How much to give?

paul_smithson

Forgive me if this is in the wrong forum, I could not find anywhere else to put it!


Hi - My question is: How much money should I give my brother for signing over his repossessed house to me and my wife?
I should give you some background to my question:
We = Me and my wife.

My brother (a class A drug addict) has had his home repossessed, we paid off his mortgage and in return he has signed a transfer of equity document, so that we are now the outright owners of his old home.
To raise the money to pay off his mortgage we took out a 'capital raising' mortgage (2 year deal with the Halifax) on our existing mortgage free home of £77,000.
The house we have purchased is worth around £120,000

At the moment we are thinking that we intend to rent out the house (3 bed end of terrace) for 10-15 years then sell it.
Once we got into the house we went through the mountain of post and found £12,000 worth of debt from credit card companies, utility companies etc. £5,000 of this debt has gone to court and an order to pay has been issued. I do not think my brother is worried about paying back the this £12,000. He now says he wants to go straight/get clean but as anyone who has had experience of a heroin addict will tell you, what they say and what they do can be 2 very different things!

If we had not purchased the house the bank would have sold it and my brother would obviously have not received any money from them. We have offered him either a cash sum or he can live in the house as a tenant. He has chosen a cash sum.
I think I have covered the background, has anyone got any suggestions as to how much we should give my brother? I know this is a tricky one to answer, but we just don't know what to give him.
Please remember that he is my brother when answering so I do have a sense of loyalty towards him, we definitely intend to give him money, somebody has already said to us that we should not give him anything, that is not going to happen.

JUST TO RECAP THE ORIGINAL QUESTION:
How much money, whether in cash or a rent free period in his old house should we give my brother?
Thanks for your reply.

Doozergirl

How much did he owe on his mortgage?

If the house was repossessed then as long as the house was sold for more than the cost of the mortgage and the additional fees incurred, he would have received the "change" as such. On the other hand, if he owed more than the house sold for, then the additional debt would travel with him. So it's sort of incorrect to say he wouldn't have got anything - he'd either have money back or the remaining debt.

Where does his current level of debt come into it? Do you plan to pay it off on his behalf?

if you think it's worth £120,000 then perhaps £110,000 might be the sort of sum it would have sold for as a repossession. It might have gone for full market value though.

Pee

Giving a Heroin addict money is a bit like giving a bad driver a Ferrari... I think undoubtedly you owe him about £40k, but I can't see that giving it to him now would be a good move. Is he working or on benefits? Eitherway, too much money in his name would mean the debts would have to be paid, which presumably he doesn't want to do. Can you talk to him about it?

theartfullodger

(Speaking from experience of having a relative similarly afflicted..)

Set up a trust fund with whatever £££s seems the right amount. That trust fund to provide money for housing and living (eg paying rent bills etc..) but not handing over £10notes.. Trustees (sensible family members) can vary the terms of the trust should he (hopefully) recover.

Sadly the trust should cater for the possibility he departs this life. Residue to all his children/nephews/nieces??

Any competent solicitor can set it up for you.

Sorry to hear of your Brother's affliction and the probable impact on the rest of the family & friends. Show me a drug dealer & I shop 'im. B****ards..

Cheers!


Lodger

silvercar

If we had not purchased the house the bank would have sold it and my brother would obviously have not received any money from them.

Wrong. The bank would have sold it and given him the change. So if it is worth 120k, a quick sale may have released 100k so he would have got 23k change from the mortgage.

You really should have had the plan agreed before you bought it.

I would have thought that you were better off letting him live in the property rent free - at least then he has a home.

If you gave him the 23k that the bank would have given him, will he pay off his debts or buy more drugs? Where will he live?

Your real problem is that, unless he wants help, gets help and changes his ways, he is likely to end up bankrupt. The Official Receiver will then look at his past transactions to see if it can rescue money for its creditors. You buying his home as a relative at below market value is suspect; you risk the Official Receiver setting aside the transaction or demanding money from you that should go to his creditors.