Dispute over ownership of house

DaronHarvey

We have a scenario where, out a number of siblings, one of my wife’s brothers took out a loan to help their elderly parents buy the council house they had lived in for years. That was back in 2002 for a little over £30,000

Evidence exists of an amount transferred from the brother which covered the purchase cost. That brother lives in Australia, by the way.

Evidence exists of a number of large payments made from the parents to the brother over several years, although it is not clear if the full cost of the loan had been repaid.

Both parents have now passed away.

The brother insists that the house belongs to him, as they were not paying him back, but had paying him rent. The parents had argued that was not the case.

No change of ownership was ever made on the deeds, so that is still in the parent’s name.

No agreement of any terms of the loan exists, so it remains in dispute.

We feel that the house should therefore form part of their estate which should go to intestacy and be equally shared between all 6 siblings, and that it is only fair that if he has not been fully reimbursed for the cost of the loan (inc interest), then he should be paid for any such shortfall.

Any idea where we stand please?

Grumpy_chap

Were there restrictions on who could buy the council house that would support establishing who the owners are?

NameUnavailable

Given that the house would still have been owned by the council if the brother hadn't put up the cash for the parents to buy it, I can understand how he could feel that the property is his. Why should anyone else benefit when they didn't help out at the time of purchase?

AdrianC

The parents exercised their right to buy.
They owned the property.
The property is part of their estate.

The brother gifted or loaned the parents money to allow them to exercise their right to buy.
Is there any paperwork that shows whether it was a gift or a loan?
If it was a loan, then that debt is also part of their estate. Repayments may support that.
It if was a gift, it is not.

All siblings are clearly grown adults... They need to sort this out among themselves. Who is executor?

[Deleted User]

DaronHarvey said:

We have a scenario where, out a number of siblings, one of my wife’s brothers took out a loan to help their elderly parents buy the council house they had lived in for years. That was back in 2002 for a little over £30,000

Evidence exists of an amount transferred from the brother which covered the purchase cost. That brother lives in Australia, by the way.

Evidence exists of a number of large payments made from the parents to the brother over several years, although it is not clear if the full cost of the loan had been repaid.

Both parents have now passed away.

The brother insists that the house belongs to him, as they were not paying him back, but had paying him rent. The parents had argued that was not the case.

No change of ownership was ever made on the deeds, so that is still in the parent’s name.

No agreement of any terms of the loan exists, so it remains in dispute.

We feel that the house should therefore form part of their estate which should go to intestacy and be equally shared between all 6 siblings, and that it is only fair that if he has not been fully reimbursed for the cost of the loan (inc interest), then he should be paid for any such shortfall.

Any idea where we stand please?

Your in-laws can’t have been paying your brother-in-law rent to live in a house that they owned.

What evidence does your BIL have that this was a loan and not a gift? Is there a loan agreement in place? Does he have a charge secured against the property? 

Whose idea was it to exercise the right to buy? Your in-laws’ or your BIL’s? Not that it really matters as the house is presumably registered in your in-laws’ names. The estate of the deceased does need to make sure debts are repaid before distributing any inheritance to the beneficiaries but if your BIL can’t provide any evidence that the £30,000 was a loan not a gift and how much is outstanding he’s at the mercy of his siblings to believe that this was indeed a loan. Even if the siblings accept it was a loan that does not make him the sole beneficiary of the property. It just means the estate would repay whatever was outstanding of the loan not sign the entire property over to him. 

[Deleted User]

NameUnavailable said:

Given that the house would still have been owned by the council if the brother hadn't put up the cash for the parents to buy it, I can understand how he could feel that the property is his. Why should anyone else benefit when they didn't help out at the time of purchase?

Because the parents exercised their RTB and owned the house. If the parents wanted the BIL to be the sole beneficiary of the property they would have written wills stating that but it doesn’t sound like they did. 

Marvel1

DaronHarvey said:

We have a scenario where, out a number of siblings, one of my wife’s brothers took out a loan to help their elderly parents buy the council house they had lived in for years. That was back in 2002 for a little over £30,000

Evidence exists of an amount transferred from the brother which covered the purchase cost. That brother lives in Australia, by the way.

Evidence exists of a number of large payments made from the parents to the brother over several years, although it is not clear if the full cost of the loan had been repaid.

Both parents have now passed away.

The brother insists that the house belongs to him, as they were not paying him back, but had paying him rent. The parents had argued that was not the case.

No change of ownership was ever made on the deeds, so that is still in the parent’s name.

No agreement of any terms of the loan exists, so it remains in dispute.

We feel that the house should therefore form part of their estate which should go to intestacy and be equally shared between all 6 siblings, and that it is only fair that if he has not been fully reimbursed for the cost of the loan (inc interest), then he should be paid for any such shortfall.

Any idea where we stand please?

It's the parents home.

xylophone

The property stands in the name of the parents (or possibly in the sole name of the surviving parent who has now died.

The brother either gave or lent the money to the parents to buy the house.

Either way, the property belonged to the parents.

Presumably they owned it as joint tenants.

The second parent has died intestate.

The property forms part of his estate.

It seems to me that the rules of intestacy apply.

 If so, the person who takes out Letters of Administration will need to satisfy himself  as to whether any  repayments are due to the sibling who provided the money to buy the property and as to whether there are other monies to be paid out to creditors of the estate.

After that, an equal distribution to all siblings needs to be made.

TBagpuss

Legally, the starting point is that he house belonged to the parent so forms part of their estate.
It is difficult to see how the son could claim the whole house - presumably the parents were entitled to a significant discount so the son's loan/contribution would have only represented part of the value of the house in any event - the % discount was equivalent to the parents paying that proportion.

So suppose for the sake of argument that the house had a value of £100,000 at the time it was bought, and son provided £30,000, then at most he could argue that he had a 30% beneficial interest in the property.  

If the parents paid him back some of the money then the issue is really whether he is still owed anything and if so, how  much. It would be for him to provide proof of what he said was owed and any evidence of any agreement relating to interest etc. 

Since he took out a loan to help his parents it would certainly be equitable if he were to be paid back enough to cover that loan plus any interest charged on it, and presumably he would have records to show what the interest rate on the loan was.

The executors have to act in the best interests of the estate and can't privilege  one beneficiary over others, so they need to approach brother as creditor as they would any other creditor - ask him to set out what he asserts the estate owes him (if anything) and what evidence he has of the debt.

Similarly if he claims he owns the property it is for him to prove that. He could make a claim against the property under ToLATA  - a court will start by looking at the deeds, and if someone is claiming they have an interest by way of a resulting or constructive trust then they have to provide proof of that. It sounds as though you have evidence that the parents did not regard him as the owner  - do you / the executors have any proof of that (including anyone present at any conversations and willing to make statements if needed) 

LHW99

This could be an occasion where bringing in a solicitor to act as Executor may be helpful.

If you have a legal addon to your home insurance, you could try them first for advice.