Buying inherited property from my co-beneficiaries

pencil31

Hello, grateful for any advice /help. My 3 sisters and I each recently inherited a share of my late mother's property. I expressed a desire early on to buy out the others and at various times I've had agreement and disagreeement. Now we have finally received the Grant of Probate, I'm keen to get things moving. Currently, 2 sisters have agreed to my buying them out but another has been unwilling. So in an effort not to fall out with her , I have reluctantly agreed to her offer to have a 75%-25% split so I buy the other two sisters, and the third sister keeps her share. Its not what I wanted but I know mum wouldnt have wanted us to be fighting about so will do iit. The rea issue I have is with the practicailities. I know that I will be the one who will always end up doing all the leg work to maintain the property (mum was letting it out as she wasnt well enough to stay by herself). My sister is married with 2 fairly young children and is constantly busy with life so I can just see her not being proactive and by default leaving it to me . What can you suggest we do to make sure that everything is agreed up front , how it wil be managed, any extra costs that maybe incurred , future plans to selll etc. or is that as I will own the majority share, the onus will be on me anyway ?

Yorkshireman99

pencil31 wrote: »

Hello, grateful for any advice /help. My 3 sisters and I each recently inherited a share of my late mother's property. I expressed a desire early on to buy out the others and at various times I've had agreement and disagreeement. Now we have finally received the Grant of Probate, I'm keen to get things moving. Currently, 2 sisters have agreed to my buying them out but another has been unwilling. So in an effort not to fall out with her , I have reluctantly agreed to her offer to have a 75%-25% split so I buy the other two sisters, and the third sister keeps her share. Its not what I wanted but I know mum wouldnt have wanted us to be fighting about so will do iit. The rea issue I have is with the practicailities. I know that I will be the one who will always end up doing all the leg work to maintain the property (mum was letting it out as she wasnt well enough to stay by herself). My sister is married with 2 fairly young children and is constantly busy with life so I can just see her not being proactive and by default leaving it to me . What can you suggest we do to make sure that everything is agreed up front , how it wil be managed, any extra costs that maybe incurred , future plans to selll etc. or is that as I will own the majority share, the onus will be on me anyway ?

Short answer is don't do it. Long answer is that you will have endless problems and arguments that you don't need. The best thing would be to force the sale and distribute the proceeds as per the will. I am assumeing one quarter to each. Emotional attachments to house never work and can cloud judgements. The awkward sister may no like it but if she will not cooperate you can take her to court and she is very likely to have to pay the costs. Better to get the problem over now than have it for years ahead.

Keep_pedalling

Are you planning on living in it or renting it out?

getmore4less

Try to understand the motivation for wanting to retain a share there may be strategies to make her change her mind.

if the will allows for a sale then the sister has no choice but to agree to a sale (you just happen to be the buyer off the estate)

assuming that is not going to happen

What's the plan for the property?

If it is to carry on letting

Then a good thing to do is retain all income in the letting business to make sure there is enough to carry out repairs and pay bills during voids so you don't have any issue when it comes to getting funds back from the sis.
that could mean no income for a year or two

Does she realise that a letting business will involve her doing tax returns.

A question to ask yourself, unless keeping it for someone to move into in the future, is would you buy this property to start a letting business

pencil31

thanks for all replies, much appreciated. yes it is most definitely a property worth keeping and continuing to let. It is in a very good rental location and has done well . I know I would be reluctant to put it on the market and the others too. In fact, I when I suggested this as a way out, the unwilling sister accused me of forcing her to do something she did want to . So you see, I really don;t want there to be any arguments and risk any rifts. Its not what mum would have wanted. Her reasons for keeping it is as something for her kids in the future although she owns a house herself with her husband. I am single and don;t own a property in my sole name (I know we all make choices in life !, I just made some bad ones). I suspect when she realises how much work can be involved in the upkeep of another property, including tax returns , she may well have second thoughts. On a related theme, presumably we would need to drawn up some form of declaration that officially shows the percentage ownership, is the part of the conveyance process when the property is transferred into our names

Keep_pedalling

Unfortunately owning a house this way is almost certain to cause issues along the line, and personally I would rather force a sale rather being a joint landlord with a reluctant partner.

Does she actually want the reponasbilities of being a landlord? Does she want the bother of doing tax returns? Will she be cooperative when large spends are required on the house.

Voyager2002

Firstly, ask one of your other sisters to be an intermediary, since the "awkward" sister is likely to disregard anything you say about the bother of tax returns, the work involved, and so forth (I know that I would in her position). Some of the points I would want her to appreciate:
1. if she wants to build up somethng for her children, she ought to consider what investments would be available and what she could do with her 25 per cent of the house value;
2. she really does need to understand the responsibilities of being a landlord;
3. under the circumstances it would be sensible to use an agent to do most of the work involved: there would be fees for this and she would have to agree to pay her share of the fees;
4. she would need to understand that owning a property involves various costs, and so rent received would need to remain in the business account to make provision for these costs.

Yorkshireman99

pencil31 wrote: »

thanks for all replies, much appreciated. yes it is most definitely a property worth keeping and continuing to let. It is in a very good rental location and has done well . I know I would be reluctant to put it on the market and the others too. In fact, I when I suggested this as a way out, the unwilling sister accused me of forcing her to do something she did want to . So you see, I really don;t want there to be any arguments and risk any rifts. Its not what mum would have wanted. Her reasons for keeping it is as something for her kids in the future although she owns a house herself with her husband. I am single and don;t own a property in my sole name (I know we all make choices in life !, I just made some bad ones). I suspect when she realises how much work can be involved in the upkeep of another property, including tax returns , she may well have second thoughts. On a related theme, presumably we would need to drawn up some form of declaration that officially shows the percentage ownership, is the part of the conveyance process when the property is transferred into our names

The tax returns is a small problem. You all need to understand the need to comply with the legal requirements of being a landlord. I would say run a mile!

getmore4less

I am single and don;t own a property in my sole name

not clear, do you own any other property?

what's the place worth?
what's the rent?

Where are you living, would moving in be an option.

pencil31

I own a half share in another buy to let property(for 12 years) which actually works very well . Co-owner is my brother who put up lions share of the deposit. he is also a completely different person to my sister. Very co-operative, proactive and does his share whenever required without being asked! . He is also the brother in whose house I live currently (sounds complicated I know, but its not really, we get on very well , I pay to stay there as well as help with household chores). So, the inherited property is currently valued at £300k and is rented out at £1000pm . It is possible I may move in myself at some point in the future but unlikely for the short term. Since writing the last message, I've now found out that unwilling sister has recently sought financial advice and the grapevine is suggesting she may be more open to a buy out !. Obviously I'm not raising my hopes but there may well be a positive ending to this after all. I hope so as we're coming up shortly to the first anniversary of my mother passing. Thank you all again for great support and advice .

Keep_pedalling

As you are already a property owner, you will need to pay out the 3% additional property stamp duty, on the price you pay your sisters.

Based on your figures you will be getting a return of 4% on the property before tax, expenses and any void periods. Does not sound a great return on investment for all the hassle of being a landlord, especially a landlord who is likely to face problems with a co owner.