House ownership after passing

6022tivo

Person leaves estate to two people (their children)

Home Question
Child 1 wants to live in the said home and will be their first and only home. 
Child 2 doesn't want part ownership, responsibility or rent from it and already owns their own home.


Child 1 can't afford to buy child 2 out of it in full. 
Child 2 is chilled and just says, pay what you can and I'll just put a land registry charge on the remaining percentage (say 25%) 


Is this an acceptable workable solution? 
Is this a potential 2nd home for child 2 and if sold, is profit or a rise in value subject to CGT? 
Will this charge stop child 1 getting a secured loan or mortgage on the property? 

Child 2 has zero say on the property, but will entitled for 25% of the sale if child 1 ever decides to sell, or his dependants sell if they where to pass? 

Robin9

Is there enough money in the estate to meet any debts/ mortgage?

6022tivo

Robin9 said:

Is there enough money in the estate to meet any debts/ mortgage?

Yes Robin

Odd mortgage on the property of around £8 for the last 15 years. 
No interest and never gets paid.  Just get a statement every year that is always the same from the bank. 

I think it was back in the day when people did this to keep the  deeds safe, but probably not required? 


Estate has no debts. 

Alphatauri

Others will be better able to answer your questions and I would recommend talking to a solicitor.

The solution you propose would I believe leave Child 2 with a second home and all the factors you list (happy to be corrected).

I am not sure if it feasible and is a variation of what you suggested. Child 1 buys the maximum they can, e.g. 25%. Then Child 2 loans Child 1 the remaining 25%. So Child 1 would own 100% of the property with 2 charges, one as a traditional mortgage repayable over 25 years and one to Child 2 that is repayable with interest if the property is sold? This way Child 2 would not own a second property but their inheritance is protected as a personal mortgage. Obviously this would require a legal agreement.

I am not sure if a traditional lender would be happy with this situation nor if it is a valid option. I am sure there will be pros and cons so please get proper legal advice to ensure you are aware of all the implications. 

RAS

Don't think Child 1 won't be able to get a mortgage in their sole name if Child 2 is on the deeds. Try the mortgage forum here.

getmore4less

6022tivo said:

Person leaves estate to two people (their children)

Home Question
Child 1 wants to live in the said home and will be their first and only home. 
Child 2 doesn't want part ownership, responsibility or rent from it and already owns their own home.



Child 1 can't afford to buy child 2 out of it in full. 
Child 2 is chilled and just says, pay what you can and I'll just put a land registry charge on the remaining percentage (say 25%) 


Is this an acceptable workable solution? 
Is this a potential 2nd home for child 2 and if sold, is profit or a rise in value subject to CGT? 
Will this charge stop child 1 getting a secured loan or mortgage on the property? 

Child 2 has zero say on the property, but will entitled for 25% of the sale if child 1 ever decides to sell, or his dependants sell if they where to pass? 

There was a long thread on the various issues over having a %charge and if that constitutes a beneficial interest for things like SDLT IHT,CGT etc.  



Another solution is C2 becomes the lender with a fixed charge, then get paid monthly or as and when,  if interest is charged that would be income tax for C2.  (think out of the box on that issue)

C2 takes the hit on not getting their inheritance quickly.


That does come with the usual caveat, money and family.


getting a mortgage with C2 having a charge will need specialist mortgage help

Is C1 borrowing a mortgage limit issue or an affordability issue?

msb1234

Other things to consider: If C2 is married, at some point in the future if they divorce, would their spouse be entitled to half of her share of the house, and if so, would they have to sell up to pay the spouse off?
When C2 decides they want the money at some point in the future, will C1 be able to afford what will be a bigger mortgage as the value of Cis share will have increased? 

Brie

6022tivo said:

Odd mortgage on the property of around £8 for the last 15 years. 

No interest and never gets paid.  Just get a statement every year that is always the same from the bank. 

I think it was back in the day when people did this to keep the  deeds safe, but probably not required? 

I would suggest contacting the bank to check on this.  I have heard of other cases where the bank actually no longer held a paper deed but simply a pdf of it and therefore there was no charge to be made for keeping it.  Net result was the owner got back X years of ££ that had been charged.  

And as for both kids owning the home....what if the roof needs replacing or the boiler?  who pays for that?  It should be 50/50 but C2 isn't going to want to do that as it is of no benefit to them.  And what if in 15 years time C1 decides to sell and the house is incredibly more valuable.  OK C2 will get their percentage but will there be resentment at C1 getting the lion's share??  Much simpler to find a way to buy C2 out at this point for a clean break.  

6022tivo

I'll comment better tomorrow. We appear to be over complicating it. 

There will be no mortgage on it. C1 will live until they pass, C2 isn't arsed about his part ownership until C1 dies or sells it. 

C2 won't be paying any maintenance as C1 isn't paying any part rent to C2

SevenOfNine

The £8 is something we came across with Santander when FiL died (his was £1) a couple of years ago. It's outstanding mortgage, though no interest accruing & just the trivial sum left outstanding for 'deed storage', but there will be a 'charge' on the property. 

They made us pay £50 to have the 'charge' removed from the title deeds, so we could sell the property. You might want to sort that now, so it's not an unnecessary fly in the ointment delaying any plans you might decide on.