Can I be forced to sell as a tenancy in common

madmac2003

Hello

I'm after some advice on selling a home which is jointly owned as a tenancy in common. I own the house with my mother-in law. She now owns 68% (after her husband passed away, she inherited his share) and I own 28%, but me and may partner have paid 50% of the renovation costs and up keep of the house since purchasing. We are now looking to sell the house, but I have a minimum that I can accept in order to move, (we have 2 kids) which the house has been valued at by estate agents, but my mother-in-law feels the need to sell sooner and is prepared to sell at a lower cost that I can't really accept. Can I be forced to sell, if I don't agree with the offer? She says as she owns a larger share, it's her decision. I'm not being un-reasonable, I'm just after the market value we have been quoted by estate agents. We are prepared to take only our share, and no more, it's not about us getting a larger share, but if we sell at the price my mother-in-law is prepared to sell at we would lose money, and she would make a large profit. I'm hoping we can come to an agreement, but I need to know where I stand legally because it no longer makes sense to pay 50% of up keep costs and only get 28% back.

I'd be very much grateful if you could offer me legal advice on this matter.
Kind regards
Darren

pinkshoes

Who owns the other 4%?

How much have you paid for the upkeep and renovations? (I.e. If it's quite a lot, then agree to the ower price IF she pays what she owes for upkeep and renovations as a 68% 'shareholder'.

I.E if it's been £50k upkeep and renovations, and she's paid 50% (so £25), then she should have paid £34k, she needs to then pay you £9k when the sale completes.

Whatdo

Property held in trust as tenants in common has essentially two classes of owner. Legal Owner and Beneficial owner, depending on the original deed these two classes are normally linked together. So if 4 people purchase a house as tenants in common all 4 are legal owners and the division of beneficial ownership is set out in the deed. From your OP it would seem that only three were on the deed as legal owners in unequal shares (beneficial owners). When your Father in law died he can no longer be a legal owner and his interest in the property is and can only be as a beneficial owner. His interest passes in the property according to his will or otherwise, in this instance to your mother in law who has acquired his beneficial interest to add to her own beneficial interest.

Now only you and her are legal owners and both need to agree to sell or one or other has to seek a disposition from the court to remove the right of the other owner "not to sell".

Title to property in england includes the "duty to sell" and one actually purchases the right to be able to say I do not want to sell today. Compulsory purchase uses the duty to sell in its mechanism. Similarly the court can invoke your duty to sell.

The problem here is the share ownership, on the face of it the distribution of monies should be according to the agreed share holding, that is what the legal contract says.

May we ask who actually lived in the property? Was it rented out? Did all parties formally agree to any contract of works? What proportion of works and monies spent were "necessary maintenance". Has deprivation of capital been mentioned?


hope this is helping

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madmac2003

Thanks for the replies, sorry my mother in law owns 72% not the 68% I mentioned on 1st post. We have all lived in the property since the purchase date. it has never been rented. my father and mother in law, myself and my partner (there daughter) plus now our 2 children. When we purchased the house it was was meant to be split 4 ways for all utility bills and running cost, but all renovations (i thought) was going to be split by the proportions as the the % holding. As I felt this was the an equal way of getting out what you put in. After moving in, it became apparent that the renovations would be split 4 ways, meaning me and my partner would pay 50%, as not to upset my partner and her parents we went ahead with this, but nothing was put in writing, and I have always not been happy with this, as I saw this problem would arise when we come to sell. But as you may understand I didn't want us to set off on this journey on the wrong foot. I now just wish I had walked away, and put the house straight back on the market.

All I ideally want to know is do I have to sell as any price, or can I hold out for what I believe to be a fair price (and one quoted by estate agents to us) I do want to sell, or can I be forced to sell at the price my mother in laws wants to accept? Am I best getting a surveyor to give me a price of the value of the house so this would at least be a better bench mark? (would you know rough costs?)

Can I ask what do you mean by "Has deprivation of capital been mentioned?"

As I'm sure you can guess I'm no lawyer, and am slightly concerned that I may be forced to sell, and not re-coup enough money for me and my family to be able to live where we'd like, I've put alot of physical and hard work (plus money, over £50K between me and my partner) in to this house, as my outlaws were retired and couldn't do the physical work, at present I feel very pressured and bullied
in to doing something that may have effects on the rest of our lives.

madmac2003

Thank you for taking the time to reply; but in the example you give, she pays 9k to match the % of ownership, this doesn't take in to account that without the renovations the total value of the property wouldn't have gone up? does that make sense? how would we work out a figure taking that in to account, or do I just write it all off, and learn to get my own legal advice going forward?

