Difficult sale post death

lisyloo

Looking for some ideas.

A family member is executor for her later father's house that has an equity release loan on it.
He died about 14 months ago.
The house is a 3 bed worth about £300K, the loan is about £100K but still going up.

My family member borrowed £40K from another family member to pay her father's siblings and ex their shares.
The reason for this is that one of the brothers was joint executor and their relationship is completely broken down to the point the funeral director had to stop a shouting match at the funeral. By paying them off the brother formally relinquished being joint executor.

The first sale of the property fell through due to other parts of the chain falling apart.
With the current offer there is an issue with a border being put in the wrong place.
It's a front driveway where there used to be a wide hedge and the driveway is wider than it should be meaning it takes up part of the land of a neighbouring (council) property.
We think this was done about 30 years ago and there are google maps pictures from 2008 so we think it's ok under statute of limitations.
The buyers solicitors wants it sorted but that may take a long time dealing with the council.
The sellers solicitor wants them to buy and sort it out afterwards as it will be fine.
Physically returning the area to it's original state will be quite major as the land in not level. It would mean removing a wide strip of driveway and returning it to grass and it might need a bit of retaining wall where there is a step down.

Time is the issue now as the £40K loan needs to be paid back and more urgently the equity release company are threatening repossession and I believe it's in their terms and conditions that they can repossess after 12 months.
My family member has been actively trying to sell the property so hasn't done anything wrong here.

If the repossession happens they don't think they'll get the much change after all the costs and they need at least £40k.

The only suggestions we've come up with are a discount for a quick sale or auction.
Any other thoughts please?

eddddy

I'd suggest you tell the buyers to buy the property assuming that the strip of land isn't theirs.

I'd be tempted to ask the estate agent to discuss this with the buyers, rather than going through solicitors.


But tell the estate agent to mention to the buyers that...

• the land has been used by the house owners for 30 years without complaint

• they can try for adverse possession if they want (or not) - which might get them a bonus piece of free land

• if they don't agree, the house is likely to be repossessed - and probably put back on the market and they might then get outbid (and an equity release company won't do anything about the boundary).

Estate agents should be experienced negotiators (and experienced 'persuaders'), so they might be able to solve this with a friendly chat with the buyer. (Solicitors aren't negotiators!)

And once the buyers have reached agreement via the estate agent, they need to tell their solicitors how they want to proceed.

lisyloo

Thanks for your reply. If I was the buyer I'd listen to my solicitor whether they said "it's fine" or "don't buy it".
I would not trust an estate agent.
You seem to have a higher opinion of them than I do. 
I'm sure there are good ones but I wouldn't rely on what they said and often information they provide like floorplans(for example have major caveats like *for illustrative purposes only, so you can't hold them to what they say.

user1977

lisyloo said:

Physically returning the area to it's original state will be quite major as the land in not level. It would mean removing a wide strip of driveway and returning it to grass and it might need a bit of retaining wall where there is a step down.

Has anybody suggested that the land would need to be returned to its previous levels? The risk is losing the ability to use that area - is it currently essential for access?

lisyloo

user1977 said:

lisyloo said:

Physically returning the area to it's original state will be quite major as the land in not level. It would mean removing a wide strip of driveway and returning it to grass and it might need a bit of retaining wall where there is a step down.

Has anybody suggested that the land would need to be returned to its previous levels? The risk is losing the ability to use that area - is it currently essential for access?

No, no-one has suggested it.
The buyers solicitor has asked for it all to be sorted before the sale and the thinking is that getting possession could take some considerable time.
No it's not essential.

I think it's down to what the buyers solicitor says. If they told me not to buy it, I'd pull out and look for something else.

user1977

lisyloo said:

user1977 said:

lisyloo said:

Physically returning the area to it's original state will be quite major as the land in not level. It would mean removing a wide strip of driveway and returning it to grass and it might need a bit of retaining wall where there is a step down.

Has anybody suggested that the land would need to be returned to its previous levels? The risk is losing the ability to use that area - is it currently essential for access?

I think it's down to what the buyers solicitor says. If they told me not to buy it, I'd pull out and look for something else.

