Buying House From Relative

cdb07

Hi all,

Firstly i must say that i have been an avid browser of this site for many years and think the advice you offer people is fantastic and now the time has come for me to ask for some of your wisdom!!:)

I'm looking for some advice please on buying my aunt's house from her. Unfortunately she has suffered from Alzheimer's for some time and she has recently been taken into a care home as she is no longer able to look after herself.

She has three children who i think have been given power of attorney over her affairs and are looking to sell her house. Myself and my OH are currently in rented accommodation and have been offered the opportunity to purchase my aunt's house.

It is currently worth around £75000, however her family are prepared to sell it to us for £50000 (due to the current market and the fact it needs totally renovated). What i would like to know is how lenders look at the difference in valuation and purchase price and if his sounds like a complicated process?

Clearly this is something which will need to be discussed with a solicitor, however i am looking for some info to see if it is doable as it is in a great location.

P.S It is located in Scotland if that makes any difference.

Many Thanks

TonyMMM

They can can certainly sell you the house, if they have power of attorney BUT ...who is paying the care home fees for your aunt ?

If the family sell her home for less than the market value, they may find themsleves liable for making up the shortfall ....look up "Deprivation of Capital".

You need to get a proper valuation for the house ,in its current state.

cdb07

Thanks TonyMMM,

I think the fees are currently being paid from her own savings but not sure.

Who would they need to make up any shortfall to?

Thanks

Annisele

Plus, regardless of the care home issue, the attorneys have a duty to act in the best interests of your aunt - which they wouldn't be if they sell the house to you at an undervalue.

So far as 'deprivation of capital' is concerned, if your aunt's savings run out the local authority (or whoever would otherwise pay the fees) will be coming after the attorneys for the shortfall.

getmore4less

Found this, Scotland rules are a bit different.

http://www.firststopcareadvice.org.uk/downloads/resources/2818.pdf

as with any care trying to make sure that any real nursing care is properly funded is not always easy.

Back to the main issue for you how can you buy it.

You will need funds for a deposit and the refurb getting both of these through undervalue sale will be difficult.

LMCD

am thinking u might be my new next door neighbour haha....

cdb07

Thanks more4less,

The link was useful although my basic understanding after reading it is deprivation of capital only applies if the house is signed over to someone else. We would be going through a 'normal' sale process.
We have funds for deposit and refurb. What difficulties do you forsee with an undervalue sale? I thought it would be a good thing from a lender's point of view.

LMCD,

I don't think we'll be neighbours by the sound of things!

getmore4less

If you have a deposit and refurb money based on the actual transfer price you should be OK to get a loan.


undervalue is far from "normal sales process" for all other potential issues

cdb07

Thanks again,

Think it would be best to speak to a broker or solicitor to get a clearer understanding of it all.

Could you expand on the last part of your post - didn't quite understand it sorry!!

DVardysShadow

cdb07 wrote: »

... The link was useful although my basic understanding after reading it is deprivation of capital only applies if the house is signed over to someone else. We would be going through a 'normal' sale process.
We have funds for deposit and refurb. What difficulties do you forsee with an undervalue sale? I thought it would be a good thing from a lender's point of view.

Section 4 deals with it - if you deliberately give away your property or savings covers your aunt's situation. If you buy at a discount on 'market value', then some portion of the property value has been given to you.

You must make sure that you can argue that the property is sold to you at market value

cdb07

I think the family thought it would be less hassle than putting it on the open market where it could sit for x amount of time, given the current market conditions, whereas we are in a reasonably good position to proceed quickly. That's not to say that if it did go on the market someone else won't come along in the same position with a higher offer.
I think the fairest solution for everyone would be for it to go on the market and make an offer on it then. That way they could argue that it was available to everyone and sold for the fairest price.