Inherited half a house

fernandohierro

Hi all,

Looking for some advice.

I inherited half a house with a sibling and as probate etc is now sorted I'm going to begin process of purchasing the other half as agreed with my sibling.

Only problem is I've no idea where to start!

I would expect keeping the likes of estate agents, banks, solicitors out of the deal would be more beneficial to both parties but not sure if this is legal or not.

Ideally we would agree a price and I would give her lump sum followed by monthly instalments. Would a solicitor have to endorse this agreement?

Has anyone been in a similar position or have any advice?

Thanks

davindub

You will need a solicitor to handle the title, even if you know how to handle yourself, its a confidence thing for purchasers solicitors in the future if selling on again. But there is no need for EA's or anyone else.

You will need advice on the loan situation as well. If interest free, it could be liable for CAT for the interest that your sibling could achieve, there are reliefs on this though so its best to get legal advice now rather than deal with implications later.

The_Conductor

Definitely get a solicitor to handle the details- its all well and good agreeing all the details between you- but unfortunately it is fraught with difficulties.

What a lot of people in your situation do- is put the property on the market for an agreed length of time- and after a few weeks- withdraw it. Whatever the highest offer on the table is at that point- is deemed the open market value- and the value you both have in the property is half this minus the transactional costs (even registering the deeds and legal fees etc are probably a few grand, and this should be apportioned between you).

Its all well and good trying to keep professionals out of the equation and save a few shekels- however, its also the route to family splits and siblings never talking to one another ever again.

I would also seriously suggest you do not go down the road of giving your sibling a lumpsum and then drip feeding them the remainder over a protracted period of time. You're buying the property- cleanly buying the property- or you are not buying the property. This whole lark of giving them a hundred grand now and another hundred on a monthly basis over 10 years (or whatever)- is a recipe for arguments and disagreements. What happens when one or the other of you need cash for a particular event and try to defer or speed up the disbursements? Etc etc.

If neither of you are in a position to buy out the other- the fairest thing all round- is to simply sell the property- you have no idea the hell a proposition such as you're suggesting can be- regardless of whether it is an informal arrangement or not. I can reel off lists of families who've done similar to you down the years where siblings, inlaws, cousins and descendants- are no longer on talking terms, and in a few cases where they modified the spelling of the family surname to differentiate themselves from the wing of the family who was perceived to have wronged them............

These things do not work out- it doesn't matter what your best intentions are- seriously- its a recipe for disaster- just sell the property.

April 73

You will need a solicitor for sure.

I could see the monthly payment method having the potential to cause problems. You will have the benefit of your inheritance immediately but your sibling has to wait to realise theirs over the number of years that you pay them. Could you get a mortgage to buy them out immediately?

TimeToShine

Someone is being screwed here and I have a feeling it isn't you OP.

Hire a solicitor in the interest of fairness to both of you.

Stealthfins

Sell the house and split the difference.

That's what myself and my siblings agreed to when we're left the house.

That's the only fair way of dealing with it.

antoinolachtnai

Good advice on this thread.

You both need independent solicitors giving independent legal advice.

It will cost a few thousand euros, but if you get the right advice it will save you years of trouble.

You will need an estate agent for the valuation too.

If you need finance (i.e., if you cannot afford to buy your sibling's share outright with your own cash) then the bank is by far the cheapest place to get the money.

If you cannot afford the professionals, then you might be better selling up and splitting the cash.

Advbrd

Stealthfins wrote: »

Sell the house and split the difference.

That's what myself and my siblings agreed to when we're left the house.

That's the only fair way of dealing with it.

Why so? If one wants to keep the house and one wants the cash, I can't see what's wrong with agreeing a fair valuation and proceeding using the services of a solicitor.

Advbrd

antoinolachtnai wrote: »

Good advice on this thread.

You both need independent solicitors giving independent legal advice.

Practically speaking, I don't see the need for two solicitors. Is there a legal requirement?

The_Conductor

Advbrd wrote: »

Why so? If one wants to keep the house and one wants the cash, I can't see what's wrong with agreeing a fair valuation and proceeding using the services of a solicitor.

Its almost impossible to do what the OP is suggesting- without a family rift ensuing.

The OP has advised that they do not have the cash to purchase the half of the property they do not own- nor are they in a position to borrow it- yet, they still want to go ahead with purchasing it.

The only fair and reasonable manner of doing this- is to put it on the open market and sell it. There could be a default position that the OP would equal any bid up to a certain level- however, if it exceeds this level- they should simply release it to the high bidder.

