Selling inherited house

[Cancermummy]

I'm looking for some advice and can't seem to find anything on this situation.

Me and my sister inherited our grandparents shared ownership house 4 years ago. We both got 25%. My sister was still living at our parents with no interest in moving out and no job (so wouldn't have been able to afford rent payments). It was agreed I would live there and when I eventually sold it she would get what it was evaluated at in the will.

The time has come for me to look at selling the place. My sister is still living at our parents with no job so is unable be able to take over the place. We have put a lot of improvements into the house over the years including a fully functioning garden office. My sister now wants 50% of what we sell for despite originally agreeing to only have 50% of its value at the time of our inheritance.

Does anyone have an idea on what a reasonable amount would be for her to get? Or any idea where we stand legally? To give an idea on price our 25% of the house was originally worth £32,500. I'm not sure what its worth now.

Any help or pointing in the right direction would be appreciated. Thank you.

So I guess then my original position that the sister owed rent to the HA stands then. That means the op doesn't owe any rent to.the sister. The sister is still entitled to 25% of current value less essential expenses.

You are really not thinking about this logically. She owned half the house four years ago and she still owns half the house. You have C benefitted from being able to live there so of course you should have paid the rent on the half neither of you own.

How old is your sister?

You must have a rough idea of the value now?

I sort of agree....except that I think that the the OP has spent a lot on the property and that will be realised in the increased value. Surely the OP should be the only one to benefit from that? I am not talking about essentials or maintenance as the OP paid yes, but also directly benefitted as a result.

Lets say (pretend numbers) the house would be worth £100k without the home office, but is now worth £150k with the home office, surely the difference belongs to the OP as without her financial input, said home office wouldnt exist?

Did the will specify the amount left to you & your sister ie both beneficiaries should receive 25%?
Was there any form of legal contract drawn up between yourselves at the time of your grandparents' deaths stating your sister would only receive 25% of the value at time of death?
Or even just an email stating this?
Or was it just a verbal agreement?

See a lawyer & check all legalities before talking about the finances.

(I recently did probate for my mother's estate & all valuations of house, shared & investments were on the date of death),

I agree with @KievLoverTwo

Unless you don’t mind causing a rift with your sister that could last years or even for life, it’s not just about the money but also about her feelings. I would agree to a 50% split of any profit just on that basis alone (minus the cost of the garden room maybe). In hindsight, you should have just sold the property when you inherited it as now it’s messy. You spent more while living there but you also had the huge benefit of living there whereas your sister has seen no benefit at all so far. If properties like this one have appreciated in value since you inherited the house, it seems only fair that she should benefit from that too. You can find out what it would have been worth the year you became the legal owners (if you don’t already know) by employing a surveyor to do a Red book valuation.

I don’t know the legal position & not sure anyone else does either on this thread. Independent legal advice is your first step. Make an appointment with a solicitor and attend it with your sister so she hears the advice first hand.

I would say that you covering her share of the rent cancels out the rent you owe her. I think it would be fare to give her 50% value of the house now minus what you have invested in it via improvements that have added value.

I think the people who are saying that the rent paid to the HA cancels out rent due to your sister are wrong. It’s been for your benefit that the sale has been delayed not hers. For me as the occupier you’d be liable for 100% of the rent. You get a 25% discount for the portion you own. 25% to sister and 50% to HA. Essential costs (boiler maintenance typestuff) should be split between you and sister.

I think you’ve possibly overspent on the property by adding a garden room. It’d be unusual to find out that value had gone on to the property. It might make it more desirable or easier to sell. I have a conservatory on my house that needs redone. I can spend £20k -£30 k on it but the value of the house won’t increase.

The sister wouldn't have to have paid her share of the rent if the OP had sold the property straightaway so I don't understand why anyone thinks she should pay it.
The OP stayed int he property for her own convienience. She has saved herself money and the sister has lost out on money.

This saved me having to type the same answer! Of course you alone paid the rent on the 50% you didn't own; you lived there, not your sister!

Split the inheritance on the way the Will advised, as you're arguing over a few pounds that is not even worth spending legal fees on.

Yes, but THEY didn't sell it, therefore they both remain liable for the rent. It is a joint asset and a joint responsibility.

Your sisters inheritance has been delayed not for her benefit.
She should get 25% of what it is worth now and potentially you should get a refund if the cost of the improvements depending what they were. I wouldn't bother if it was a lick of paint since you've enjoyed rent free living in her property.
But if you've invested significant money you should get that back.

So
Sell house
Refund yourself cost of improvements, then,
Split house sale money according to will - 25% each.

That's fair.

If you give her 25% of what it was worth, that's a complete guess, so not fair. And she could have been using that money if only earning her interest in an account so not fair.

Do you know that it's definitely increased in value?

Mine hasn't much and I live in a very popular expensive place.

