Buying out sister from property before probate is granted?

md25

Hello,

My sister and I inherited a home from out late mother.  I wish to remain in the home, so I am buying my sister out.
Probate for my mum has gone past the 16 week mark which is longer than we expected and my sister is in a situation whereby she needs the funds asap due to purchasing a new home.

Is it possible to form some kind of agreement (document) with my sister and pay her the money in advance, to buy her our before probate is granted? So that when it is, the deeds etc can then be passed to me?  This will also provide her with a document and source of funds for her new property.

Thank you

Sarahspangles

This sounds like a short term loan to me but you need legal advice/drafting especially if she is going to use this in a transaction where she requires a mortgage 

Marcon

md25 said:

Hello,

My sister and I inherited a home from out late mother.  I wish to remain in the home, so I am buying my sister out.
Probate for my mum has gone past the 16 week mark which is longer than we expected and my sister is in a situation whereby she needs the funds asap due to purchasing a new home.

Is it possible to form some kind of agreement (document) with my sister and pay her the money in advance, to buy her our before probate is granted? So that when it is, the deeds etc can then be passed to me?  This will also provide her with a document and source of funds for her new property.

Thank you

Yes, but as the previous answer says, you need legal advice to help ensure matters are correctly progressed, any possible tax liabilities avoided and (forgive me) clarity provided if one of you dies while matters are still ongoing.

uknick

As you're talking about buying out half (?) of the house I assume it's a pretty large sum needed, therefore most lenders would need some form of security.  In which case, what will you secure it against?  I doubt a lender will let you use a house going through probate.

born_again

Could your solicitor provide her with a advance from the estate?

Sarahspangles

uknick said:

As you're talking about buying out half (?) of the house I assume it's a pretty large sum needed, therefore most lenders would need some form of security.  In which case, what will you secure it against?  I doubt a lender will let you use a house going through probate.

I don’t think the OP needs to borrow, she just wants to find a way to transfer the money via a loan that can later be repaid by transferring half the property.  The sister’s lender may not like the arrangement.

md25

uknick said:

As you're talking about buying out half (?) of the house I assume it's a pretty large sum needed, therefore most lenders would need some form of security.  In which case, what will you secure it against?  I doubt a lender will let you use a house going through probate.

Yes.  I have the funds.

doodling

Hi,

If you have the cash to buy her out (i.e. you wont be using a mortgage) then the easiest option is to simply lend your sister the money.  This might be unacceptable to a lender if she requires a mortgage however.

You could lend the executor the money to allow them to make an early distribution of your sister's part of the estate but you need to consider what happens if the will is found to be invalid and the executor isn't actually the executor.  Your sister's mortgage company might not be comfortable if they were aware of this arrangement as it might turn out that your sister isn't entitled to the money and what was an inheritance turns into a loan.

If you need a mortgage to buy her out then there is no way this is going to work - the current owner of the property you are inheriting is unclear (it will be the executor of the will, but until probate is granted, both the will and the executor are in question).  A mortgage company is not going to lend where the owner is unclear - who would they give the mortgage monies to for a start?

md25

doodling said:

Hi,

If you have the cash to buy her out (i.e. you wont be using a mortgage) then the easiest option is to simply lend your sister the money.  This might be unacceptable to a lender if she requires a mortgage however.

Is there some kind of legal paperwork I can get if lending my sister the money, basically stating that it is an early payment as probate has not been grated yet?  That she can then show her mortgage lender as source of funds?  We were waiting for probate to clear initially, so that we could go to a conveyancing solicitor and process funds and deeds all in one.  However, my sister is eyeing up a new build which are selling fast and wishes to acquire funds asap,

doodling

Hi,

md25 said:

doodling said:

Hi,

If you have the cash to buy her out (i.e. you wont be using a mortgage) then the easiest option is to simply lend your sister the money.  This might be unacceptable to a lender if she requires a mortgage however.

Is there some kind of legal paperwork I can get if lending my sister the money, basically stating that it is an early payment as probate has not been grated yet?  That she can then show her mortgage lender as source of funds?  We were waiting for probate to clear initially, so that we could go to a conveyancing solicitor and process funds and deeds all in one.  However, my sister is eyeing up a new build which are selling fast and wishes to acquire funds asap,

How much do you trust your sister?

You could give her the money in the hope that she would agree to a deed of variation giving you a larger share of your mother's estate.

You would however be required to confirm that the money is a gift, in writing.  There would be nothing stopping your sister saying thank you very much and then insisting on her full share of the estate.

Note that some mortgage companies treat gifted money differently so you would need to check that this approach would work if you chose to adopt it.