They should be explaining the risks, not just saying "don't buy it". If the worst case scenario is losing a strip of ground which isn't essential for access and makes no significant difference to the value then it really isn't a big deal.

Bigphil1474

So if the house is worth £300k, the equity loan is about £100k, and the new loan is £40k, where is the rest of the property value 'lost'? The cost of selling a property should be no more than a few £k, so there should be at least £150k left over. Is there a mortgage to pay off? Personally, I'd ask the buyers want they want and if it means reducing the price a few £k, then so be it. Better to be sorted than have the debt hanging over.

Did the family member borrow the money themselves or did the estate borrow it? Don't forget, it's normally the estate selling the house, not the executor or beneficiaries.

eddddy

lisyloo said:

If I was the buyer I'd listen to my solicitor whether they said "it's fine" or "don't buy it".
I would not trust an estate agent.

Based on what you've said, this sounds like "a mountain out of a molehill".

Sending Solicitors' letters backwards and forwards often isn't a good way of getting things back into perspective.


If your relative genuinely believes that the estate agent they hired isn't capable of having a friendly, sensible discussion with the buyer, then your relative should consider contacting the buyer directly themselves..


For example, your relative needs to find out if this strip of land really is that important to the buyer. Would the buyer walk away if they can't have that strip of land?

(If necessary, could it be resolved by knocking £2.5k or £5k or £10k off the price - as a goodwill gesture?)

lisyloo

Bigphil1474 said:

So if the house is worth £300k, the equity loan is about £100k, and the new loan is £40k, where is the rest of the property value 'lost'? The cost of selling a property should be no more than a few £k, so there should be at least £150k left over. Is there a mortgage to pay off? Personally, I'd ask the buyers want they want and if it means reducing the price a few £k, then so be it. Better to be sorted than have the debt hanging over.

Did the family member borrow the money themselves or did the estate borrow it? Don't forget, it's normally the estate selling the house, not the executor or beneficiaries.

Do you think the equity release company will put it on the market for the usual amount of time to get full market value, or sell quickly at auction for 70%?
I don't have experience in this, but we are expecting them to sell at auction, so that's £90K gone.
The executor (who has the equity release Ts and Cs) thinks the estate would pay legal costs e.g. court order.
There will also be more interest on the £100K until it's sold.
There is no mortgage beyond the equity release loan.
So let's say £210 for house (70%), £10K interest, £20K costs, then there will be £80K left, so not all gone, but a lot less than the £200K estate originally.

The family member borrowed the money from another family member.
I think the repossession is the more urgent issue as the expectation is that it will be sold quickly below market value.

Grumpy_chap

lisyloo said:

With the current offer there is an issue with a border being put in the wrong place.
It's a front driveway where there used to be a wide hedge and the driveway is wider than it should be meaning it takes up part of the land of a neighbouring (council) property.
We think this was done about 30 years ago and there are google maps pictures from 2008 so we think it's ok under statute of limitations.
The buyers solicitors wants it sorted but that may take a long time dealing with the council.
The sellers solicitor wants them to buy and sort it out afterwards as it will be fine.
Physically returning the area to it's original state will be quite major as the land in not level. It would mean removing a wide strip of driveway and returning it to grass and it might need a bit of retaining wall where there is a step down.

I am struggling a bit to understand this.

If the driveway is narrower - so the next door neighbour erects a fence along what the boundary "should" be - does that make the driveway impractical to use?
There is usually no need for a fence to be erected at the boundary, or anywhere else for that matter.
If the driveway remains practical even if narrower, then the property can be purchased with the boundary as per the deeds and what the neighbour does now or in the future with the strip of "extra" driveway is immaterial.

I can only imagine that any contact to the LA to adjust the boundaries will only result in refusal and the fence being erected on the boundary in any case.

GDB2222

The obvious thing to do is to offer the buyer a discount on the basis that they proceed with the purchase as is. Make it a decent discount, so that the buyer is really keen to proceed. Eddy suggested a few £k, but I disagree. You want the buyer to be desperate not to lose a bargain. Your relative thinks she could lose £100k if this purchase doesn’t proceed quickly. So, she has room to offer a decent fraction of that as a discount.