Buying a house with a relative - surely a bad idea?

yummymummy_2

My mother wants to buy a house with a relative. She would be putting far more equity into the new house than the relative (from the sale of the old houses). I think it's a bad idea as she has not considered all the pitfalls of who would own how much of the house. Obviously it's none of my business what she decides to do with her money but I am concerned as she doesn't seem to have thought it through.

Does anyone have a view?

dwsjarcmcd

When she purchases this property, it should be done on a 'tennants in common' basis, with an unequal share to reflect who has contributed what. This will be offered by the solicitor as part of the buying process.

So if your mum has invested 2/3rds of the cost, this can be specified during the legal process

Bossyboots

Absolutely agree with you. She can get an agreement drawn up as to who owns what share and how any proft will be divided should they sell. They also need to buy as tenants in commons so that they each own their own share to leave as they please but this also has to be dealt with so that neither can be evicted from the house of the death of the other.

To be honest it really sounds as though she has not thought this through and although there is nothing wrong with her buying the house with a relative, I think it is your business to ensure she is aware of the all the legalities and gets everything set up right. After all, where will she go if the relative dies and she has to leave the house. If it was me, then I would be pushing her to get full legal advice on shared property ownership rather than using any tactic that seems to be objecting to her actions. It may well be that when it is all explained to her, she decides not to go ahead.

Also, from the issue of possible future care home fees, both relatives need to make sure their share of the property is watertight, so you have a good number of reasons to cajole her into doing this properly as it is not just her that could lose out but the other relative and she wouldn't want that would she.

Debt_Free_Chick

If they buy as tenants in common and the other relative dies first, your mum will either have to buy the share of the property she doesn't own - or sell up! Assuming that the relative doesn't leave her share of the property to your mum.

Bossyboots

Debt_Free_Chick wrote:

If they buy as tenants in common and the other relative dies first, your mum will either have to buy the share of the property she doesn't own - or sell up! Assuming that the relative doesn't leave her share of the property to your mum.

They can arrange a lifetime interest in each other's share to avoid this but it is clear this is not a straightforward transaction if each party is to be protected so both really ought to be taking independent legal advice before embarking on the purchase.