Renting out a Probate Property

zellytbaby

Hello, this is my first post here so I will try to explain the situation as clearly as possible:

My husband's Aunt died back in July 2013 and left her entire estate to be split equally three ways between her sister (my husband's mum who is the executor), my husband and my husband's brother.

The estate consists of: a run down house which my MiL had valued at 100K, a bank account containing around 20K, an outstanding mortgage on the property of 27K.

My MiL has decided she would like to keep the house, do it up and rent it out. She has agreed to buy my husband and his brother out using some of her own money which she already has in the bank. 9 months have now gone past and my husband and his brother are both still waiting for their third of the estate - my MiL says that she cannot pay them until she has had an exact final figure from the solicitor. She does not seem to be very pro-active re chasing up the solicitor which sometimes you have to do.

HOWEVER - my MiL has gone ahead and done up the house completely and has a tenant lined up ready to move in next month. Obviously the house is now worth more than 100K, my MiL would have spent at least 20K of her own money getting it up to scratch. I have the following questions regarding the legal side of things:

Is it permitted for her to rent out a house which doesn't legally belong to her yet?
Should she have gone ahead and refurbished a house which doesn't yet belong to her (and has been left to her and two other people)?
What would happen to any rent which she will start to accumulate?
Shouldn't she have ensured that the other two beneficiaries are paid first before continuing with her own investment?
For the record - there are no written agreements of any description.

Sorry for the lengthy email - hope I have explained it properly

Thrugelmir

Is there a joint executor i.e. solicitor?

da_rule

Your MiL has no right to retain the property. If the other parties agree then your MiL could give you payment in lieu of the house (i.e. buy you out). Also, by renting the property out she opens up a can of worms in relation to income tax and capital gains tax. Also, as there is a mortgage she will need consent from the mortgage lender. In terms of the work she has carried out then that will be her loss.

You need to seek legal advice form a solicitor who isn't dealing with the estate as executors have certain powers and responsibilities, which if she is not complying with you may need to obtain an injunction to make her comply.

thequant

zellytbaby wrote: »

HOWEVER - my MiL has gone ahead and done up the house completely and has a tenant lined up ready to move in next month. Obviously the house is now worth more than 100K, my MiL would have spent at least 20K getting it up to scratch. I have the following questions regarding the legal side of things:

Sheesh, she couldn't wait to cash in on her sisters death.

AdrianC

Do the other two want to make an issue of it?

If so, then - strictly speaking - she's organised the work and letting of her deceased sister's house, and any income/profits are due to the estate - and any costs of the refurb would come out of the estate.

If they don't want to make an issue out of it, and the sale is all agreed in principle, then there's no problem - all that's outstanding is the paperwork and the payment of the legacy they're due.

Rough numbers - £120k in assets less £27k in liabilities = £93k, so the MiL owes the other two £31k each.

If they want to play hardball, and claim that an executor has undertaken the work on behalf of the estate, then add the estimated £20k in refurb to the £27k mortgage, so £47 in liabilities. Take the post-refurb value of the property, and add the interim rental income to that... Let's guesstimate it's added £15k to the property, and there'll be £5k in income. So £140k - £47k = £93k, divided three ways... £31k each...

How much trouble do you want to stir up amongst the family?

jaybeetoo

zellytbaby wrote: »

.... a run down house which my MiL had valued at 100K....

I could read this two ways - did she value it or did she get it professionally valued before doing it up?

zellytbaby

Thank you so much for your replies.

She had the house professionally valued at 100K before doing it up.
There is a solicitor in place too.

Just wondered if she should pay out the other two from her own savings (which is what she wants to do), she just seems to want to wait for the exact figure (down to the last penny) rather than paying out the 31K each and sorting out the final discrepancies later on.:(

zellytbaby

Professionally valued by estate agents before doing it up - 100K

Thanks :-)

jaybeetoo

Has the mortgage been paid off yet? If not, as da_rule has said, the MIL can't do anything without the agreement of the mortgage company. Is the mortgage frozen or is debt building up?

G_M

The share that the other two should receive should be based on the value at the point probate is granted.

Since this has not yet (apparantly) happened, the property should be re-valued now, and they should get 1/3rd of the current value.

Since mil is mil is acting still as Executer, yes, she can let the property provided that is in the best interests of the Estate. Obviously any rental income goes into the Estate to join the savings accounts, and like the property gets split 3 ways when Probate is granted.

In theory she could use money from the Estate to do up the property (rather than her own money) but again, only if that is in the best interests of the estate. If the other 2 Beneficiaries believe spending money from the Estate doing up the property in order to increase its value and or generate income for the Estate, they could challange mil.

Ideally, the solution is to disuss all this openly and reach an amicable agreement.

But if mil is ripping them off and they cannot reach agreement, legal advice will be needed.

For £6 they can enquire from the Probate office how far the process has got....

http://www.daviessolicitors.co.uk/forms_davies/Wills%20&%20Probate/Application%20for%20Probate%20Search.pdf

jaybeetoo

G_M wrote: »

Since mil is mil is acting still as Executer, yes, she can let the property provided that is in the best interests of the Estate.

The OL hasn't said if the mortgage has been paid off. If it hasn't then wont the mortgage company will have a say in whether it can be let out or not?