house purchase from my mums estate help please

dprovan

Hi,

My Mum passed away in september of this year. I am waiting to be made executor to her estate. Originally I had thought I would just sell her house (no life assurance) and be done with it, however now because of other family responsibilities/complications etc Im considering taking over/buying the house.

I am confused however about how to do this and what my options are.

The mortgage outstanding on the house (which clearly needs to be payed to bank) is approx 38k. She bought the house for approx 42k 2 years ago but did alot of work to it.

My Mum will also owe other monies of approx 30k (this will include legal fees/funeral expenses etc).

Therefore her estate owes approx 68k and the only asset is the house. I thought it would be worth no more than 50k. However I have had a chat with a local estate agent who reckons it is worth about 65k, more than I feel its worth and more than I think it would ever go for on the open market.

If I decided to buy it, how is the price decided would I need to pay an average of so many valuations etc? Or how else would this be worked out?
I have contacted the solicitor dealing with my mums estate but a response is very slow in coming.

Many thanks in advance.

Bossyboots

I am very sorry to hear of your loss.

What do you mean when you say you are waiting to be made executor. You either are or you aren't. What does the will say?

Who are named as beneficiaries? MOst particularly, who has the house been left to?

If you have been left the house then you can pay off the debts yourself and have the transferred to you. If you cannot pay the debts the house will have to be sold.

If you could expand a bit more on the current situation it will be easier to see what you can do.

Robert_Sterling_3

Is it the case that you are named in your mother's will as an executor but you are awaiting probate before you can dispose of the house?

If this is the case then are there any other executors?
Are there any other beneficiaries?

dprovan

hi thanks for replys.

There was no will so the solictor has to go through court to make me next of kin the executor.

There was no life assurance on the house so it was left to no-one. In essence I will be placed in charge of her estate ( the house and about 2k in the bank)....which is really a relatively small task because the estate won't be big enough to pay debts, hope that makes sense.

Bossyboots

Okay. First off, you are wasting your money using a solicitor to obtain Letters of Administration. You could do this yourself and it really is not that difficult. Are you sure it is you going to be made executor and not the solicitor?

Are you the only child? If so, then the house will pass to you anyway under the intestacy rules. If you have siblings it will passl in equal shares.

I will assume firstly that you are an only child. You can retain the house and pay off the estate debts yourself. If you cannot afford this then the property will have to be sold as estate debts take priority over bequests.

If you have to share the property with siblings, you would need to buy their shares from them. The same rule about estate debts applies.

This is one where you need to juggle all the figures to decide what to do for the best. Either way, those debts have to be settled.

One word of warning, do not let a solicitor eat up the estate in fees. You can do lots of the work youself.

Robert_Sterling_3

Somewhat coincidentally the assets i.e. The House, and the liabilities, The Mortgage and The Debts both total £68,000.

You can have the house valued for "probate" purposes.
[ The "probate" is in quotes because technically there is no probate if there is no will and so it might be more correct to refer to them as "administration" purposes. ]
This generally produces a lower valuation than a valuation for sale purposes.
If the people, to whom the estate owes £30,000, get their money in due course they will not care about the value of the house.
The Inland Revenue will not care about the value of the house as Inheritance Tax is not an issue.
Inland Revenue take little interest in an estate worth up to about £250,000
let alone an estate worth approximately nothing.
Are there any brothers or sisters of yours who might be interested in what the house is worth?
If for example it could really be sold for more than £68,000 they might have a claim to part of the excess value over and above the £68,000 needed to pay the existing mortgage and the existing debts.

If you are an only child everything should turn out Ok financially.

dprovan

Thanks again for replys

Bossyboots: I didn't view the solicitors fees as a waste of money because we always knew the estate wouldn't be worth enough to cover the debts. Therefore the solicitors fees meant one of the debtors wouldn't get payed their full share. And as I live in a different country from my mum and estate/etc and my brother isn't up to dealing with these issues (he has learning difficulties) it made sense. What has changed slightly is the extrordinary valuation of the house (65k) which I really believe is huge and unachievable.

Robert- If I was to get it valued for administrative purposes and the value was less than 68k therefore the debtors didn't get all their money, would this mean I would need to pay them the difference somehow?

My predicament is Im not prepared to buy the house for or spend one way or another 65k as I really feel I would be in negative equity straight away. I feel the house is worth 50k max, so it really would be madness on my part, I hope this makes some sense.

thanks again for all the responses.

ps menat to add yes there is only me and my brother. My brother has housing problems and would love to live in the house, this is why I considered buying it, with him paying me rent. Thereofre he will have no particular issues with value etc which we couldn't easily agree upon.

Bossyboots

Sorry dprovan the penny hadn't dropped and I remember you other posts now about your brother.

Obviously in your circumstances employing a solicitor is necessary. I would have thought it would be more practical in the circumstances for them to be granted letters of administration rather than you.

If the value of the estate is less than the debts then it does not fall to anyone else to balance it out. The solicitor (and this is a good reason in your case to have one) can either pay them in priority order or see whether he can get them to agree a reduction so everyone gets something. Those at the bottom of the pecking order can end up with nothing. You would not be buying the house, you would have to pay the creditors off up to the value of the estate.

Could you not use the money inherited from the pension to pay the creditors off and keep the house? I know your brother will have some difficulties with his benefits but is this not an option worth considering? He would have housing security which could go a long way to countering any accusation of deprivation of wealth. This is something that would need to be discussed with the benefits agency with a detailed plan of the advantages of doing this. Otherwise, you will have to stump up the full amount of the estate debts yourself in order to keep the house.

Robert_Sterling_3

dprovan wrote:

Thanks again for replys
Robert- If I was to get it valued for administrative purposes and the value was less than 68k therefore the debtors didn't get all their money, would this mean I would need to pay them the difference somehow?

No. Nobody is responsible for the debts of a deceased person.
Only the executor of the estate is responsible and they are only responsible for paying up to 100% of the estates value. i.e. It does not involve using your own money.

I am not sure what the position is in relation to the costs of your solicitor. He is working for you I think rather than for the estate.

My predicament is Im not prepared to buy the house for or spend one way or another 65k as I really feel I would be in negative equity straight away. I feel the house is worth 50k max, so it really would be madness on my part, I hope this makes some sense.

In these circumstances I guess the house will be offered for sale at a price set by an Estate Agent.

thanks again for all the responses.

ps meant to add yes there is only me and my brother. My brother has housing problems and would love to live in the house, this is why I considered buying it, with him paying me rent. Therefore he will have no particular issues with value etc which we couldn't easily agree upon.

It is a pity your brother was not actually living with your mother.

Disclaimer :T This post is neither legal advice nor is it financial advice it is like a chat in a pub with somebody you do not know who might or might not know what he is talking about. Cheers.

dprovan

thanks again guys, it is appreciated.

Im beginning to feel that it may be better to just forget about the house and if considering buying a house by a completely seperate one, this just feels too complicated and messy to be honest.

Thanks for all the views.