Purchasing Property From Parent - Via Monthly Payments. Advice needed

LTNRW

A situation has come about where I have the opportunity to purchase my family home, the property is owned outright & has never been mortgaged as it was purchased by my Grandmother in cash approx. 12 years ago.

She has recently decided to relocate to another property, and it has been proposed that I could purchase the property via monthly payments

I have a few concerns about this which I would appreciate any advice regarding & to better understand what steps I need to take next & to ensure all legal requirements are met,

•   This property would have ultimately been sold on and the sale money split between 3 people including myself in the event of my Grandmothers passing.
•   My Grandmother is now 80 years of age & the proposed terms mean the property is not fully paid until at least 9 years and 3 months. meaning she will be 89 years old when fully          paid, should the worst occur are there any legal issues which could arise or need addressing now?

We realise that solicitors will most likely need to be involved here , would a general solicitors likely be able to assist in this case?

as its not a typical purchasing method, does the house belong to me from day 1 or day of completion?
are there any taxes or fees that would be payable in this situation or things to be aware of?

finally, the two other beneficiaries mentioned above, may not be too impressed with me purchasing this property ( they have persistently scrounged and taken anything they could from my grandmother, and will no doubt be aware of what they stood to gain in the event of this house being sold on the open market.  they however, could not purchase this or any house with their financial situations nor have they ever been in a financial situation to do so.)

I appreciate this is a very unusual situation with extra obstacles, so all advice is much appreciated.

Thanks all.

user1977

Sounds like a private mortgage is the most sensible way of doing it (rather than buying it bit by bit or whatever you were thinking) i.e. you fully own it from day one but with a charge securing the amount due to your gran until you've paid it off. Any conveyancing solicitors ought to be able to set it up, though you'd need separate representation for you and your gran.

What the other potential beneficiaries make of it isn't really a legal issue, though if there is still an amount due when your gran dies, that will be an asset of her estate so they'd inherit that if nothing else.

LTNRW

I had briefly read on private mortgages last night so it's great to know I was barking up the right tree.

with regards the other beneficiaries, do you mean that for example:

Sale agreed for £100,000 , and the worst happens in 6 years , while having only paid £60,000 , that I am then liable to pay the others £20,000 each?  is that on the outstanding terms of monthly payments or as a lump sum?

I assume though that the above is only applicable if it is stated within her will that they remain beneficiaries on the property?

A very complex situation it seems, so thanks for bearing with me!

tacpot12

My father lent my grandparents the money to buy their council house, but he had enough money to lend them so they could buy it outright. He went through a solicitor to create the loan and a charge was put on the house. It caused quite a bit of friction between him and his siblings because he charged his parent's interest (the capital and interest were to be repaid when they died or could no longer live in the house). The friction was so great that they didn't speak for many years. As in your case, neither of the siblings could have afforded to lend them the money, but even so they resented the fact that my father got much more than they did (his capital and the interest on it plus one quarter of the residual from the sale), completely ignoring the fact that they would have had nothing if my father had not let his parents the money to buy their home! Families can be unreasonable, so bear that in mind.

My advice would be to discuss it with the other beneficiaries, and compare it with the option that the property is sold on the open market, and your grandmother receives the money from the sale. Invested, this money could provide a income for your grandmother, and, if the capital remains untouched, there would be the prospect of inheriting the capital, plus the capital value of the property she is buying. You should also bear in mind that they will want you to pay at least the market value of the property, and it would be a good idea to get them to agree on what this value is before you start having a survey done (do get a survey as you don't want to buy a pig in a poke). The market is moving quite quickly so, you need to complete the sale asap to avoid any suggestion that you are getting more than you are paying for. 

user1977

LTNRW said:

with regards the other beneficiaries, do you mean that for example:

Sale agreed for £100,000 , and the worst happens in 6 years , while having only paid £60,000 , that I am then liable to pay the others £20,000 each?  is that on the outstanding terms of monthly payments or as a lump sum?

No, you'd just carry on paying the monthly payments to her estate as originally agreed. What the executors do with the money after that needn't be relevant to your loan.

MovingForwards

Private mortgage between you and gran. You own it from the start, but have a debt to pay. Best to have a solicitor to make sure it's done right, gran can also get her will sorted out.

Look up stamp duty or whatever is relevant for your country as it varies England, Wales, Scotland etc.

CGT is your grans 'problem'.

If gran passes away before you've repaid it, remortgage the property to clear the private loan enabling the executors to action the terms of her will. Assuming she doesn't leave you the money due from the mortgage, cancelling out the debt, and other available finance to others.

wannabe_a_saver

LTNRW said:

finally, the two other beneficiaries mentioned above, may not be too impressed with me purchasing this property ( they have persistently scrounged and taken anything they could from my grandmother, and will no doubt be aware of what they stood to gain in the event of this house being sold on the open market.  they however, could not purchase this or any house with their financial situations nor have they ever been in a financial situation to do so.)

If you are buying at market value then your gran will have that money plus interest from you so she can still leave them something if she chooses. 

If you aren't buying at market value or paying interest then its a bit rich of you to accuse them of scrounging! 

getmore4less

You can set terms on the debt in the event of deaths.

Often setoff is a good option to avoid too big an overhang for the other potential beneficiaries.

maisie_cat

LTNRW said:

I had briefly read on private mortgages last night so it's great to know I was barking up the right tree.

with regards the other beneficiaries, do you mean that for example:

Sale agreed for £100,000 , and the worst happens in 6 years , while having only paid £60,000 , that I am then liable to pay the others £20,000 each?  is that on the outstanding terms of monthly payments or as a lump sum?

I assume though that the above is only applicable if it is stated within her will that they remain beneficiaries on the property?

A very complex situation it seems, so thanks for bearing with me!

If when your grandmother dies there is an outstanding balance it will obviously form part of her estate. If you are one of 3 beneficiaries you will need to pay them 2/3rds of the outstanding, 1/3rd each because you are the other 1/3rd. So you would pay the other beneficiaries £26667 of the £40k

p00hsticks

user1977 said:

LTNRW said:

with regards the other beneficiaries, do you mean that for example:

Sale agreed for £100,000 , and the worst happens in 6 years , while having only paid £60,000 , that I am then liable to pay the others £20,000 each?  is that on the outstanding terms of monthly payments or as a lump sum?

No, you'd just carry on paying the monthly payments to her estate as originally agreed. What the executors do with the money after that needn't be relevant to your loan.

I'm not sure you'd be allowed to just carry on paying monthly for years after the death - I suspect it would be more likely that the executors would expect you to settle the debt ASAP.

user1977

p00hsticks said:

user1977 said:

LTNRW said:

with regards the other beneficiaries, do you mean that for example:

Sale agreed for £100,000 , and the worst happens in 6 years , while having only paid £60,000 , that I am then liable to pay the others £20,000 each?  is that on the outstanding terms of monthly payments or as a lump sum?

No, you'd just carry on paying the monthly payments to her estate as originally agreed. What the executors do with the money after that needn't be relevant to your loan.

I'm not sure you'd be allowed to just carry on paying monthly for years after the death - I suspect it would be more likely that the executors would expect you to settle the debt ASAP.

Only if the OP agrees that's what will happen. A creditor dying (or e.g. a corporate one going bust for whatever reason) isn't generally a trigger for a loan becoming immediately repayable.