5 children inherit a house - one wants to buy but can't get mortgage

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Pinoy adventure

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How does a charge on a house work if siblings are involved ?

The case involves 5 kids & family home (4 who have there own homes) and 1 who doesn't but lives in the family home.
The will states house can be sold too any member of family with the sale money divided equally between all 5.
The value of the house is about €300,000.
The child who lives in the house would not qualify for a mortgage as she was a carer for the mother who passed away (but has a good bit of savings roughly €160,000).

In this case how would a lean on the house work if she was too buy out the other 4 siblings with all her savings ???

What options would she have in acquiring the home.
Any advise would be great.
Thanks
 
So each person gets €60k
She needs to find €240k.
she has €160k.
She can buy out two siblings completely for €120k which leaves her with €40k
She can owe one of them €20k and the other €60k.

If she gets on well with only one of her siblings who does not need the money, then she can buy the house.

No need for a lien if the family trust each other.

But if not, the occupier and her helpful sibling can buy the house together so her name would be on the deeds.

Has the occupier any chance of repaying the loan.

If she has saved €160k , presumably she has income in excess of her expenditure.

Can she rent a room to help her repay the loan?

Brendan
 
Thanks for your reply Brendan.
Occupier has a chance of repaying the balance within a few years time frame.she also has income in excess of her expenditure.

Would it be better too pay option 1 -4 x €40,000 or option2- 2 x €60,000 + 1 € 40,000 with a balance of €60,000+€20,000.

The 5 would not be on great terms so too speak as the family home is a touchy subject since the parents passed away.

Too try sweeten the deal if going with option 1 would a 10% interest on the balance €20,000 (payable let's say in 10 years time,this is where the lean comes in ) be advisable or a total non runner ?

Would there be any tax issues here if she pays siblings directly or forgoes her 20% share of the property ?

Thanks
 
Pinoy adventure said:
Would it be better too pay option 1 -4 x €40,000 or option2- 2 x €60,000 + 1 € 40,000 with a balance of €60,000+€20,000.
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This doesn't make any difference. It's what the siblings agree among themselves.

If one person insists on her share now, she has to be paid the €60k. If one is prepared to wait, then she "lends" the occupier the €60k.

Nobody is forgoing any share and nobody should. She is buying them out but deferring payment to two or more of them.

The best strategy would be to try to pay off the most difficult and problematic ones in full, so she is dealing with only two. Then over time "repay" the €20k , so she is dealing with only one person.

She should not build up savings for ten years and then pay it off. She should start paying asap and try to get rid of these loans.

10% interest is very high. If she owes €80,000 , it would cost her €8,000 a year. The recipients would be taxed on it as income.

It might be simpler for her to go to the Credit Union and ask for €80k. But their rates are very high.

Or alternatively, owe the €80k and pay it off as quickly as possible. If the two cooperative siblings need the money before it's paid off, she could then go to the Credit Union.

Brendan
 
Thanks again Brendan.

Would setting up a account with the 2 she would borrow from be a good idea and start paying into the account weekly/fortnight/monthly ?
Would you think the loan should have a contract and interest applied ?
 
She will have two loans - A and B.
She does not need an account. She just needs to set up a standing order and pay €x per month to whomever it is agreed she should pay first.

The property will need to be officially conveyed by a solicitor to the occupant.
I presume that the solicitor will note the deferred payment of the purchase price.

So yes, there has to be an agreement.

It really is up to them whether they want to charge interest or not. I would think that they should try to facilitate their sibling and get the deferred amount paid as quickly as possible.

Brendan
 
I assume the person was out, or mostly out of the workforce for sometime.
Is there any risk of them not being able to maintain a loan in the future.
It would seem in no ones interest to leave them with a big loan (relative to income) and vulnerable to default in the future.

If it were me I would hope to leave them financially independent from their siblings.
I could see any financially dependency has a the potential to be problematic in the future. People can grow resentful.
 
AlbacoreA said:
It would seem in no ones interest to leave them with a big loan (relative to income) and vulnerable to default in the future.

If it were me I would hope to leave them financially independent from their siblings.
I could see any financially dependency has a the potential to be problematic in the future.
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The occupier wants to continue living in the home.

It would be great if she could write a cheque and pay off all the siblings and be independent.

But she can't.

She has a problem now which she can solve with a bit of cooperation. She should not dismiss this solution just in case of potential problems in the future. These problems might not come to pass.

If it turns out that she can't repay her loan of €80k, then she can sell the house, trade down and repay the loan.

But for the moment, she should try to stay in the house as it's nearly within reach.

Brendan
 
AlbacoreA said:
I assume the person was out, or mostly out of the workforce for sometime.
Is there any risk of them not being able to maintain a loan in the future.
It would seem in no ones interest to leave them with a big loan (relative to income) and vulnerable to default in the future.

If it were me I would hope to leave them financially independent from their siblings.
I could see any financially dependency has a the potential to be problematic in the future. People can grow resentful.
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You are correct she was out of the work force since becoming a care giver for her mother for the last 4 years.(it was agreed she would become the carer when her father passed away ) while the siblings all have full time jobs.

She will rejoin the work force pretty soon which will make paying off the loan sumwhat easier,with a salary of about €2000-€2500 monthly.

Most of the siblings would like too keep the family home within the family (this part can become tricky once money/feelings are involved).
 
Can half the money (i.e. €120,000) not be paid to everyone now with a view to the person rejoining the workforce and then getting a mortgage for the other €120,000 to take everyone out?
 
Pinoy adventure said:
You are correct she was out of the work force since becoming a care giver for her mother for the last 4 years.(it was agreed she would become the carer when her father passed away ) while the siblings all have full time jobs.