Its all well and good one of the siblings wanting to keep the property- however, patently they cannot afford it- and are trying to use mechanisms that are only going to cause long term headaches- to try and buy their siblings share.

I fully accept there is an emotional attachment to the property- however, the OP cannot afford it (and this is ignoring the property tax, upkeep and other costs of ownership)- so it really doesn't make any sense to try and procced in the manner they are suggesting.

The_Conductor

Advbrd wrote: »

Practically speaking, I don't see the need for two solicitors. Is there a legal requirement?

No solicitor will act for both sides of a transaction- it may not be a legal requirement- however, on your first day in Law- you'll have this drummed into you- don't do it.

ted1

If you are paying her monthly, she'd be better off if the two of you just rented the house, that way she'd get money monthly and still have an asset.

antoinolachtnai

Advbrd wrote: »

Practically speaking, I don't see the need for two solicitors. Is there a legal requirement?

There isn't necessarily a legal requirement.

The problem is that in the deal proposed it isn't just a matter of a sale. The seller is also financing the property, i..e, loaning the money to buy it to the purchaser.

In my view handling the two sides of this transaction is putting too much on a solicitor. The conflict of interest is just too large.

If the whole thing went to court, it could be a problem that the two sides didn't get appropriate legal advice.

On a more personal and emotional level, it is important for the future that each side feels like they got the right advice at the time and weren't 'bounced' into anything in the moment.

The_Conductor

ted1 wrote: »

If you are paying her monthly, she'd be better off if the two of you just rented the house, that way she'd get money monthly and still have an asset.

However- both parties would be taxed on the rental income- and the OP would have to pay to live somewhere else, from their NET income.

The sums really don't add up here- however, nor do they add up for the OP and his/her proposal to give the other sibling a lumpsum every month ad infinitum.

Advbrd

The_Conductor wrote: »

Its almost impossible to do what the OP is suggesting- without a family rift ensuing.

The OP has advised that they do not have the cash to purchase the half of the property they do not own- nor are they in a position to borrow it- yet, they still want to go ahead with purchasing it.

The only fair and reasonable manner of doing this- is to put it on the open market and sell it. There could be a default position that the OP would equal any bid up to a certain level- however, if it exceeds this level- they should simply release it to the high bidder.

Its all well and good one of the siblings wanting to keep the property- however, patently they cannot afford it- and are trying to use mechanisms that are only going to cause long term headaches- to try and buy their siblings share.

I fully accept there is an emotional attachment to the property- however, the OP cannot afford it (and this is ignoring the property tax, upkeep and other costs of ownership)- so it really doesn't make any sense to try and procced in the manner they are suggesting.

Yeah, it could get messy. Can't see the problem with a straight forward buyout but with monthly payments, who knows what the future may hold.

Advbrd

antoinolachtnai wrote: »

There isn't necessarily a legal requirement.

The problem is that in the deal proposed it isn't just a matter of a sale. The seller is also financing the property, i..e, loaning the money to buy it to the purchaser.

In my view handling the two sides of this transaction is putting too much on a solicitor. The conflict of interest is just too large.

If the whole thing went to court, it could be a problem that the two sides didn't get appropriate legal advice.

On a more personal and emotional level, it is important for the future that each side feels like they got the right advice at the time and weren't 'bounced' into anything in the moment.

Yeah, I see the point.

fernandohierro

Thanks for all the advice, I've definitely got some food for thought here.

The last thing I want to do is cause family problems and I can see now the lump sum/instalments idea would be very unfair to suggest and won't go ahead with that.

I'm surprised though with the amount of people urging to sell. I can definitely see that fairest thing is to put the house to open market so that we both have option to maximise our gains but it seems like everyone would expect me buying to end in disaster.

Is there really that much history of problems when it comes to family homes?

Radio5

In answer to your last question,in my experience, yes.

I've worked in a solicitor's office for many years and have seen how these things pan out.

Both of you need indepdendent legal advice and taxation advice with regard to all your options, ie whether you buy out, how you buy out or what happens if you both decide to sell and divide the sale proceeds.

antoinolachtnai

There are plenty of options if you really want to buy out the property.

If I were you, I would go to a broker and see if there's any way you can finance this with the bank. You won't need a deposit, because you already own 50 percent of the equity.

Even if the bank will only finance part of the amount, you would then be borrowing a much smaller amount from your sibling. This would be a lot more manageable.

