My family owns a house that’s split among my father and his three siblings. He spent $100,000 on renovations and wants to buy his siblings out. What can he do?
There’s been a property in our family going back decades. It was actually split into four equal parts among the original owners, who have now all passed away. So the kids of the owners have the rights to the property. They each have 25%.
My grandma and her son (my uncle) were living there rent-free for decades until my grandma passed away a couple years ago, and now the other family members want their part of whatever the value of the home is.
My side of the family has six siblings. They had a meeting as to what to do with the property. Two options: 1. Sell the property and split the proceeds. 2. They pool their money together and buy the property from the rest of the family.
The only problem: Not one sibling wanted to pony up the money to purchase the property. One of these siblings — my uncle — still lives at the property, lives off Social Security (about $800 a month), and really has no desire to have any type of job for an income.
“‘If they sold the property, my uncle would have nowhere to live without money to support himself. And he would be extremely unhappy with some type of small apartment.’”
If they sold the property, my uncle would have nowhere to live without money to support himself. And he would be extremely unhappy with some type of small apartment. In essence, my dad was the only one with financial means to purchase the property to keep it in the family.
My dad has put more than $100,000 into it so far. Once he purchases the property, he will own it outright. So he’s going through all this trouble of contacting long-lost family members to get their signatures for his purchase of the property in exchange for the money due to them from the property.
Here’s the biggest problem: My dad’s other brother sometimes sleeps at the property, but he mostly uses it to store items from his junk-removal business. So the property is pretty trashed. Apparently he doesn’t make much profit from the junk-removal business, so it would be difficult for him to pay my dad any kind of rent.
He’s borrowed lots of money from my dad and other family members throughout the years. My dad’s patience with him is wearing thin, and he wants his brother to get a real job, as opposed to trying to run a business while trashing the property.
My dad just wants the property clean, so he can eventually take out a loan to build a house on the land so he can resell it.
Frustrated Family Member
First of all, never put $100,000 of your own money into a house that (a) you don’t live in, (b) other people use for accommodation and/or storage and (c) is owned by several people, many of whom don’t have the money to buy you out. I understand that spending money on this home will help it maintain and improve its value, but that increased value will likely be split equally among the owners if and when it’s sold. Your father will have an uphill struggle to get that money back.
The problem is: Your uncle who lives there has all the reason in the world to welcome renovations and make his/their home more comfortable, but there is not much reward in giving up that home and renting a smaller apartment. He loses the security of being able to live there rent-free and being the proverbial cog in the wheel, preventing the property from being sold with the proceeds being split among his siblings. It’s a tough spot.
“Your father’s dilemma is the result of bad estate. Leaving a house to multiple siblings will stoke long-held resentments, and cast an unflattering light on the gap in their financial lives.”
If he does wish to sell the home rather than allow this to linger for years, he should do his best to contact the other owners to convey their wishes to sell or not. Given what you said about the other siblings using the property for various purposes, he is unlikely to reach a consensus. As such, he can take a partition action to force his siblings to sell their share. The court will decide if there is a strong reason to sell. This could be an expensive and bitter legal challenge.
As the Law Offices of Weiss & Weiss state in this blog post on the subject of partition: “When two or more owners cannot agree on the disposition of the property in question, any of the owners can file a partition action in the appropriate court.” And what if there is someone living in the property? “A person remaining in possession does not have the right to block the potential sale of the property simply by virtue of living at the property,” the firm says.
There may be an inquest: “Each co-owner is given the opportunity to provide evidence of their contributions to the upkeep of the property, such as payment of real estate taxes, insurance, and property repairs, and any income they may have earned from renting the property,” the firm adds. “A court-appointed referee then issues a report to the court that details what each owner should receive from the property sale, incorporating the evidence from the inquest.”
Your father’s dilemma is the result of bad estate planning by your grandparents. Leaving a house to multiple siblings will surely stoke long-held resentments, and only cast an unflattering light on the gap in each sibling’s financial lives, exacerbating any pre-existing tensions. This is where co-owners could take nefarious actions, like turning off the water and electricity, in a dastardly effort to smoke out the other co-owners.
Selling the house then or now would prevent that.
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