Should we charge rent?

Forreal

My hubby bought a house with his father as his father couldn't afford it by himself and it was an investment for my hubby as I owned a house and had a mortgage already.

They took out a joint mortgage and all was fine for the first five years until his father was unwell and had to retire early. Since that time my hubby has paid the entire monthly repayment. The house was 90k, the mortgage 45k and his father put in the other 45k.

We have since had kids and find it hard with two mortgages between us. Should we be arranging some sort of property transfer or 'gift' payment to account for the fact my hubby owns half a property his parents live in rent free or are we being greedy. If he had bought a flat somewhere he would have rental income aswell as a gain from the increase in house prices.

His father refuses to make a will as he thinks that is tempting fate - I feel a bit aggreived to think if anything happens to him my hubby's brother and sister will benefit from his wise investment if that makes sense? At the moment they own a half share each and this passes to their NOK on death.

I would not want them to leave the property as they are very happy.

All comments gratefully received.

Bossyboots

Your hubby and FIL really should have had an agreement drawn up at the start of the venture to cover what would happen in this situation. After all, what would FIL have done if it was your hubby out of work?

Perhaps they could now have a document drawn up setting out an agreement that the unpaid share of the mortgage will come from FIL's share of the property when he dies or some such other trigger point. Alternatively, he could transfer an additional share of the property in lieu of payments. It is important this is done correctly as the share must be seen to be for a financial consideration and not a gift. After all, it is not a gift.

If you are struggling though the only real option is to charge rent for the half of the property FIL does not own. I suspect you may find this causes a family rift.

I don't think you are being greedy. I think the inlaws are taking advantage. Perhaps you should tell them openly that you cannot manage with two full mortgages to pay and discuss what options are available. You cannot really say on the one hand though that you cannot afford the mortgages and then agree to take an additional share of the property in lieu as you will still have to pay out the money every month so in that respect your position will not improve.

angelatgraceland

Bossyboots wrote:

I don't think you are being greedy. I think the inlaws are taking advantage. Perhaps you should tell them openly that you cannot manage with two full mortgages to pay and discuss what options are available. You cannot really say on the one hand though that you cannot afford the mortgages and then agree to take an additional share of the property in lieu as you will still have to pay out the money every month so in that respect your position will not improve.

Yes I totally agree. They realy do need to know how you are struggling and they can help to come up with a solution to the problem. Perhaps they have an amount that they can afford, even if it is only a little. Perhaps transfer a part of his ownership to your husband as suggested. As FIL share would pass on to his family perhaps they can help him to find a way to pay his share if they are going to benefit. If he is not going to work again and nothing is discussed, you will just keep paying 2 mortages for evermore-until he passes away.Nobody wants to tempt fate but it is not an unreasonable request to make a will. It is a caring sensible gesture and it effects more than this particular piece of estate also. Whatever you do, get it drawn up properly through a solicitor. Family feuds are rife when a person dies or money becomes a realy big problem. Sort it out now, before it gets out of hand-children get more expensive as they grow up, so unless you win the lottery it will not get easier. I hope also that both your husband and you FIL have life assurance for this mortgage.

Forreal

Thanks for your replies. I think I need to bite the bullet in the New Year and speak to them about sorting this out via the will. We can manage (but on a buget) at the moment but it would be nice to know we were going to benefit in the long run.

I really don't think the in-laws understand the situation properly in regard to their rent-free existance - but now is the time to sort it out - you are right about problems sorting this out when they have gone.

Bossyboots

Forreal wrote:

Thanks for your replies. I think I need to bite the bullet in the New Year and speak to them about sorting this out via the will. We can manage (but on a buget) at the moment but it would be nice to know we were going to benefit in the long run.

I really don't think the in-laws understand the situation properly in regard to their rent-free existance - but now is the time to sort it out - you are right about problems sorting this out when they have gone.

I really urge you not to sort this out via a will. A will can be changed as many times as you like. Just because it is set up one way at your urging, doesn't mean FIL won't trot off to a solicitor at the behest of one of his other children and change it. A will does not therefore help you in any way to ensure your OH's actual financial input into the house.

He needs a separate agreement that is binding so that at the very least the additional mortgage money paid until either they have both died, the property is sold or they start paying again, is deemed to be payable from the equity in his share of the property.

jockettuk

get this sorted,, my friend was in a similar situation he actually lived with his dad at the time.. his dad died suddenly and because they had no writtten agreement his brother and sister were entitilled to a share.. they made him sell up and lose his home and he didnt get out what he had put in.

i would tell them you are struggling to pay both morgages, dont let him think you can afford it no matter how tight your budget is..

explain that you are protecting your kids investment but insist it has to be sorted even to protect his wife's interest if he dies..

Forreal

Hmmmm,

Looks like a visit to the solicitor in the new year. I think my fil will understand regarding 'kids future' angle - luckly I produced the only male grandson (old fashion type!!) which makes him treat me 2 yr old son like he walks on water so I can't see any fallings out if I lay the cards on the table.

Thanks once again to you all - I've been so unsure and its good to get some totally unbias views.

Robust_2

Forreal wrote:

They took out a joint mortgage. The house was 90k, the mortgage 45k and his father put in the other 45k.

His father refuses to make a will

I feel a bit aggreived to think if anything happens to him my hubby's brother and sister will benefit from his wise investment if that makes sense? At the moment they own a half share each and this passes to their NOK on death.

I have included the quotes of most interest and deleted the rest

In a nutshell, a property bought on a Joint tenancy will automatically pass to the remaining owner if the other dies! A WILL cannot change that FACT! A property bought on a Tenancy in common however is a different matter.

Your hubby's mortgage advisor could explain further; he can comment if a solicitor is needed depending on the type of joint ownership in question.

Bossyboots

Robust wrote:

I have included the quotes of most interest and deleted the rest

In a nutshell, a property bought on a Joint tenancy will automatically pass to the remaining owner if the other dies! A WILL cannot change that FACT! A property bought on a Tenancy in common however is a different matter.

Your hubby's mortgage advisor could explain further; he can comment if a solicitor is needed depending on the type of joint ownership in question.

I took it as read that the property was a tenancy in common as the OP clearly states each share passes to the next of kin on death. If they are in any doubt as to this issue then the cheapest way of checking is to get a copy of the register online from the Land Registry.

It would have been foolish to do it any other way as this would mean the OH's hubby's share would pass to the FIL if hubby died first although nothing about this arrangement so far has been dealt with as sensibly as it could have been.

Forreal

The property is held as Tenancy in Common.

Robust_2

I didn't want to assume that it was a tenancy in common until you made it clear
In that case you need to see a solicitor who will be best placed to assist you.