Tenants in common: Who should pay?

JLWeale

Background:

George & his wife Beatrice purchased their council house under the Right-to-Buy scheme. Three of their adult children contributed the largest share to the purchase price, so George & Beatrice had only an 8.5% share.  George & Beatrice were listed at the Land Registry as the legal owners of the property, and the exact interest shares of all contributors were listed in a Declaration of Trust. George & Beatrice made mirror wills in 2014, listing the percentage ownership of the property as detailed in the Declaration of Trust. Beatrice died in 2015 and her name was removed from the title. At the same time, the names of the three adult children were added as tenants-in-common. George died in 2016. The house was subsequently redecorated and new carpet fitted, prior to being sold.

Question:

Should George's estate have been held fully liable for the cost of the redecoration and re-carpeting?

Or

Should the cost of the redecoration and re-carpeting have been split among the tenants-in-common according to their percentage shares?

pramsay13

If it was a landlord / tenant situation the landlord wouldn't be able to claim for the redecoration / new carpets as it would be betterment, so it's probably fairer if this cost is met by the owners who will benefit anyway when it is sold. 

sammyjammy

Why would Georges estate be liable!  Current owners split the cost.

Keep_pedalling

Presumably the house was registered in G & Bs name as they were the only people entitled to buy it, so I am not sure how anyone els3 could have a share in it.

getmore4less

did they really only get 8.5% for their share.

Did that include the discount?  seems very low for a right to buy.


The estate should at most have paid in proportion to the share the estate owned
and then received that proportion of the uplift.

depending on the distribution of the estate it may not make a difference to the end recipients. 

JLWeale

Keep_pedalling said:

Presumably the house was registered in G & Bs name as they were the only people entitled to buy it, so I am not sure how anyone els3 could have a share in it.

The house was registered in G&B's name at the Land Registry, but 3 of their children paid the lion's share of the purchase price - hence the Declaration of Trust that registered their financial interest in the property

JLWeale

getmore4less said:

did they really only get 8.5% for their share.

Did that include the discount?  seems very low for a right to buy.


The estate should at most have paid in proportion to the share the estate owned
and then received that proportion of the uplift.

depending on the distribution of the estate it may not make a difference to the end recipients. 

G&B only paid 8.5% towards the purchase price of their council house; 3 of their adult children paid the lion's share.

Re the distribution of the estate, the 3 surviving tenants in common profited from the improvement to the house which G's estate paid for. 

davilown

JLWeale said:

getmore4less said:

did they really only get 8.5% for their share.

Did that include the discount?  seems very low for a right to buy.


The estate should at most have paid in proportion to the share the estate owned
and then received that proportion of the uplift.

depending on the distribution of the estate it may not make a difference to the end recipients. 

G&B only paid 8.5% towards the purchase price of their council house; 3 of their adult children paid the lion's share.

Re the distribution of the estate, the 3 surviving tenants in common profited from the improvement to the house which G's estate paid for. 

So they didn't account for the discount - assuming ages are about right, that would be upwards of 70% or a max of £84,600 across England and £112,800 in London boroughs (whichever is lower).  So G&B must have contributed 8.5% cash but significantly more in reality?

diggingdude

Sounds like G&B were being taken advantage of. They almost certainly had more than 8.5% share due to discount. In addition they already had a secure home which it sounds like family members pushed  them into buying.

IF the 3 people owner 91.5% property, costs would be 91.5% theirs to pay as a minimum I would think 

getmore4less

Only three of the adult children got involved,  it is beginning to look like(very limited info) as well as G&B being "done over" the other kids are as well if they are beneficiaries.

trevormax

I can't see why the estate should pay anything towards the cost of decorating the house after his death. I'm not an expert in matters of dealing with a deceased estate, however this seems like it would not even be allowed.

Presumably, it is the three children with an interest in the property who are claiming that the deceased estate should pay towards the cost of improving the house.
 
If there are other beneficiaries involved (other children for example), then their interest in the deceased estate is diminished by the three children using the money to improve the house, whilst the three children benefit from the use of the deceased estate. 

What the other beneficiaries need to examine is if the use of the deceased estates share/money increases the value of the house by more than what they used of the deceased estate to pay for the improvements. e.g.

house value £100,000 split as 8.5% deceased (£8,500), 30.5% to each of the three children (£30,500)
cost of renovations £5,000 incurred by deceased estate.
value of house post renovation £120,000 split as 8.5% deceased estate minus £5,000 (£10,200 - £5,000 = £5,200) and 30.5% to each child (£36,600).
As you can see here, the children have gained ££6,100 each and the other beneficiaries have lost a percentage of £3,300. 

The fairest solution is for the total cost of renovations to be added up, and then each "owner" pay their share based on their percentage of ownership. So if there is a cost of £5,000 to renovate, the the deceased estate pays 8.5%, and each child pays 30.5% of the cost. Then when the house sells, they each claim their respective percentage of the money realised. 

HOWEVER, if the three children are the only beneficiaries of the estate, then it makes no difference because no other people lose out.