Buying house off parents to save them

sbensley

Hi there,
wondered if anyone could shed any pointers, gotchas on what is a bit of a tricky one.

My parents mortgage has come to an end but they were only paying interest and still owe £106.5k (75%) of their house which is worth £142k.

My brother and I have agreed to pay full market value for their house (142k) and we have a mortgage offer from the same lender.

A few questions we have are:-
1. My parents used there house as an asset guarantee for their business against their property (that's what the 106.5 k is) - can we be sure that when we buy the house off them there wont be any possibility of any other unknown lenders coming back for another payoff. I trust my parents but they are elderly so what if they got the sums wrong? Is there any protection for us on this eg the deeds transfer process?

2. Should my brother and I get a separate solicitor to do our buy part of the conveyencing or would it be safe enough to use the same solicitors as our parents.

3. Would our parents be liable for any kind of tax (eg capital gains)as they only originally paid £50 k for the house approx. 16 years ago.

Any pointer greatfully received.
Kind Regards
Stu

G_M

1) given your concern I would use your own solicitor. He will ensure that any Charges registered against the Title are paid off so that you get a debt-free property, just as if you were buying from a stranger.
2)See above!
3) If it was their main residence there is no capital Gains Tax to pay.

On a separate question - where are your parents going to live? Are they moving (ie into care or into another property?).
Or are they going to continue to live there, in which case a) you could be deemed to be landlords, with associated liabilities and b) the property could be construed as still theirs by the council if/when they need care (see 'Deprivation of Capital' )

SuzieSue

G_M wrote: »

1) given your concern I would use your own solicitor. He will ensure that any Charges registered against the Title are paid off so that you get a debt-free property, just as if you were buying from a stranger.
2)See above!
3) If it was their main residence there is no capital Gains Tax to pay.

On a separate question - where are your parents going to live? Are they moving (ie into care or into another property?).
Or are they going to continue to live there, in which case a) you could be deemed to be landlords, with associated liabilities and b) the property could be construed as still theirs by the council if/when they need care (see 'Deprivation of Capital' )

Good advice. About the Deprivation of Capital, the OP and his brother are paying full market value for the property, so this will not be an issue as long as the parents don't give the 25% equity back to the OP and his brother.

Trollfever

can we be sure that when we buy the house off them there wont be any possibility of any other unknown lenders coming back for another payoff.

If they have other debts then voidable preference in bankruptcy may be an issue.

taxsaver

Trollfever wrote: »

If they have other debts then voidable preference in bankruptcy may be an issue.

Not if the property has been purchased at true and fair value.

poppysarah

taxsaver wrote: »

Not if the property has been purchased at true and fair value.

Would need to ensure this was shown to be the case.


But what lesson do they learn by being bailed out?

birduk

poppysarah wrote: »

Would need to ensure this was shown to be the case.


But what lesson do they learn by being bailed out?

Do they need to learn a lesson? They are elderly and presumably won't be going into another business any time soon?

serious_saver

Some family members recently bought off their parents and were advised that they would have to use different solicitors. I think it could be considered a conflict for the solicitor to deal with both vendor and buyer. It may be that you can use the same firm (not sure about this) but I think it would have to be a different individual. The best thing to do is phone up and ask. Personally I would want to use a separate solicitor anyway