The problem with saying sister should get 25% of the current value, less the costs of any improvements the OP has made is as follows.

Firstly, the fact that OP has spent eg £10,000 on the house does not mean the value of the house has therefore increased by £10,000. That is very often not the case, and she has chosen to spend that money and has enjoyed the benefits she perceives thereof. (In a very worst case scenario, sometimes so-called improvements can actually damage the market value of a house - not that we have any indication that is the case here, but it can happen, as we all know).

Furthermore, OP has made these improvements off her own bat, and in the full and certain knowledge that she was renting and would one day be moving on. I doubt her sister was consulted much, despite the fact she is an owner every bit as much as the OP. How often do we see people who are renting advised not to overspend their own money on their home?

She expects the sister to effectively pay 50% of these works she has had the benefit of - but her sister only owns 25% of the property and will only receive 25% of any uplift in value achieved on the sale. By her own logic, OP should be expecting the HA or whoever owns the majority 50% to pay half the cost - but of course she does not, as she knows that is not how it works.

Exactly the same logic applies to her sister.

OP you have benefitted massively through your sister's agreement to defer the sale, paying only 75% rent for all that time. You were completely unreasonable to get her to agree she would only get 25% of the probate value, regardless of when the future sale took place, possibly preying on her naivety. I struggle to believe any court would uphold that.

By living in the property, you seem to acquired some notions that you have some moral and legal rights with regard to it. You are wrong, your sister owns it every bit as much as you do, and has already suffered by tying up her capital to help meet your housing needs.

Do the right thing by your sister, and avoid a totally unnecessary rift in family relations in the process.

I think this thread sort of proves the point. A bunch of intelligent women and we're arguing amongst ourselves about who owes what to whom. There is no clear cut answer, which means the lawyers will happily argue about it for as long as they are paid to do so.

OP says that the initial value of the share was £32,500. If the property has increased in value by 10% that's £3250. So OP can either spend much more than that on lawyers to argue the toss, destroying family relationships in the process. Or she can let it go and split things in line with her grandmother's wishes.

It really comes down to which is worth more - three grand or her relationship with her sister.

But the sister didn't want to keep the house and did not rent it from anyone, theres no contract for the sister to pay rent to the 50% owner.

OP is the renter, she rented the house off the 50% owner which means she pays all the rent not her sister.

Its the same way OP sister is not liable for any bills or council tax, it the person who LIVES theres responsibility to pay these bills.

My landlord doesn't pay half the rent just because its his house lol.

Whilst I agree with your conclusion in the current situation @Motorina , what this story demonstrates is the need for people to get legal advice before doing anything. It's cheaper, easier and prevents confusion in the future.

No she wouldn't as she did not take on rental responsibility of the house, the person living there did.

You really dont know what you are talking about or how rent works.

I am literally in this situation (actually more complex as there is a clause in my case that the 3rd person lives in the house until death) and I can tell you, having gone through solicitors and legal advice for it myself you are wrong.

How were you allowed to do such improvements on a house that someone else owns 50% of ? I guess the HA or whoever owns the 50% is benefitting hugely too?

Unless they set out any of this contractually at the start then actually it is legally pretty simple they own 25% each so will get 50% each of the sale value

all of the arguments are around the morality of it and who has benefited and who has paid what but given there is no actual agreement the original ownership stands

I'm not sure that I'd necessarily class the garden office as an improvement that should be refunded. It could well have reduced the value of the house by limiting garden space.

They are often placed against the back wall where planting needs to go for privacy or the garden is overlooked. It cost me several thousand to have one removed in the last house I bought.

I agree with your proposal being fair, but whether it's legally correct is another matter. Depending on the wording of the last deceased grand-parent's Will, it could be a simple matter of a 50/50 split on the sale proceeds, whether OP likes it or not. This is why she needs to get legal advice. If a solicitor tells her this is the case, then OP will understand her and her sister's rights before having any meaningful conversation with her about it. OP could then try to negotiate with her sister on the basis "Yes, of course you're entitled to half of the sale proceeds, but I invested £x,000's on these significant improvements and surely you would want to be fair and reimburse me for those costs?". If the sister doesn't see this as fair, then OP would have to chalk it up to experience and rethink her relationship with her sister.

You're in the wrong here.

That's just because you didn't want/need one, but with the shift towards more home working post-pandemic, you're in a minority, and the briefest of internet searches will tell you you're wrong about a reduction in value: "On average it will cost around £9,000 to build a garden office but can add an average of 8.4% to the value of your home." [Source. The Property Centre]. This is just one quote from many sources which clearly state a home office does increase the value of a house (and certainly doesn't reduce it).

Offer to meet in the middle so not 50%, but maybe 35%. And take into account all of your expenses inc your own labouring costs to upgrade the property