IVA & House intestate.

AVal

Hello!

My brother has been in an IVA with Debt Free Direct for the last couple of years, but is now having issues with them.

In Oct 2007 our mum passed away, leaving the family home intestate (I am the administrator). I have organised with the family a way that I can stay in the house and make sure that every one is happy.

As administrator, I of course want to ensure that all mum's debts are clear before we decide to sell the house (if we do). Unfortunately, DFD are now saying that the house should've been declared as an asset by my brother when mum died, therefore it may have to be sold to help toward paying his debt.

As mum may (unlikely) still have debt outstanding, and I don't want to be hit with unexpected debt myself, can they force my brother to get me to sell?

He doesn't want to do it, as I still live there, and the family don't really want to sell as it's the only thing mum left to us. What can I tell him?

They have asked him to speak to a solicitor regarding a letter to prove that he has no interest in the house as an asset. Is this something that can be written up, or is not possible as the property is intestate?

I have an idea as to what has to be done for intestate issues in law, but as everyone is happy with the current status quo I thought that things would work out...

Charco_2

Well, the bad news is that your brother is entitled to his fair share of the house and therefore his creditors are entitled to their fair share...

However the way i heard it, when your mother passed away - although she died intestate - you were looking after her and had been for a while. It was kind of understood that because of your help and devotion to your mother and the fact that you still live there while your other siblings had moved on and settled themselves already that the BULK of your mother inheritance was to go to you but obviously she loved all her sons/daughters and did wish for them to have something...

You would be willing to try to raise a decent lump sum offer to buy out your brother's beneficial interest in your mother's home AFTER her own debts had been settled but that this beneficial interest did not reflect 1/3 of the home (or 1/4 or 1/5 depending on how many siblings).

Make an offer to your brother's IP/Creditors (get your brother to make the offer obviously) explaining that he is entitled to an amount but that amount is limited and that if they wish to pursue it through an expensive court case you'll contest it all the way.

AVal

Thank you!

That was her wish, for me to keep the house in my name, whilst ensuring that the family would be allowed to benefit. I wish we'd sorted a will!

The IP did mention getting a letter from a solicitor regarding my brother not having an interest. I'd assume that due to intestate that would be pointless?

He's worrying because they've said they can force a sale, thereby making me homeless.

As I'm only working part time at the moment, any offer would be minuscule!

Charco_2

It's definitely going to depend on the amount of equity in the inherited home and the number of siblings. However i dont think you can be forced to sell but neither can you unreasonably refuse to acknowledge their interest - a reasonable offer (based on the amount of equity not your income) a token of your brother's interest in the home, should suffice. I'd need to know the kind of figures you're talking about tho to hazard a reasonable guess - i'm sure you can work it out for yourself! Good luck

AVal

OK, well things have progressed a little since I last wrote. DFD now want 100% of the money owed. I am starting to get valuations for the property, and quotes to get at least some pretties done on the house.

I estimated the property at £175,000 when I went through probate, which would give my brother £43k, still not enough to clear his debts. The house would have to be valued at £220k to do that, which is never going to happen. We're going to put it to DFD that if the house does sell, the share of which would go to my brother is all that they would get. We would see it as full and final payment.

The annoyance is that I don't want to sell, but none of the family is in a position to help financially with my brothers problem, loans are out, so I could be forced to sell just to clear my brothers debts.

Charco_2

No no no!

DFD would only be a minority interest in the home and cannot force you to sell.

I'm assuming (from a quick calculation) that the house has no mortgage and is worth £175,000 and there are four of you!? Therefore your brother's interest is 25% of the equity of the property... how can 25% force 75% to sell up?

I'll come back to this with a longer answer shortly - is my assumption correct, 4 siblings/ inheritors from the will!?

AVal

Mortgage is paid up, my estimate on the house for the issue of probate was £175k, but I will be getting an estate agent round soon to get a proper figure.

You are correct in that there are 4 siblings (me, my brother & two half sisters). Financially I would be the only one able to get a loan or mortgage the property, as I'm the only one not in any debt... yet...

I have also been told by my solicitor that I could be found guilty of maladministration. Not a huge thing because that would be between my family and I, and like I said, if my brother hadn’t had any debts, this wouldn't be an issue.

Charco_2

Look after yourself and the home for now.

First thing is to get the property valued to make sure the estimate used for probate is correct (the lower the valuation the better). Investigate either a mortgage or a secured loan based on what you can borrow and what you can reasonably afford to repay. Even if this doesn't come to the full value of their claim on the property (ie 25%) based on your history of the property - you caring for your mother and it now being your home.

Alternatively, ask DFD if they would give you time to raise your brothers share of the equity and let the matter be dealt with in the final year. This would allow you time to find full-time emplyment and raise the full amount of the debt.

Your brother's creditors MIGHT accept the amount offered as the F&F on his IVA if it can be shown that he is going to help you to repay the mortgage you have to raise... ultimately though, it is a windfall and should be considered as EXTRA to his normal monthly payments.

I don't see an alternative to eventually having to pay to address your brother's claim on the property, but you can try to mitigate the eventual figure. It might look like he has about £40k on paper now, but after a forced sale and various costs this could be only £35k. And if you approach the creditors (through the IP) softly softly to offer £20-25k and say that it is all you can realisitically raise and your brother indicates that your mother would have wanted you to have the most benefit from the home in which you cared for her, and that you currently only work part-time so if you were forced to sell you'd be effectively be being made homeless... then it's likely your brother's creditors would consider it.

It's all negotiable at the end of the day!

AVal

Thank you!

I'll email my solicitor with your suggestions and get him to draft a letter.

AVal

I have now been informed by my solicitor that I would have to sell the property as part of my overriding duty as administrator of the estate, even though nobody in the family wants that. We are happy with the situation as is.

The only debt that mum had when she died was the mortgage, which I paid off. Therefore the estate is clear, and there is no need to wind up the estate by selling the property. All other goods that mum had (small amount of furniture, etc) was given to whoever wanted it in the family.

DFD are being extremely stubborn, and it looks as though my solicitor is not going to be much help either.

Charco_2

Woah woah woah, explain the part where you paid off the mortgage!

As for the solicitor saying you have to sell the property - there's no need for that so long as no-one requires it (your brother and DFD aside)... you can just as easily sort it out on paper! There doesn't have to be a tangible transfer of physical property or cash, so long as people's rights are acknowledged.

Would have been so much easier if there had been a will... was listening to a radio segment on the topic just yesterday - it can get very complicated after the event but it's so simple if it was just sorted out while they were still alive!