WWYD? Request to loan in-laws money

IWasHereBefote

https://forums.moneysavingexpert.com/discussion/comment/81996823#Comment_81996823

I’m confused by your question.

The house was inherited around 15 years ago. Not sure what it would have been worth then but they have convinced themselves it is worth at least £150l. Looking at Rightmove I think that’s top end and £135k is more realistic. Probably £130k for a quick sale. Yes that reduces the CGT but there is also then £15k less cash than they planned.

I assume they have the £100k they thought would be the difference, but that could also be missing in action.

None of us can believe how stupid they have been.

Spikeygran

Oh dear what a mess, it doesn't sound like it will end well for anyone involved. I've been following this topic for a while. I'm wondering whether the inlaws are actually competant to complete any transaction?

This might seem OTT but I'm going to suggest that quietly without making a fuss you get some legal advice for yourself and your DD. Keep some notes of events and dates, and keep an eye on the bank accounts.

RAS

https://forums.moneysavingexpert.com/discussion/comment/81935651#Comment_81935651

Presumably the parents have a conveyancing lawyer. I'd suggest that they go back and have a serious discussion about the mess they are in and how to extract themselves from the situation, perhaps taking your hubbie or the sibling near whom they planned to move along to listen and clarify.

It may be that the better option might be to void the contract, agree a schedule of work on the "new" house to satisfy the vendor and kick their wounds.

If they have any money left over after the debacle, it would make sense to sell the family home then move into the inherited house and renovate. But…….

You and hubbie may have been under the impression that his parents were able to budget but you are not living near them. On a day to day basis, that is probably true but they don't seem to be good at longer term financial planning? That suggestion is supported if they do not have enough savings or investments to cover the shortfall. Where were any future care costs coming from?

Have they been disinvesting by giving to the other children, perhaps out of misplaced loyalty? Do they understand deprivation of assets? Or that if they need care this means the bankrupt child would have to leave their non-rental property and it will be sold to cover any care costs, if needed? Ignoring the other elephant in the woodpile; how are the parents going to maintain the old house long-term, as neither they currently own seem to have been managed well based on the need for work before sale.

There may also be a dynamic where dad is still seen as the head of family. Why for instance, is the bankrupt child living in the inherited house. Even if they have children (especially if they have children), they should be able to find a rental was paid for by Local Housing Allowance. Not immediately, which is why their parents' short-term support is admirable, but with time and diligent search.

Much as your hubbie loves his family, it may be time to work out how many members aged over 21 are adults and how many adult children?

By the way, money spent doing up houses prior to sale is rarely well-spent. How much are they intending to spend on repairs? Weather tight, decluttered, deep clean, with no major utility problems will probably net more than one on which money has been spent. Go over to housing forum here to discuss further.

IWasHereBefote

Thank you. The family dynamics are very different to mine and FIL absolutely considers himself the head of the family.

Sibling that lives where the new house is has flagged the issue to the conveyancing solicitor (who were shocked that neither house is on the market).

DH has told them the best option is to sell the family home as is as quickly as possible. Response was “none of the kids want us to sell that house” (but DH and at least 2 siblings couldn’t give a toss and DD hasn’t been asked anything about it). They’re clearly attached to the house having been there 50+ years, and haven’t been closely involved in buying any property since. I think they are incredibly naive and genuinely thought that the completion date was a guide and that conveyancing is an overnight affair.

They’ve basically focused on the new property to avoid hard feelings about moving and have made the whole thing worse.

Several siblings have now advised them that the inherited property needs putting on the market immediately and whatever reasonable offers may come one needs to be accepted (and likely not at FIL’s £150k expectation).

DH obviously wants to protect his parents, and do what he can to help, but I’ve spelt out at a high level the risk to all of us if he goes too far with this. If there isn’t significant action by PIL in the next week I’ll be upping the ante on that.

Pollycat

"DH obviously wants to protect his parents, and do what he can to help"

Your husband's priority and loyalty is to you and your child.