You can do all these things, if you are all businesslike about it. But if you can't deal with it in a business-like way, then there is going to be in trouble.

breeno

antoinolachtnai wrote: »

There are plenty of options if you really want to buy out the property.

If I were you, I would go to a broker and see if there's any way you can finance this with the bank. You won't need a deposit, because you already own 50 percent of the equity.

Even if the bank will only finance part of the amount, you would then be borrowing a much smaller amount from your sibling. This would be a lot more manageable.

You can do all these things, if you are all businesslike about it. But if you can't deal with it in a business-like way, then there is going to be in trouble.

Is that definitely correct? I am in a similar position to the OP(2 Siblings, family home in both of our names) and am under the impression that I would require a deposit (20% in my case as I'm not a FTB) for the finance to buy my sibling out?

Seve OB

It quite amazes me the negative attitude on here towards the OP and without knowing their exact circumstances, yis all know the best thing is for them to sell the house! :rolleyes:

I do agree monthly installments might not be ideal, but we do not know if you are talking for hundreds or thousands, months or years..... so hard to gauge, but probably not ideal. See can you finance that amount yourself. Nowhere does it say OP cannot get a loan from the bank, (or has other financing options, even lump sums which could be locked away) but yet people assume so and tell them the only option is to sell :rolleyes:

And this craic of getting estate agents and put the house on the market for 3 months to determine the best offer :eek: Have you never heard of the property price register? OP could easily come up with a valuation using that and other means. Of course it would have to be agreed by both parties, but then some of you even think the OP is out to gain an advantage over their sibling

OP, if I were you I would discuss your ideas with your sibling between yourselves and other halves and even get advice from friends and family if possible. If you manage to come to an agreeable solution, then at that point take it to a solicitor and get their advice and help. If you can't agree, well at that stage it might be time to think about selling.... but that doesn't mean you can't buy it

spaceHopper

Go to the bank and get a mortgage to buy out your sister. You'll have to get the house valued for the mortage. It costs about 170, you'll get a upper and lower value, house is worth between 150 and 170k... go with the mid point. Maybe ask your sister to pick a valuer, give her a list of 5 say.

You both need to get a solisitor, lets say you make one mistake and in a few years you need to sell it could muck things up. Also what if prices go through the roof this year and she feels ripped off. By getting her to get independant legal advice now you cut of any future probles or at least lessen them

SarahMollie

Hi OP,

While I don't think theres anything wrong with you wanting to hold on to the house if thats what makes sense for you, but I do think you should do so cleanly and not try to cut corners as some of your posts suggest. By cleanly, I mean in one single transaction, and engaging the correct professionals to ensure its handled smoothly.

This means a solicitor for each of you, possibly a broker for you to arrange financing, and an independent valuation of the property (and bank financing you will insist on this anyway).

Having a solicitor each is really really important, and TBH I don't think you're likely to find a solicitor who would entertain the notion of acting for you both anyhow as they wouldnt want to take on such a conflict of interests.

When I bought my property I asked my solicitor for advice because my OH would be living with me but the property, mortgage etc are all in my name. The first thing he told me, was that we would both need independent legal advice, otherwise anything we signed would not be reliable and to not insist that my OH had his own representation would actually leave me open to challenge in the future if something went wrong. He was clear that he could not act for us both. Ultimately we did nothing as I felt it wasnt worth while, but the point is that us both having separate legal representation was the only way that I could have fully protected myself. If I'd simply had something drafted by my solicitor and asked him to sign it, then I would have been leaving the door open for him to challenge me on the grounds that he didnt understand what he was signing.

Separate legal council for your sibling protects you as much as it does them. Don't skimp on some professional fees on such an important transaction.

Stealthfins

Advbrd wrote:

Why so? If one wants to keep the house and one wants the cash, I can't see what's wrong with agreeing a fair valuation and proceeding using the services of a solicitor.

Well then if the house is worth 300,000 and that's 150,000 for the person who wants the Cash.

The one who wants the house is going to have to give the other 150,000, it never really goes that way.

Usually the one who has to hand over the Cash expects to get away with handing over a lot less.

They'll do their best to maybe strike a deal for around 80,000 then 80,000 will be too much...The next thing it patters down to 25,000

It rarely works out, someone with a 150000 loan chained to them for years usually ends up the worst off.

SarahMollie

Stealthfins wrote: »

Well then if the house is worth 300,000 and that's 150,000 for the person who wants the Cash.

