Buying house off Estate

Jetsam

Hello to all, hopefully this isn't too complicated to sort out.
I am one of five equal beneficiaries in our late mother's estate - mainly her house. After some earlier disagreements and obstructive behaviour by one of the beneficiaries we have at last all reached agreement. In short I am buying the house off the estate to live in. We have all agreed a price. However I need time to sell my old house before I'll have the funds to pay off the others. So how long is a reasonable time to do this? My house has been 'for sale' for two and a half months and I'm worried that the 'troublesome' beneficiary will soon start to demand their share or demand more than the original house valuation (now three months old) which was £300k - divided five equal ways. The other three beneficiaries are all happy with the situation but how do I stand if the 'troublesome' one starts making demands again? I am the executor by the way.

getmore4less

As executor you have to be careful of self dealing.

Do you need a mortgage or will the sale of your place raise enough?

if you will have the cash eventually you could mortgage the place to complete the purchase and pay off the other beneficiaries.

If the other beneficiary thinks it's worth more stick it on the open and market see what offer you get.

Jetsam

Thanks 'Getmore4less'. Yes, once my sale has gone through I'll have enough to pay off the other beneficiaries. We had four valuations, three by chartered surveyors and one by estate agent (guess which was highest) and we have all reached agreement on a fair price. So that isn't the issue. Its just the amount of time I should be allowed to get mine sold - i.e. how long the other beneficiaries can be expected to wait to get their money. Its been three months on the market and now with Brexit I sense would be buyers are waiting for the dust to settle. I realise too that house prices might actually go down or at least slow down. There is one beneficiary who has caused a lot of problems but the other two fully support me. I just wondered if that one person could suddenly turn around and demand their money straight away?

Tuesday_Tenor

Where house sales are involved then it's reasonable that beneficiaries might have to wait many months before they receive their full inheritance.

In this case, if you weren't selling your property, you'd be having to sell your mother's property. I would assume either could take up to a year to complete a sale, but if mother's is extremely sellable, and yours isn't, then consider whether the 'troublesome' beneficiary has a fair point.

Does the estate have other assets such that an interim payment could be made, ideally to all beneficiaries equally but not necessarily. If one beneficiary clearly has a need for funds that the others don't, there's nothing to prevent the executor making an interim payment to just one person. Such interim payments are entirely at the executors discretion, made according to the assets and needs of the estate.

If your house isn't sold in 12 months I think you really will have to take out some form of mortgage or bridging loan rather than keep unhappy beneficiaries hanging on. If the other beneficiaries are happy to wait longer, then the sum involved would be just the £60k due to that person.

Do look into the self dealing implications referred to by gf4l. Not something I know about, but you need to.

Jetsam

Thankyou TT, that's most helpful. If I have to then the loan (or mortgage) to pay off the complaining beneficiary might well be my best option. I have solicitors involved - and I am using an 'independent' one to sell the estate house to me so as to avoid conflict of interest. I was advised to do this by my own solicitors. The modest cash sum left in the estate has already been shared out.

Yorkshireman99

Jetsam wrote: »

Thankyou TT, that's most helpful. If I have to then the loan (or mortgage) to pay off the complaining beneficiary might well be my best option. I have solicitors involved - and I am using an 'independent' one to sell the estate house to me so as to avoid conflict of interest. I was advised to do this by my own solicitors. The modest cash sum left in the estate has already been shared out.

Have you had an independent, paid for, professional valuation by a RICS qualified surveyor or similar? Estate agents "valuations" are not sufficient in such circumstances. You need to be able to demonstrate that you have not benefited form you position as executor.

troubleinparadise

Yorkshireman99 wrote: »

Have you had an independent, paid for, professional valuation by a RICS qualified surveyor or similar? Estate agents "valuations" are not sufficient in such circumstances. You need to be able to demonstrate that you have not benefited form you position as executor.

See Post #3.

Yorkshireman99

With respect that is not, from what the OP, has said a paid for independent valuation. The problem is that the unhappy beneficiary might later say the value was too low. The other factor is that because of the current political turmoil a valuation as close to the sale date is advisable. This way there wil be no grounds for dispute.

getmore4less

Is there IHT to pay, that will determine if HMRC need to ascertain the value.

With property/estate/time there is also CGT to be considered that needs HMRC to be happy with the probate valuation and purchase price.

There is a simple way to avoid self dealing, assent the house to the beneficiaries but that could cause other issues as you have a troublesome one.

If both properties are being actively marketed then until a competing offer is on the table for the estate property it is a waiting game.

If just yours then you need to consider the timescales much more.

I would cost up a mortgage, you could look at offsets so you only pay interest until yours sells.

Probably low fee options over good rates if you plan the overlap to be relatively short.

Buying off the estate should be a normal process with 20% deposit
( or is that 25% you have 5 beneficiaries in one post 4 in another)

(even if you only want enough to pay of the one person you will probably need to declare the others shares as loans)

EasySolution

You will also have to pay SDLT on the additional amount that you paying off the other beneficiaries for.

Jetsam

Thanks for all this advice and info. To be clear, yes, we had an independent RICS survey done as well as other surveys arranged by the other beneficiaries and a price of £300,000 was agreed to by all in writing via their solicitors. That was just over three months ago. There are five beneficiaries including myself (the executor), 20 % each. Only one of the beneficiaries has caused problems. Due to this fact (its taken nearly two years to get this far) I would rather pay that one his due -£60k- sooner rather than later just to get things on an even keel and prevent further disruption to the process. Of course in a few months time Brexit might mean house prices drop and another valuation might say £275K which would be £55K each and then he would probably accuse me of negligence !! One thing for sure, I don't ever want to be an executor again.