I'm shocked that he is even considering lending money, especially when you are talking about doing major renovations yourself.

Re this:

"FIL absolutely considers himself the head of the family."

I know this is something that can happen in different cultures.

Is it likely that your husband will go against your wishes and still lend this money?

Mands

I was having coffee with an acquaintance a while back and money + family dynamics + promises came up.

He was running a successful family business and his wife came to him asking for help. Her brother had a great business plan but couldn't get funding on his own. He didn't want to borrow money from his brother-in-law but could his BIL co-sign the loan agreement? The business was a cast-iron proposition, it was just that the banks couldn't see the value in it/him. There was absolutely no way it would fail so my acquaintance wouldn't be on the hook for any repayments.

Fast forward a couple of years and an, almost inevitable, cascade of events happened:

• The business did fail
• The BIL was unable to re-pay the loan
• The acquaintance was forced to re-pay the debt in full
• The marriage broke up because of the recriminations
• The acquaintance ended up divorced and with a €1.5m hole in his finances

Good luck with whatever you decide.

IWasHereBefote

https://forums.moneysavingexpert.com/discussion/comment/82010229#Comment_82010229

There’s no specific culture beyond a very traditional British approach to family life where dad is authoritarian and earns the money and mum doesn’t work and wipes the snotty noses. And Olympic levels of arrogance and stubbornness.

I can match the stubbornnness and have (gently but firmly) told DH that my current position is that his parents are old enough and competent enough to sort out their own mess. If that means selling the family house to afford the new one or losing the deposit and the hassle of removing stuff they have already done/moved there so be it: not our issue to fix. If it were £10k to buy a new car because theirs broke down or something like that I’d be more open to it. But this is potentially the best part of £300k at worst and £40k at best which isn’t within his gift to decide alone. We have a need to spend £20-30k on our own stuff over the next few months so he needs to be realistic about what cash there may actually be.

DH struggled over his words at that point and started talking about money he can access, but doing so would create a 60% tax liability for a considerable part of it for the sake of giving it away and it just makes no sense to do that.

DH and one of the siblings have told FIL that they need to be acting this week: if they don’t, I’ll be telling DH that any financial support he offers will be factored into the financials of a divorce so tread carefully.

RAS

Loss of deposit when failing to complete was a legal issue in 1963 to my knowledge. PIL probably bought since then?

I'm also surprised the solicitor didn't identify any issues when they did the basic due diligence. If PIL told the solicitor they were selling the matrimonial home which nearly covers the purchase price and didn't incur CGT liabilities, and it comes to light that they haven't put that house on the market, they are on very shaky grounds.

One other factor that DH and most siblings might consider is that it's possible that attachment to the family home is why they want to sell the inherited one? And that it's quite possible that the bankrupt child will inherit it so that it "stays in the family".

Inheritance may be of little financial consequence to you but neither of you shouldn't be expected to pay a financial penalty for their poor financial planning.

DH's understanding of the purchase seems to be as advised to the solicitor and he was not aware of the naivety and poor understanding and financial planning on his parents' part. He probably assumed their generosity to his siblings meant adequate finances.

If he declines to fund a very much revised and badly managed mess, he's not reneging on his original agreement.

On a practical note, I'd suggest that a sibling other than DH speaks to DD and explain the issue regarding the family home. Then at least three and hopefully 4 need to let their parents know that selling that house pronto is vastly preferable to the mess they have got themselves in. And that if they'd like a weekend's help decluttering, tweaking and cleaning to get ready for sale, it's available?

IWasHereBefote

At least one of the other siblings (and their wife) are having these conversations about the family house.

I did ask about the inheritance point, pointing out that BIL4 won’t be in any position to buy the others out and DH said he’d happily give up any share to BIL4 as he doesn’t need it.

It’s hard because our geographically distance means we aren’t routinely impacted by these family dynamics, but then it really amplifies DH’s FOG when things like this come up.

RAS

What is FOG?