I'm Lucy, and I'd be happy to answer your questions today.
1-2. The law says that, for an agreement regarding the ownership of land to be valid, it must be in a writing, signed by the parties. That means, right now, if your father-in-law decided he didn't want to give you the house after all, you would not be able to get a judge to order him to transfer the house to you. This is the same whether you made the payments to your father-in-law or to the bank directly. You'd be treated as tenants. Also at this point, he could serve you with 30 days notice to leave at any time. The only way to protect yourself is to get the agreement in writing. It should be clear what you have to do to become owners, whether your father-in-law has a right to take the property back if you miss payments, and who is responsible for taxes, insurance, and repairs between when you took over the house and when the deed is transferred into your name. Also note that, should your father-in-law pass away without a will before the house is paid, any spouse or other children he leaves behind would have a claim to your house. That's another reason it's important to get something in writing.
3. You're not considered the owner until your name is ***** ***** deed. That means there won't be any proof of ownership until your father in law signs the house over to you. He could add you and your wife to the deed, as long as the bank will agree, but the bank will probably want to add you both to the loan. The other option is to get a loan to pay off your father-in-law's loan (assuming he'll agree to sell it to you for the payoff balance). You'd have to pay interest, but the house would be yours. But the father-in-law has to agree to make you an owner. A written agreement would protect him in the event that you stopped paying for the loan.
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