Can brother in law force us to sell?

[teaandbuns]

This is long and complicated... apologies in advance, and thanks for reading.

My OH and I bought a house with my mother in law. We paid the mortgage, all bills, looked after everything including her. She provided the deposit through the sale of her own house. Her name was not on the deeds.

Four years on, MIL died. It happened rather suddenly, in late 2017. OH has one brother, resident in the US for donkey's years. They have never been close.

BIL wants his inheritance, which is mostly the proceeds from the sale of their mother's house, and is therefore tied up in our home. She owned about a 36 percent share of the place so we owe him about 18 percent of the total current value. There is no legal paperwork covering any of this (we did consult a solicitor before MIL died but he was making it all so convoluted there wouldn't have been anything left once his fees had been paid) but we are quite clear that we owe BIL that percentage and I don't think there's any argument on that front.

The problem is timing. BIL is well off (owns properties in New York), and as Brexit is obviously knocking the UK economy and house prices, we suggested waiting for things to improve before selling (he would of course benefit from any price improvement). He seemed OK with this at first but has since changed his mind.

We put the house on the market in March, as soon as we realised he didn't in fact want to wait. Things rapidly turned nasty (he doesn't believe we're really trying to sell and keeps suggesting we're up to all sorts, including having forced his mum to sign secret documents in our favour (not the case!)). We remortgaged as much as we could and released £60k, which we offered to give him while we try to raise the rest, but for some reason he refused that. (We owe him about £175k in total.)

He is demanding to be kept in the loop with the estate agents, to know about all viewings etc.

We are at our wits' end. We've never tried to lie or cheat. In fact we worked our bums off getting the house in perfect order for sale. There have been no proceedable offers, and all we're getting is demands to know when he'll be paid. I could of course show him all the emails I exchange with the agents but who is he - who stood back and watched me change his mother's colostomy bag when he visited while she was sick - to decide I can't be trusted and need to prove myself to him? It's bad enough having an unwanted house move hanging over you, plus the worry about where you'll go, without having this man barking demands and accusations from across the pond. You might wonder why if we have nothing to hide we don't just show him the correspondence - but I don't think it would end there. Judging by his behaviour so far, he'd be all over the agents, trying to get the price dropped and running the sale from afar.

We don't have much equity - the house needed a lot of work and we probably paid too much for it - and of course if we do manage to sell we will have to pay stamp duty and moving costs so we'll be limping off with not a lot to show for the last few years.

On top of that we'll be putting our eight-year-old daughter through a house move not long after she lost her live-in grandma - a major bereavement for her as she can't remember a time when they didn't live together and they were very close.

We put the house straight up for sale and have done our best. But all we've had in return is bullying, and it's making us feel like taking the house off the market.

My question is, do we actually HAVE to sell the house right now? The split is roughly 1/5 ownership to BIL vs 4/5 to us, so do we really have to do what he says and be bullied into selling at a terrible time? Even if we sell at the full asking price (which we won't) we'll be losing out a lot. Can he force us to accept a low offer or drop the price until someone eventually buys? What's the state of play?

At the moment we're jumping when BIL says jump - but is that right?

The estate is currently with a different solicitor who is looking after applying for probate, but she represents the estate (and both brothers are executors) so she wouldn't be able to act for us.

We have obviously reached a stage where we do need legal advice and will start looking for another solicitor on Monday. Meanwhile I wondered if anyone could offer their thoughts as I feel like I've read the whole internet and can't find anyone who's in the same situation as us!

Thank you.

If a house has to be sold to pay a legacy, the cost of the sale accrues to both parties, accord their percentage

If a house has to be sold to pay a legacy, the cost of the sale accrues to both parties, accord their percentage

Only if the entire house is the legacy. In this case the OP and her DH own 82% of the house and could buy BIL's 18% if they had the money. The house is being sold because they cannot afford to buy him out, so the costs of sale are theirs.

Seriously I would still put it in writing that you have every intention to pay but you will not reduce the current price/accept an offer below £x without him gaining a court order forcing you to do so and the latest you will be releasing his share is xx/xx/xxxx as you will have the funds to do so then.

Let him pay the cost of taking you to court to force the sale of the house at a low offer. Ban him from speaking to the estate agents he isn't entitled to.

If it's correct that his share will incur fees remind him of that now.

Yes he can take you to court to enforce price reduction and sale but it will take time and a judge may be sympathetic to the situation and give you x months to sell at £z price etc. You can self rep whilst he stressed himself and pays ££££££

It may all be empty bullying threats anyway.

I have a different view about the costs of sale.

