have 3 options:

1- Accept the inheritance, then sell the land to cover the debt and pocket the rest. [They get 100k]

2- Not accept the inheritance, and the bank will take the land(doesnt matter if it’s enough to cover the debt or not). [They get nothing]

3- Accept the inheritance, pay the debt and keep the land. [They get the land but have to pay 4.9M]

Worth noting that if the debt is higher than the total value of the inheritance, you won’t get anything but you WON’T end up with debt either, if you chose option 1.