One beneficiary of an estate wants to buy the property from the other beneficiaries, how does that work?

[chichilala]

I'm wondering if anyone can help. I am the joint beneficiary of my grandmother's estate (50% to one person and the other 50% split 3 ways between myself and my siblings)

The estate is simple, bit of cash and the house.

The person who has the 50% share would like to buy the house. We have had valuations and they have offered a reasonable amount for our half share, but the issue is they have suggested that we agree and then let them do the work on the house to make it up to a rentable standard, then they will get a mortgage and pay us the amount agreed.

How do these things work? surely no work can be done, or the house transferred into one name until we receive our money? We are happy to wait but my sibling has made the valid point that this could raise issue in the future, what if the person decides half way through work they no longer want to buy, what if the work takes a long time, what if the house is valued more/less in the time it takes works to be done and then they offer us less (unlikely I guess in the current market?!)

All is very amicable at the moment and none of us want any form of issue about this. am I right in thinking the solicitor dealing with the estate will say it has to be dealt with a certain way and if so what is the process? does anyone know please?

Thanks

I am not sure of the legal process, but no way would I do anything other than get full payment up front. I would forsee huge problems and potential fall outs if you did it the way they are suggesting. What if they couldn't get a mortgage for example.

thanks portfino, this is the conclusion we have come to, but we really want to know if the solicitor will tell the other party this or if we should, I suppose we could suggest a meeting with the solictior us (or one of s representing us)there to discuss this?

Is this something the executors can sort out? Our father is exectuor together with out uncle, the other beneficiary is our aunt, so both sides effectively represented by an exectutor. I would be happy to leave our father to sort it out!!!

A sensible solicitor should be able to suggest a way to do this. I imagine one way would be to give a finite amount of time to do the work- say 1 or 2 months. Anything longer is unreasonable as you all start to lose money.

The solicitor dealing with the estate should be able to refer you to someone to advise on this (they may be conflicted out of doing it themselves).

One way of dealing with it could be for the purchaser to get a mortgage offer conditional on certain work being completed, get a building contract in place with a reputable builder for the works, place the full contract sum of the building contract in escrow, and exchange contracts on the purchase of the house.

Thanks for the replies so far.

what's escrow? I have bought and sold a house in the past but have never heard of this.

So would it be normal to have a situation like this and we wait until works are done before getting our share?

I'm not really worried if it takes a while but I am trying to work out what is normal in these situations, which must be fairly common?

the work that needs doing is not extensive building work, just the result of the house being occupied by elderly people and therefore the house needs re-wiring, new bathroom, kitchen, carpets and decorating.

Although as far as I am aware no survey has been done...

Escrow is a sum of money held in a special account usually by a solicitor who will only pay it out for a specific purpose (in this case to pay the builder). This should help to ensure that if something goes pear-shaped you are not left with an uninhabitable mess.

Make sure you have appropriate buildings insurance in place, and check the builders insurance in case he burns the house down. A solicitor experienced in property matters should make sure this and everything else is covered.

what if they can't get a mortgage? What if they decide to deduct improvements from your half? what if they take years and years to do the work? What if they get halfway through it and change their mind? What if they suddenly run out of money for improvements and expect you to pay?

It's very up in the air, don't you think? You'd need a formal agreement in writing, with figures and timescales.

ah ok thanks,.

I'm fairly sure all building works can be covered by cash inherited from the estate, obv I don't know if this is how she will finance it but she will get a substantial amount of cash shortly.

Is this normal then, to have an agreement where works can be done prior to properly handing things over to one party?

my head hurts with trying to work it out!!

Yes quite normal, subject to the kind of protection I mentioned (like not relying on the fact that the purchaser has funds available for the works but instead putting them in escrow, having the building contract assignable so the vendors can step in if the purchaser changes his mind half way etc.)

Access under license is the legal term, although the fact that the licensee is already the owner of 50% of the property is unusual - but don't let that make you do things less formally, you don't want to be left owning 1/6th of an uninhabitable property and the family at loggerheads.

Thanks MrA

In my head, when we first knew she may buy the house I had assumed she would have to finance buying our share and then off she went with whatever she needed to do to it. I didn't even think it would be possible this way. although presumably if we didn't want it to happen like this we could say no? unlikely we will as we don't want to cause issues unnecessarily, but we will go through the proper channels to protect ourselves and our aunt, because as my brother pointed out what's to stop us demanding more cash once the works are completed!

"although presumably if we didn't want it to happen like this we could say no?"

Of course you could. Bear in mind also that there will be legal costs to set it up correctly which could make it unviable for the sums involved (make sure you get a capped fee from the lawyer). Also as I said at the outset this is only one way of proceeding, there are others which may be better in certain circumstances e.g. Transferring everything into a company and then selling the shares. If the property is worth £1,000,000 it is worth investigating more options than if it is worth £100,000.

I wish it was a million, but we're talking our half share being more the £100,000 mark

Thanks for your help, we will see what happens, i'm sure it'll all work out fine.