Effectively there are two owners of the property - you (OP) and the estate.

If the property has to be sold so that you both get out what you are entitled to, the net proceeds of sale are distributed (so taking in to account legal and estate agents costs of sale).

You ought to take a strict mathematical approach to the calculation of the extent of the interest of the estate. What EdtheBear posts is quite valid. Get all the figures together.

I'm sorry it turned out like this OP. Am also sorry to have given you bad advice - it just seems so unfair that you looked after your mil while bil contributed nothing and now you have to see your house to pay him off. I can't imagine doing something like that to my siblings.
I hope you get a good price for the house

now you have to see your house to pay him off

1. It was never wholly OP's house to start off with.
2. She was always ready to sell.
3. The only issue is BiL wants it selling sooner (presumably at a lower price).

I’m sorry that you’ll have to sell your home.

I agree he deserves to get his money but it sucks that he can’t be empathetic and allow you time

did your lawyer say anything about having to keep BIL informed about viewings? as if the estate agents fees are wholly your responsibility surely the estate agent is only working for you to quote your lawyer "it's your look out" it says only been on the market since March so 10-14 weeks so early days though if you have had no viewings I would be a bit worried that it is over priced for current market
Brexit could drag on for months if not a couple of years so I do understand someone not wanting to wait I think realistically you have the summer to sell at this price but after that I think he could be forcing a drop in price you certainly can't turn down an offer near the asking price

I still don't understand why all the fees are yours. If mil owned a share of the house and the only way to release those funds is by selling, then surely 36% of fees should come from her estate.
It's not like bil has been willed a specific amount of money that's sitting in a bank - he's been left a share of a house, the value of which is variable and has associated costs.
If mil was still alive and you were selling, then she would have been liable for her share of fees, so why isn't bil?

Collaborate if OP has the bills to prove she made and paid for the improvement, would it be possible for her to claim these before the 36% is calculated?

@mummmy2017 What improvements?

If there are real improvements that have increased the value of the property (eg new roof, new windows or extension) then something called equitable accounting will increase the value of OP's share, but there has been no mention of that. Getting a house ready for viewings suggests cosmetic work.

We have spent a lot of money cosmetically which will definitely make it easier to sell, but wouldn't necessarily add value. Carpets, paint job from top to bottom, massive clear-out of jungle-like garden, nice gates, boarded-out loft with enlarged hatch and proper ladder. We've also rewired and changed the boiler.

Then there are things that would arguably have added value, like completely refurbed bathroom and downstairs loo, adding an ensuite and making a utility room out of a lobby , but if we were to try to go for equitable accounting couldn't he claim rent from us for living in his "bit" of the house? If so it would probably all come out in the wash.

That said I am tempted to withhold some, to cover 18% of the estate agent fees and maybe a share of the three new bathrooms etc. Perhaps we can't do that legally but is he really going to try to sue us for a few thousand? Probably, knowing him.

If he doesn't like that he can decide to take us to court to fight for a measly couple of thousand.

Here's how I'd calculate the 18%.
You haven't answered if she paid 18% plus fees or excluding fees.
But assuming the house was £100k it was excluding and her contraction was £36k

Start by deducting 33% of the original fees and stamp duty. So say the fees were £10k, £3,300 of her money went on fees.

So really she put £31,600 into the house.

You so say you purchase for £100k
She owns £31.6%

Say it sells for £200k with the improvements

£200k less say £50k on home improvements
The original investment in the house has really increased by £150k

Mils share of that is really 31.6% so just less than £50k half of which goes to BIL.

Does that help your sums?
MIL didn't contribute to any home improvements so your investment in them need to be deducted from the sums before he gets his cut.

I'm not a lawyer but if you were paying capital gains tax on a property that's how it would be calculated you deduct the additional investment / improvements before calculating what the CGT would be.

I hope you have kept receipts?
Including receipts for any planning permission or design fees.

I'm sure you'll be able to find the sums on bank statements. It really is worth while reducing the actual sum to be paid to BIL by as much as possible.

Sorry I meant 36% included or excluded fees.

Actually another way to deal with the fees.

Say house is worth £200k.
Less buying and selling fees say £15k
Less your additional investments say £50k
Value to be shared £135k

Calculate the 18% from the £135k

Pretty sure if he took you to court for the few thousand you are trying to pocket, couldn’t he get you to pay his legal fees? Thus, putting you out of pocket!

OP - he can't claim occupation rent because you have never excluded him.

A new boiler might increase your share, and the things you mention in the second para of your post.

