What is the fairest way to rent / mind my deceased father's house (with a possible view to buy)

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Treasa_Tuesday

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My father died suddenly a few months ago. He lived alone. The mortgage has been paid on his house (three bed, D6). There are no debts associated with the property. He left a whole of life policy that is valued at €55,000. The will splits everything between us four siblings.

QUESTION: Should I take up the offer to rent my deceased father’s home – as a way to mind the house – and for me to save – before the house is sold. How can we navigate such arrangements with siblings to make sure no one is left short while also making sure I'm protected if the family decide to sell before I'm ready to buy this house or another?

I'm putting this here as it didn't seem to fall under wills / mortgages but does touch on those things. I tried to explain my concerns clearly, apologies if it doesn't - I'm not sleeping well since my dad died suddenly and I'm trying to keep my 10 month old happy while I type!

ADDITIONAL INFORMATION / BACKGROUND

I’m the only family member still renting (€1200 p.m. with my husband and our baby). My siblings and relatives all assumed I would move into the home to keep it ticking over until sale or buy it myself. I was not keen to uproot and be the minder, I worried about a lack of stability when I’m going through so much after dad died. So, I ruled it out and we never got into the nuts and bolts of it. It hasn't come up with my siblings since.

Recently some relatives and colleagues suggested I should investigate the option a bit more. I would like some impartial advice on how these sort of arrangements should be approached to ensure fairness. I think they are worried I will wind up renting forever and miss my chance to secure a family home of my own.

Perhaps someone who has been in this situation can shine a light on my queries:
  1. How long is reasonable to live in the family home at reduced rent while we save for a deposit / find a house to buy? Our savings (€20,000) were steady up until a few months ago – we need to get a good track record back under our belt – so a year would be useful.

  2. How should rent be calculated? It would need to be advantageous for me to leave the home I rent. Rents in D6 are extremely high, while my own rented house is affordable to us for now.

  3. Should a contract / lease be drawn up around the issue? If so, should this cover maintenance and repair issues (if the boiler, which is ancient, breaks down - who pays?)

  4. If I buy down the line and the property were to rise in value after I buy it – will I owe additional money to my family?
I suppose as my child is so young this may be the time to move around - and hope to buy in our chosen area when she is closer to school going age. My family want the best for me but I am anxious that they have not considered various outcomes.

I will broach the subject when I see my family next weekend but would like to have a bit more information to hand – as you can see I am quite clueless and a bit overwhelmed by the emotion of it all. We are a very close, honest and upfront family, so hopefully we can navigate this well.

TIA.
 
Sorry about your Dad.

I think renting from the family, while it would make sense financially, could cause unforeseen family complications with the rest of the family.
 
Sorry for your loss.

I wouldn't do it; no matter how wonderful you are (and I'm not doubting anyone's bona fides here) there will be tears.

I thought I was doing someone a favour in a similar situation and the whole thing ended up in a dreadful fallout.

Either purchase the property as soon as probate is granted or use your share to buy another house.
 
Yeah, that's my gut feeling on it. I think a part of me is panicking that we will get our share of the house and watch it dwindle trying to find a home all the while paying rent to someone else. I was fine with the idea of continuing to rent where we are and buying a difference house later until other family members starting telling me I must be mad.

With regards to buying the property when probate is granted - could my share of the value count towards my deposit - how does that work?
 
"How can we navigate such arrangements with siblings to make sure no one is left short while also making sure I'm protected if the family decide to sell before I'm ready to buy this house or another?"

I deal with this all the time.

You know you're in trouble when none of this is your idea, it's always someone else's idea.

On the one hand, there is a lot to be said, from a security point of view, for having someone live in the house until Probate is granted. I find it better to have a caretaker's agreement in place rather than a Lease and, yes, it needs to be on a casual basis with both sides benefitting.

On the other hand, if no-one is looking at the "hard" questions,

1. IS THERE ANY REALITY TO YOU BUYING THE HOUSE AT FULL MARKET VALUE? SOON?

2. IF NOT, ARE ALL OF YOUR FAMILY WILLING TO MAKE A PRESENT TO YOU OF THE HOUSE AT LESS THAN MARKET VALUE?

I know of families where some of the family have done well for themselves, (usually as a result of very hard work) don't need their share of their parents' estate and have no problem making a present of some portion of their share to another member of the family.

Equally, I know of families where one member believes that for various reasons, they have been overshadowed/overlooked/discriminated against and, as a result, they deserve, and are entitled to, special treatment and a stonking greater share of the estate than provided in the will.

Given that none of us are entitled to any of our parents' money and, if it does come to us, it is to be warmly welcomed but never expected, then the fairest way to deal with a situation like this is for the house to be sold and the proceeds split, as per the will. A quarter share of a D6 house will be a great big chunk of money, enough to put down as a deposit.

If you can afford to buy the house in the short term, and your siblings are willing to sell to you, you will be buying 3/4 of the house as you already own 1/4. You'd need to make an application for a mortgage to see what a Bank's requirements would be

mf
 
Of course, something like this can cause problems. But renting forever, can cause problems as well.

Your family seems to be caring and it looks as if there is an opportunity for you to avail of this, so you absolutely must investigate it further.

Let's look at the bigger picture first. We need the following information to give you any real advice.

