House transfer of ownership query

daresaints

Hello,

Looking for some advice on this one. My sister is currently unemployed and owns an ex council property. She can no longer afford to keep up the payments on the mortgage or maintain the house which is a 4 apartment and is in need of some repair. She has been on her own for past year or so since her partner died and in that time I have been helping her out with the mortgage payments.
She doesn't keep the best of health and has applied for sheltered housing which she probably has a good chance of getting. Also,at 58 it is unlikely that she will work again so any proceeds from sale of house had always been viewed as her "pension". We are both very close so there is no friction here and I have said I will help her any way I can.
Can she transfer ownership of the house to me or would I have to buy it from her? If it was possible to transfer the ownership then I would take on the house as a "project" with view to doing the place up and selling it on at a later date possibly a few years down the line.

Any advice would be appreciated (covered by Scots law)

Thanks

Debt_Free_Chick

You would have to buy it from her. The title (ownership) won't be transferred whilst there's a mortgage outstanding. You can't simply transfer a property and a mortgage to another person, hence you would have the buy the house from her.

summermummy

You will not be able to do a transfer of ownership. You will need to buy it. The only other alternatives I can think of are helping her make the mortgage payments if she cannot do so herself. Could she take in a lodger or rent the place out to help with the payments?

SquatNow

You will need to buy it from her and the proceeds will be used to fund her future care... which is how it should be.

daresaints

Thanks for that. I had thought that me purchasing the house would probably be the only option to be honest. If she sells it to me for the value of the o/standing mortgage rather than market value, this wouldn't be an issue would it ?

SquatNow

daresaints wrote: »

If she sells it to me for the value of the o/standing mortgage rather than market value, this wouldn't be an issue would it ?

Yes it most definately would.

You're going to have to pay "market value" for it, which may actually be more than you would get for it if you had to sell it "quickly". If you sell for less than official "market value" the local health authority etc could chase you for the difference.

My advice is have her sell it at auction.

daresaints

Really not sure what to do for the best here. I can't afford to pay market value for the house as I'm struggling myself so my buying it isn't an option. Putting it up for auction she would get a lot less than it is probably worth so i'm thinking that between us we hang onto it and try and do it up over next year or so. Hopefully then housing market will be a bit more healthy.However would still having the property not work against my sister's application to the council for smaller/sheltered accommodation ?
Problem is any equity that she has in current property would not be enough to buy anything else - difficult to say but in current market i reckon she would be lucky to make £20k.
Any ideas ?

simpywimpy

not sure of the scottish law, but in england, you would also leave yourself open to capital gains tax on the profit if you already own your own home (making your sisters home a second home for you)

You could try to remortgage in joint names as an alternative and thereby get your name on the deeds. If you make the deeds tenants in common you would each own a separate half share and couldn't be made to sell if one of you needed residential care.(again England, not sure about Scotland Im afraid)