Also ignore what is said about you having to pay the estate agents costs. Firstly, what you are sharing is the net proceeds of sale (so, sale price less costs of sale, which includes legal and estate agents fees - there should be no argument about this - it is so common), and secondly, if this doesn't apply, he is the one who wants it sold, so let him pay for it.

the house was nearer 1 million than a 100K so the fees would have been about 1% I do not know whether MIL paid a share of original stamp duty so if the total spend buying house was 1million MIL paid 36% of it so now BIL is owed 18%. he does not own any of it as not on deeds but he is owed his share of the sale price, he doesn't have a right to live there but he does have a right to his share, it is being marketed and provided OP and her DH are marketing it reasonably with realistic price that is fine
whether he should pay 18% of the legal fees and estate agent fees is debatable but OP's lawyer thinks not but even if it sells at 1 million and estate agent is charging the normal 1-2 % that is 10-20,00 so 18% is 1,800-3600 legal fees as straightforward should only be about £1500 so his share is really unlikely to be more than 4K a court case costs would be more than 4K so unfortunately not worth arguing about even if it seems unjust

all the paperwork establishes that the OP and BIL have all acknowledged 18% is correct so it is too late to change that

@edthebear that is how you would do it if it was MIL house to be shared between 2 children but it is only partly MIL so only the share of fees from her part can be born by the estate OP and her DH own 64% so the have to pay 100% of the fees on that part

you can't deduct all of the improvements either as some will be included as general maintenance and upkeep, ( certainly decorating rewiring and new boiler) some of the increase in value will be do prices rising OP doesn't seem to think it's value has increased much if at all so really we have to discount this as he is entitled to a share of any equity due to prices rising however much prices rise or fall he is still entitled to 18% if it sells for less than what they paid for it the amount of money will be smaller but the percent will remain the same

so to use your figures again house is 200K
fees are 15K but only 5 K attributable to MIL share
MIL share is about 72K -5k = 67K
67K to be shared ie 33.5K each not 24.3 as you suggested

You need to check back what if any percentage of the purchase fees she paid if any. The fees should be deducted before the money is split.
The further investments into the property, carpets, bathrooms, loft, all need to be deducted from the increased value. Again before the money is split.

If you don't then you basically end up paying those improvements twice.

Keeping the fees aside.
House cost £1m
You added £100k in improvements.

House is now worth £1.2m
£100k of the £.2 Is purely your additional investment.

If you give BIL 18% of the £1.2m you'd be paying for that additional investment twice.

You should only pay 18% on £1.1m

Likewise if deducting the additional investment brings it to less than originally paid for then he takes his share of the cut.

We cross posted.

General maintenance should have been split at the time, but if you paid all a percentage needs to come out of her share of the capital.
If you didn't maintain it the value for both of you would have dropped.

The OP said BIL share was roughly 175K which puts value of house at approx 972,000 ( what they actually paid is conjecture but there is some equity)

There is a paper trail by both sides acknowledging MIL owned 36% of the house this % can not now be changed retrospectively

I think they hoped that with improvements and rising market the equity would be sufficient to remortgage so they could buy his share out however according to OP this has only raised 60K so they are still roughly 115K short so they have no option put to sell up to give him his share,

Their lawyer seems to have said that because they can't buy him out the expenses that relate to giving him his share must be born by them, if they had been able to buy him out he would not have had any expenses so presumably the argument is that he can't be made worse off by the fact that OP and her DH can't buy him out
None of the costs of improvements before MIL died are nothing to do with BIL as the only people benefiting were MIL, OP and her DH and how they split costs of improvements, original fees etc and bills is also irrelevant,

it is perhaps arguably after her death that he is responsible for 18% of any ongoing maintenance required

The only really debatable is whether BIL is responsible for 18% of the fees for selling and possibly ongoing maintenance both of these figures are likely to be quite small compared to 175K

the only other question is how soon BIL can force a drop in price if it is not selling it seems he would rather the price dropped and he got 165K this year rather than hanging on and getting 175K next year,

the OP would rather wait until brexit over and some confidence return to housing market as then the price may rise; it is however highly unlikey to rise enough for them to buy him out so my guess is just to bite the bullet and get on with it as soon as possible and then draw a line in the sand, OP will have roughly 175K minus costs as a deposit for next house, however timing is bad for them as they won't get a big mortgage as I think she said one of them had been made redundant

So on an emotional level it all stinks and I quite get why OP is unhappy as BIL just wants money he never cared for his Mum or his brother which is hurtful, but legally it is all fairly cut and dried they have to sell up as fast as possible

OP’s lawyer has given wrong advice over the costs of sale. It’s very simple.