Excited13

You mention a fair price quoted by estate agents are you referring to a possible asking price? I wouldn't hold out for the asking price as especially in the current market very few houses achieve the asking price.

PaulLuke

Just to re-iterate that you do need to be realistict about the price so it would be worth checking recent sold price in the area.

Having said that, the simple answer to your question, is that no, without a court order, you cannot be forced to sell the house. So, the starting position is that a sale can only go ahead where all the legal owners agree the price and as such are happy to sign the contract/transfer deed etc.

In order to force a sale your MIL would need to go to court and obtain an order, which is neither cheap nor straightforward and certainly only recommended as a (very) last resort.

As regards agreeing upon the split of the proceeds of any sale, that again, is really a matter of negotiation between the parties.

madmac2003

Thanks to everyone who has replied, I'm happy to know that I can't be forced to sell (unless a court order, and as quoted not cheap, nor straightforward, after all I want to sell, but not by giving it away) the price I would accept is in line with the current market, and one we have been advised we should get, we have dropped the price by quite a large amount already.

I will be saying what I will accept and if she wants to accept a greater loss, then she alone will need accept this lose. Otherwise she'll be spending that lost money on court costs, and we'll end up selling at a lower value. I was bullied at school and I won't be bullied again, and to me this is just a form of bullying to get your own way, by forcing someone to do something they don't, nor can afford to do.

Thanks again for everyones replies.

princeofpounds

It is more probable than not that any 'market value' quoted by an EA to gain business is slightly higher than reality. Google the term 'anchoring'; it is possible that your fixation on this price may not be helpful. Of course it might be a perfectly reasonable valuation, I don't know for sure.

As for an order for sale, it will take effort to get one but it is not actually that difficult. You might not want to sell, but you are effectively trapping her capital in an asset and the courts will not permit that indefinitely. Ultimately they may force you to market it for a period and accept a best offer in an auction-style scenario. The market value is the market value and not the number an EA told you.

Out of interest, do you pay her rent on her share of the property?

madmac2003

Hi princeofpounds

I know people always expect more than a item is usually worth, this is human nature after all. The price I am willing to accept I do believe to be fair on within the correct market value. I have looked at the market, and what other houses are selling for. I want to sell as well quickly, but we will already be losing money by the large amount we have put in, compared to the % we get on the sale. This I accept, but need to keep this at a minimum in order to raise the funds to purchase another property for my family.

As far as paying rent why would we do this? We did pay all her living costs for a number of years where my MIL lived for free, but she only contributed to renovation/home improvements costs which we all shared equally 25% each between 4 (my partner has no share in the house).

princeofpounds

As far as paying rent why would we do this?

You need to understand the concept of opportunity costs.

Capital should earn a return. When you put money in a bank account, it gets interest because it can be used lent out productively. When you do something more risky, like let buy a property and let it out, the reward is normally a bit more.

By doing something else with the capital, you miss out on these other opportunities you had to use it. This might not be a cash cost, but it is a very real economic cost.

In your case, both you and MIL own a house 28/72%. Let's assume that house would rent for £1000pcm after costs.

If you are inhabiting the house and she is not, you are getting 1000pcm of economic benefit. She is getting nothing.

If you were to rent it out to a third party (the missed opportunity), then she would get 720pcm and you 280pcm.

Every month you stay in the property without paying any rent, she effectively has been gifting you 720 by agreeing to miss out on an opportunity to make money.

Now, there might be balancing items on the other side of this, such as living costs, and some renovation work. But they would have to be quite substantial to come close to evening up the situation.

Now I don't mention these numbers to bash you in any way. It sounds like your main concern is avoiding a firesale, which is reasonable.

But often when there are cases like this where one party wants to sell and another doesn't (usually in divorces or separations), you will often find at the root of it is the simple fact that one of the sides is getting a sweet deal from the capital in the property and the other is not, even though no actual cash is changing hands. Often they aren't even thinking about it that consciously but they realise that they like their current situation and don't want to change it.

It might also help you understand why she might be keen to recover her capital quickly - you might be holding out for a higher price but all she will see is the lost interest she is giving up every month for your benefit. So her haste may well not be driven by antagonism towards you, but simply by a fair desire to have her own capital work for her and not someone else.