1) Would you like to live in this house for the long-term?
2) Would you like to live in it for the medium-term e.g. 3 to 5 years?
3) What is the market value of the house?
4) What is you and your husband's combined salary?
5) How much savings do you have yourselves? - OK, I see you have €20,000.
6) What ages are you and your husband?

Finally, if you do not buy this house, what are the alternative options for you to buy a house for yourselves?
 
Thanks all for giving my query your consideration.
We are going to have a sit down together and discuss the options at the weekend.
As it was the siblings who suggested it first I have asked them to work out what they had in mind with various pros and cons and I will do the same. There is nothing to lose by talking it through. I don't feel pushed into anything and equally I won't fall out with anyone if they decide they are against the idea after all. The way the renting situation is at the moment, we would be seriously screwed if our landlords decided to sell so all options must be hammered out at the very least. If it's not a runner, as someone said - there will still be some support coming our way through the sale of the house. Whenever that goes through it will put us in a very good position to buy.

With regards to the hard questions:
1. IS THERE ANY REALITY TO YOU BUYING THE HOUSE AT FULL MARKET VALUE? SOON?
I would say with one more year of saving (if we lived at a reduced rent for example) we will be in a position to buy the house at market value (when my share is factored). Paying our current rent - it would take longer (stating obvious!)

2. IF NOT, ARE ALL OF YOUR FAMILY WILLING TO MAKE A PRESENT TO YOU OF THE HOUSE AT LESS THAN MARKET VALUE?
I don't know much about the ins and outs of that option but it's not something I think I would request (unless there is some advantage in it for them). While the family are doing fine - they all have their own mortgages and children to support. Long term I think that would be a mistake, if any of them hit a bump in the road for example.

Brendan, in response to your questions:
1) Would you like to live in this house for the long-term? Yes we would be happy to buy and live in this house long term. We had not planned to live in the area that I grew up in, but we did not expect my dad to die either. I'm not particularly tied to any area at this point in time. If we had more children we would consider a move to a larger house, but that is a way off.
2) Would you like to live in it for the medium-term e.g. 3 to 5 years? Yes - as above
3) What is the market value of the house? Between €340,000 - €360,000 according the estate agents we have spoken to. At a max they said it could reach €400,000. Although the houses in the estate have stayed the same over the past few months.
4) What is you and your husband's combined salary? €80,000 and we both have small increases coming (at the moment we pay €1200 rent and €1000 creche per month plus utilities, insurance etc. Neither of us has any personal debt.)
5) How much savings do you have yourselves? - OK, I see you have €20,000. (We definitely have the scope to save quite a lot, but efforts had gone out the window of late)
6) What ages are you and your husband? 31 & 33

Thanks again, I feel like I have some good points to weigh up.
 
So, here are the hard numbers

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If you like the house, you should seek to buy it immediately and you can well afford to do so.

The real cost of your accommodation is the interest you pay on your mortgage. The monthly repayment of €1,187 includes €487 of capital repayments, so this is the equivalent of savings.

Even at €400k, the interest cost of €786 is €400 a month less than the rent you are paying.

If you buy the house, you have security. As you point out, your landlord might not renew your lease.

You know the house you are buying. You know the area. If you are happy with all of these, then you should buy it now at the valuation.

You don't need to do anything complicated like rent for 3 years and then buy it. Circumstances might change. You might fall out with one of your siblings. House prices might rise.

If they want to give it to you rent free for three years, this would save you around €40k. Why not reduce the selling price by €40k and buy it now instead? This would leave you with a mortgage of €206k. You would not feel under any compliment to your siblings. You would have a comfortable mortgage. At some stage in the future, one of your siblings may not be as well off and you will be in a position to help them.


Brendan
 
Treasa_Tuesday said:
there will still be some support coming our way through the sale of the house. Whenever that goes through it will put us in a very good position to buy.
Click to expand...

That is the other option to consider.

If the house sells for €360k, you will have a deposit of €120k. ( 1/4 of €360k; 1/4 of €55k; €20k)

On a salary of €80k, you will be able to borrow around €280k. (3.5 times €80k)
So, you could buy a different house for €400k.

Of course, you will have to wait for your dad's house to sell and then you will have to go through the competitive bidding when you are buying another house.

Brendan
 
Brendan, thank you so much for breaking it down like that. It makes more sense to me now. It would be far better to make a clean break and buy than get into an ambiguous renting scenario.

At the moment, our savings - while not terrible - are not consistent. We we knuckle down and get things in order so that at least by the time probate is granted we will have organised ourselves better and decisions can be made on the basis of actual numbers.

I'm going to post again at a later stage when there is some progress. I definitely believe other people are in this position, and clueless like myself!

Thanks again, you have helped no end at a time when I genuinely needed it.
 
If you (and your husband) like the house and like the area and will be happy with the local schools then I would agree with Brendan that you should consider buying it outright. Have you had it valued yet for probate purposes?
 
We haven't had it officially valued yet. One estate agent (who has sold a few places in the estate) mentioned €360,000. The solicitor said to put down €400,000 on one of the forms for Revenue (not sure which) as as generous estimate. The estate agent is a friend of the family and so he told us to get it valued for probate purposes by someone else as well.

We are definitely happy with the area. It's a lot to take on mentally but not in a negative way. I think the whole family would like to see the house stay close to us. It's just so crucial to do it right! We have relatives who haven't spoken in over ten years over one inherited house and another scenario looming with friends of mine where a person died without making a will.

Thanks again for the input.
 
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