Distribution of a cash share in a property

LittleJohn

I own a half share in a property. My business partner recently dies and the other half has been left to me and another person.



As I already own half it makes sense for me to buy out the other person and pass over 25% of the value as a cash sum.



To do this I will need to raise a mortgage. How does this work? As I presume as I do not own the whole property I will find it hard/impossible to raise a mortgage, and I cannot own the whole property until the money has been passed over to the other person.


I appreciate that this will probably end up with a solicitor but it would be good to know how this can be worked.


Can anybody give me a rough idea of how this is likely to be solved?


Thank you

getmore4less

how do you think others buy a house they don't own.

you raise the mortgage on the basis you will own the place

Mojisola

Does the other person want to sell their share?

madbadrob

Getting a mortgage should be easy in this instance assuming the banks see the risk is warranted. The fact you have 75% equity anyway I would assume the banks would be only to willing to help. The question is will the other person sell their 25%

Rob

Mojisola

LittleJohn wrote: »

I own a half share in a property. My business partner recently dies and the other half has been left to me and another person.

As I already own half it makes sense for me to buy out the other person and pass over 25% of the value as a cash sum.

I appreciate that this will probably end up with a solicitor but it would be good to know how this can be worked.

Can anybody give me a rough idea of how this is likely to be solved?

If the half share has been left between two beneficiaries, you can't make the decision that you will pay the other beneficiary money instead of giving him/her a quarter interest in the property.

If the other beneficiary is happy to receive cash, it's doable but you must get their agreement.

LittleJohn

getmore4less wrote: »

you raise the mortgage on the basis you will own the place

Good point

Thank you to everybody who has responded.

The will actually does not name the property, it just says "my estate real and personal whatsoever", the other person does not own the other 25%, neither do I for that matter. I am seeing it that she has a share in the total estate. The property forms part of that estate, it has been valued, and I am thinking that is the value that will be used to pay off the other share... ?

Is that a wrong assumption, as there is no "ownership" at the moment as such?

madbadrob

Ok has I understand it your business partner and yourself own 50% of the property each at present (if he was still alive) and that you and the named other person are to share in the total of his estate. Thus meaning that you and this other person hold 25% of the said business property. She would also now own 25% of the business as well based on what you have stated.
This of course would not be the case if he has signed the business over to you in his will.

I suppose if the executors so wished they could add up the value of the estate and let us say that is 300k. His share of the property is valued at 280k. that would mean you both would get 150k. At this juncture you could ask the other beneficiary if they minded you having the share in the property and they take the other minus 10k. They may well say no and therefore you would then have to take your share of the rest of the estate and they would obtain 25% equity in the business property.

The question arises and one you need clarifying is what happens to the deceased share of the business which should also be a part of the estate. Who is going to value the business and how would you pay that share to the estate.

Rob

getmore4less

LittleJohn wrote: »

Good point

Thank you to everybody who has responded.

The will actually does not name the property, it just says "my estate real and personal whatsoever", the other person does not own the other 25%, neither do I for that matter. I am seeing it that she has a share in the total estate. The property forms part of that estate, it has been valued, and I am thinking that is rye value that will be used to pay off the other share... ?

Is that a wrong assumption, as there is no "ownership" at the moment as such?

the value of 1/2 a property is less that of a full property and a 1/4 ...

ValHaller

Is the property an asset of the business? Depending on the legal nature of how the business is incorporated, the other beneficiary may argue that the business is worth more than the constituent parts. And then you might have an argument about the words "my estate real and personal whatsoever".

Who are the executors?

LittleJohn

Thank you for the replies.

I am one of the executors.

Property has been valued by a RICS valuer for IHT and has also reduced this by 10% as my partners share is seen as being less than market value as the other half is owned by me.

The other beneficiary is Austrian and will not want to retain any share in the UK property.

The property was part of a business partnership, no written agreement, but was always seen as 50/50. All drawings were on this basis and the capital accounts also reflect this share.

Thank you

ValHaller

LittleJohn wrote: »

The property was part of a business partnership, no written agreement, but was always seen as 50/50. All drawings were on this basis and the capital accounts also reflect this share.

More questions arising.

• Who owns the property and in what capacity?
• When you say 'no written agreement', what is that for - the partnership, the allocation of the property to the business, the drawings or what?

Basically the exact basis of ownership needs to be sorted out in order to sort out how assets may be distributed.