The one who wants the house is going to have to give the other 150,000, it never really goes that way.

Usually the one who has to hand over the Cash expects to get away with handing over a lot less.

They'll do their best to maybe strike a deal for around 80,000 then 80,000 will be too much...The next thing it patters down to 25,000

It rarely works out, someone with a 150000 loan chained to them for years usually ends up the worst off.

Not to mention the tax implications!

Advbrd

Stealthfins wrote: »

Well then if the house is worth 300,000 and that's 150,000 for the person who wants the Cash.

The one who wants the house is going to have to give the other 150,000, it never really goes that way.

Usually the one who has to hand over the Cash expects to get away with handing over a lot less.

They'll do their best to maybe strike a deal for around 80,000 then 80,000 will be too much...The next thing it patters down to 25,000

It rarely works out, someone with a 150000 loan chained to them for years usually ends up the worst off.

Maybe I think differently to most but I would simply get a valuation or probably two, agree the purchase price, engage a solicitor and proceed with paying the agreed amount. I know one guy who did this problem free and I actually nearly bought our family home but it made no sense as I live too far away so we sold in the end.

fernandohierro

The_Conductor wrote: »

Its almost impossible to do what the OP is suggesting- without a family rift ensuing.

The OP has advised that they do not have the cash to purchase the half of the property they do not own- nor are they in a position to borrow it- yet, they still want to go ahead with purchasing it.

The only fair and reasonable manner of doing this- is to put it on the open market and sell it. There could be a default position that the OP would equal any bid up to a certain level- however, if it exceeds this level- they should simply release it to the high bidder.

Its all well and good one of the siblings wanting to keep the property- however, patently they cannot afford it- and are trying to use mechanisms that are only going to cause long term headaches- to try and buy their siblings share.

I fully accept there is an emotional attachment to the property- however, the OP cannot afford it (and this is ignoring the property tax, upkeep and other costs of ownership)- so it really doesn't make any sense to try and procced in the manner they are suggesting.

Just to clarify, as I had already been saving towards a deposit for a house and additional cash inheritance along with my own employment, income, etc I'm very confident I would have no problem securing a mortgage to purchase half the house.

My suggestions in the op were simply to lower costs. Going by a lot of the replies it may not be wise to try cut corners.

CramCycle

Get independent solicitors as already said. No solicitor in their right mind will deal with both of you.

Buying the house outright, if you want it, should not be difficult. The LTV alone should get you a great interest rate if you meet all the other criteria. The bank themselves will have valuers but putting it on the open market for a set period, which is agreed on and signed off on is the best way. On that date if the highest offer is out of your range, let it go, if it is not, make the offer. Gives you a bit of time to talk to the banks as well.

4ensic15

CramCycle wrote: »

Get independent solicitors as already said. No solicitor in their right mind will deal with both of you.

Buying the house outright, if you want it, should not be difficult. The LTV alone should get you a great interest rate if you meet all the other criteria. The bank themselves will have valuers but putting it on the open market for a set period, which is agreed on and signed off on is the best way. On that date if the highest offer is out of your range, let it go, if it is not, make the offer. Gives you a bit of time to talk to the banks as well.

Putting it on the market is madness. The agent will have to be paid a fee as if he had sold the house. A manufactured bid could be made by the person who is getting the cash in order to drive up the price. Usually, if a price cannot be agreed, 3 independent valuations are sought and the average is taken as the price.

davindub

Radio5 wrote: »

In answer to your last question,in my experience, yes.

I've worked in a solicitor's office for many years and have seen how these things pan out.

Both of you need indepdendent legal advice and taxation advice with regard to all your options, ie whether you buy out, how you buy out or what happens if you both decide to sell and divide the sale proceeds.

Well in fairness you wouldn't get the successful ones in to see you!

CramCycle

4ensic15 wrote: »

Putting it on the market is madness. The agent will have to be paid a fee as if he had sold the house. A manufactured bid could be made by the person who is getting the cash in order to drive up the price. Usually, if a price cannot be agreed, 3 independent valuations are sought and the average is taken as the price.

Fair enough, no agent fee if you put it on daft yourself, just the ad price (between 300 and 500euro) and that's it. Not much different. Valuations can often be way off in a rapidly increasing market but as you said both parties have to have faith in the one who would benefit, although there is more trickery involved when there is no agent. I'd prefer your way if it was me for simplicity.