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Inherited house and buying out

edited 30 November -1 at 1:00AM in House Buying, Renting & Selling
24 replies 1.7K views
kelloggs36kelloggs36 Forumite
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edited 30 November -1 at 1:00AM in House Buying, Renting & Selling
I hope you lot can help me! My mum died back in August and bequeathed her property (less an amount for grandchildren) to my sister and myself. Just weeks prior to this, she 'gave' my sister 50k as a deposit to purchase a house which was due to complete next week. However, her mortgage company have now decided at the 11th hour that they want another 12k deposit before they will lend her the money which she does not have at present. My mum made it clear (but did not have time to put it in her will, so I know I have to trust my sister) that the 50k deposit was to be 'put back' so to speak upon her death so that my sister effectively inherits 50k less and I get that 50k. The plan was that we would sell the house - valued at £325k - that I would get 50k and then we would split the remainder in half so that we were 100% equal. Because the mortgage company are now making new demands which threaten to scupper her purchase (it will as the house is not under offer and there is no sign of the money becoming available any time soon), my sister has suggested that she buy me out of the house which I am happy about.

I want to know whether any lender would want to do the usual searches etc that they would normally do upon lending and how different the conveyancing procedure would be in this situation? The amount she needs to borrow is £187,500 which is the agreement as outlined above. I know she would need to ask her lender whether they would transfer the offer to the new property taking into account that she actually now needs to borrow 22k less than she needed when buying the house. The house has not yet been re-registered into our names so do we need to do that first with a specific portion share or can she just buy it without it being transferred first? We have probate already and we are both executors of mum's will.


I hope this makes sense.
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Replies

  • G_MG_M PPR Forumite
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    As joint Executors you can transfer the property into your sister's name. You do not need to register it first in the Executors' names, nor in the names of the joint Beneficiaries of the will.

    As I understand it, she needs to pay you £212500 (325000 / 2 + 50000).

    To do this she needs to borrow £187,500 in the form of a mortgage and presumably has the remaining 25,000 to give you in the form of savings?

    Yes, the lender will want
    * the usual searches and Valuation (they still need to be sure it's a safe loan!)
    * a solicitor to oversee the transfer and registration of the property and their Charge over it
    ** If I include a blue link in my post, click and read it before posting a follow-up question. The answer may be in the link! **
  • kelloggs36kelloggs36 Forumite
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    I have worked it out a different way: House value 325k. I take the first 50k and then the remaining amount is split between the 2 of us, so therefore I get 187500 and she gets 137500.
  • G_MG_M PPR Forumite
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    Hmmm.. Or

    Mum lent your sister £50,000.
    Your sister owes mum's Estate 50,000
    So the value of mum's Estate for Probate is 325,000 + 50,000 = 375,000
    (assuming no other assets).
    So you each inherit 375/2 = £187,500 once sister has repaid the £50,000 she owes.....
    ** If I include a blue link in my post, click and read it before posting a follow-up question. The answer may be in the link! **
  • kelloggs36kelloggs36 Forumite
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    Nut she isn't repaying it in reality so we are looking at it so that I take 50k out so now we have both had 50k and then we split the rest.
  • kelloggs36kelloggs36 Forumite
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    Which means we have both had £187500 each.
  • Tom99Tom99 Forumite
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    kelloggs36 wrote: »
    I have worked it out a different way: House value 325k. I take the first 50k and then the remaining amount is split between the 2 of us, so therefore I get 187500 and she gets 137500.

    That's correct, sister buys your share of house for £187,500.

    Or looked at another way sister buys your half at £325/2=£162.5 then gives you half the cash gift she already has £50/2 = £25. Total the same £187.5K
  • kelloggs36kelloggs36 Forumite
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    The main worru is that she won't be able to. I am hoping tjat as the mortgage co offered her 196k now and she only needs 187500 that they will just go ahead. I was wonderimg whether the conveyancing would be exactly the same as she owns half already.
  • Tom99Tom99 Forumite
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    [FONT=Verdana, sans-serif]Why does she need to borrow £187.5K, what happens to the £50k cash?[/FONT]
    [FONT=Verdana, sans-serif]£187.5k to you, less £50k she already has = £137.5k mortgage?[/FONT]
  • kelloggs36kelloggs36 Forumite
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    She has had 50k so my mum wanted me both to have equal shares of her estate. Tjerefore, from the estate I get 50k and then what is left is split equally. If she only had 137500 then I would not get my 50k. It has to come from the property as there is not enough cash elsewhere to take it from. She keeps the cash she jas already got.
  • yoshiyellayoshiyella Forumite
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    kelloggs36 wrote: »
    She has had 50k so my mum wanted me both to have equal shares of her estate. Tjerefore, from the estate I get 50k and then what is left is split equally. If she only had 137500 then I would not get my 50k. It has to come from the property as there is not enough cash elsewhere to take it from. She keeps the cash she jas already got.


    She gets £137,500 mortgage and uses the £50K deposit.


    Both of which would then go to you
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