Most of the siblings would like too keep the family home within the family (this part can become tricky once money/feelings are involved).
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Was any financial allowance made within the family for her giving up her job? If no allowance was made financially for her being the full-time carer for 4 years it would appear a bit rich now for others to think '(this part can become tricky once money/feelings are involved)'.

Another thing that rings alarm bells for me is when I read 'Most of the siblings would like to keep the family home within the family' especially if she is having to buy them out. I often feel that it is best to let the family home go and people in this lady's situation get their own home because even though it will be her home other family members sometimes feel that they still have a right to make use of it.
 
It does sound like the other siblings want the best of both worlds- full market value and the family home staying in the family. And that’s ignoring the career sacrifices made.

Sadly that’s why these things so often end in a row, a combination of emotion and greed. Often when the solution is obvious, stares everyone in the face, and requires the most minimal of flexibility.

If things do get sticky, a perhaps curve ball option would be to engage someone everyone respects to hear all the interests and desired solutions, and have them arbitrate a fair outcome - then people accept it or they don’t. Of course someone refusing ultimately means the place needs to be sold- so it will become clear fairly quickly whether people have the appetite to find compromise and keep the family home in the family and to show appreciation to their sister, or whether nailing money comes first.

For everyone’s sake, especially those who do get on well and want to keep it that way, everything should go in writing, via a solicitor once agreed.
 
A lot of you are missing the point.


Pinoy adventure said:
The will states house can be sold too any member of family with the sale money divided equally between all 5.
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Brendan Burgess said:
She needs to find €240k.
she has €160k.
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So she can pay off two in full immediately.
She needs to get two to cooperate by deferring part or all of the payment.

That should be her first objective. If she can get that, then she buys the house and the first two can do nothing about it.

If three refuse to cooperate in any way, she needs to raise €20k to buy out three of them in full.

No need for family mediation on this unless none of them will agree to a full deferral while some combination will agree to a partial deferral.

Brendan
 
Gordon Gekko said:
Can half the money (i.e. €120,000) not be paid to everyone now with a view to the person rejoining the workforce and then getting a mortgage for the other €120,000 to take everyone out?
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Gordon I'm only assuming that it would take a a few months (6-12) too build a good solid savings history too qualify for a mortgage.
She was receiving carers allowance for the 4 years of caring and has now switch of too jobseekers unemployment payment.
 
Sue Ellen said:
Was any financial allowance made within the family for her giving up her job? If no allowance was made financially for her being the full-time carer for 4 years it would appear a bit rich now for others to think '(this part can become tricky once money/feelings are involved)'.

Another thing that rings alarm bells for me is when I read 'Most of the siblings would like to keep the family home within the family' especially if she is having to buy them out. I often feel that it is best to let the family home go and people in this lady's situation get their own home because even though it will be her home other family members sometimes feel that they still have a right to make use of it.
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Sue - no financial allowance was made apart from her receiving carers allowance in respect of the care she provided + living in the family home (she paid the bills + grocerys )
I was also thinking along the same lines that if they did sell the home she would receive her 20% share which she could put too whatever she has saved and buy a cheaper place.
The family home is in central Dublin so even with her xx savings + 20% she might find it difficult buying a place too her max value.
 
Pinoy adventure said:
Gordon I'm only assuming that it would take a a few months (6-12) too build a good solid savings history too qualify for a mortgage.
She was receiving carers allowance for the 4 years of caring and has now switch of too jobseekers unemployment payment.
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Yes, being made permanent basically, so probably 6-12 months.

Less than the time it takes for probate basically.

I’d pay them each €30k when the time comes and then get a mortgage for the other €120k. And make it all legally robust obviously.
 
presidenttttt said:
It does sound like the other siblings want the best of both worlds- full market value and the family home staying in the family. And that’s ignoring the career sacrifices made.
Click to expand...
Pinoy adventure said:
Sue - no financial allowance was made apart from her receiving carers allowance in respect of the care she provided + living in the family home (she paid the bills + grocerys )
Click to expand...

Good God, talk about Irish style and akin to stuff like The Field.

She gave up her career for 4 years and possibly saved them a fortune in looking after their mother, she paid the bills and groceries and the now the situation is tricky because of feelings/money involved :( She should run a mile because as I said already there is a reason why they want the house kept in the family.

I know one young couple who took out a mortgage and paid the parents the value of the house and they live there but the parents have since died. Family who live abroad think nothing of imposing on them when they come home on holiday and others don't see any problem in calling in uninvited on a weekly basis for meals etc. Brass neck springs to mind.
 
Not only did she save them financially, she saved them emotionally. Her siblings knew that their parents were in the care of a close family member, potentially able to stay in their own home because of her presence. This is unquantifiable in peace of mind terms and they should count themselves lucky that they had her to do this. I really hope that they understand the value of this! While I know it is a very common thing that families fall out or become greedy over inheritances, it makes me slightly queasy. It can be a very complicated and messy situation, but in cases like this I really feel like the carer sibling deserved more than a straight split in her inheritance. I hope it all works out amicably.
 
But it was up to the mother to make allowance in her will for the care her daughter gave her.

I agree that she should have left the house or, at least, a greater share of it, to the daughter, but she chose not to.

I am not sure that arguing this now will get her anywhere.

If one of the siblings feel like that, they can gift her their share.

Brendan
 
Brendan is right, she only needs €80K. So give to siblings €60K each, hopefully the two she gets on least with. Then give the other two €20K each, and she will owe them €40K each. She gets a job, and in 6 months gets a mortgage for €80K and pays off the last two siblings.

Every sibling gets €60K inheritance and she gets a home with a relatively small mortgage. Maybe the house is worth more than €300K and the costs of buying add some extra costs but maybe the siblings will be happy with the €60K each.
 
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