Buying property within family

Seems like we got a decent buy as we bought for a lot less than $900k... A fair bit of work to get it up to the standard that The Gap house was in, but saw the growth potential as the opportunity I couldn’t let pass....

 

Interesting, I hope the rest of your family was happy and that you had it valued first. I am all for buying undervalued property, but not when it is family. In reality, there was not hurry to sell the house in Paddington.

 

Well, the reality is that they did need to sell in a hurry and after numerous months on the market and then going to auction, we were the only buyers that were willing to buy.

 

I work in this area. The reality is, no you don't need a fire sale to go into an aged care facility. This is misinformation. Just because it didn't sell at an auction, or at a listed price,doesn't mean that it has to be sold under valuation within months. I am sure that if an agent had marketed this property differently or there was more time, that there would have been a lot of interest at more than what you paid- you would not have been the only buyers at that price point that were willing to buy. You seemed to be very interested in the property very early in the piece, could that have be a rather large influence in how you bought the property? I have seen this scenario over and over, I would rather pay an older person a little more for a property in a desirable position. I would be surprised if your family didn't insist on an independent valuation. Congratulations on your purchase, but it doesn't sound right from what you have stated, I certainly would have been interested in the $800ks. Wouldn't be surprised if some of your family get very annoyed, they might not be now as it is a very stressful time when people move into an aged care facility and they would have other pressing issues. Seen families ripped apart due to this type of thing. Good luck to you. "Well, yes of course I'm needing a good deal to make it worthwhile for me"- you got your good deal.

 

Thanks a lot for your feedback Cate but you don’t know the whole story so please don’t act like you do. We didn’t rip any family member off and we did pay market value as there was a contract with a random buyer for X amount that ultimately fell through from the buyers end. That was nothing to do with us. We only came in after this and bought for that X amount minus agent fees so a very strong arguement is that we DID buy at market value given that actual market value dictated our price.

Of course if a different agent, tried to sell in a different market a different price could have be gained but as I said earlier, they needed to sell, a point which you seem to know more about than myself and my family.

Given that you work in aged care (in particular, the aged care that the family member is now residing in), you would be well aware that we’ve had to dish out over $20k in interest right?

 

In all fairness, people can only comment on the information given.

Obviously it is up to every person how much they disclose, but there is no point in getting upset if readers misinterpret your posts because you omit relevant facts. You ask for advice and opinions, inevitably you will get some you don’t like.

If everyone in your family is happy, then clearly it was a good result all around.
Marg

 

Fair point Marg.

I was in no way getting upset, just outlining (as you have) that there is more to the story than what has been discussed. You are the very first to comment in a neutral tone outlining that 'If everyone in your family is happy, then clearly a good result all round' and greatly appreciate that you can see the other side compare to the 'I wouldn't touch it with a 10 foot pole as you're clearly taking advantage and your family will bust up in the future' point of view.

 

Possibly because experience tells us that peoples views of something change over time. The sentence might start with “everyone in the family is happy”

now.

And in ten years “but....”

A lot of people would just prefer to avoid even the possibility of conflict later on.

 

If everyone is happy doesn't mean necessarily it is a good result. What did both yourself and the attorney do to protect yourselves against potential allegations of elder abuse down the track?

 

My personal protection (the buyer) is purely based around the fact that we purchased it for the same amount that another random buyer (totally unrelated or unknown to the family) was going to purchase it for. A contract was in place and it fell through from the buyers end. Given we purchased for the same amount where is the abuse or advantage in that? From the POA's (sellers) point of view, I'm sure they have had those conversations with their lawyer/solicitor around the POA's obligation and how they acted but I obviously cant comment on that as I was not a part of those conversations.

I keep saying, it got to a stage where they had to sell in order to pay for the nursing home bond as the $ to pay interest dried up. An argument could be made that we actually provided them an out/solution to their problem given we were the ones who provided them with a buyer.

Yes we may benefit from this transaction, but we also may not. Nothing is given in the property market. We gave up our lovely, renovated, nice, clean, well presented house (according to Cate Bell's earlier comment) to move into a run down, older property that will need work in the future. Who in their right mind would do that unless there is a potential (not a definite) future gain? I'm sure you wouldn't you sell any of your property/houses to buy a worse off property/house that cost you more?

 

I wish to clarify that the process we undertook to purchase the property was actually different to the initial post. We independently sold our house to finance the purchase of this. I understand this point of view if we were buying this as a deceased estate, but were not.

What leg could other family members stand on to cause an uproar in the future? They had the same opportunity to sell property and or finance the purchase themselves. They couldn't and/or chose not to. That's not a issue for myself as the buyer or even an issue for the seller's who wanted and/or needed the sale.

 

This disputes can arise later after death happens, so take care, just in case. A contract that fell through doesn't really prove much, a valuation should probably be obtained. Just think in 5 years time if someone disputes this and gets their own valuation done, based on the time you transferred title, it could be way different to what you actually paid. You could be forced to pay more at that point.

 

Please let me say again that I do value and appreciate the conversation, feedback and all viewpoints.

 

To move to a better area? People do this all the time.

No judgement here. Just be aware that what you think are your protections may not prevent others from taking legal action in the future. The court may have a different opinion of fairness to you. There may be additional things you can do that help you legally even if you dont think you need it.

 

Thanks Terry. Good point, but can you elaborate further? Hypothetically if the initial random buyer did end up buying it for the X amount (same as I bought), could this be forced upon them? If not, why could this be forced upon myself as the buyer? Can this be forced upon the POA as well?

My question is basically, why is it the buyers responsibility to purchased at the valuation price, compared to the seller selling at the valuation price given that they're actually the one's who are acting on behalf of the seller?

 

The random buyer is an unrelated party for legal purposes. You are not. This has nothing to do with the price. As a related party there are additional responsibilities on you as a buyer.

Legally its harder to sue an unrelated party for not paying fair price, because the transaction is arms length (some exceptions, say if the seller was mentally ill).

 

Let's do an extreme example

Bart buys Thelma's property for $100,000. It is sold by Barney as Louise's attorney.
Later Thelma dies and under her will a charity is the beneficiary of her estate. (Charities are very keep to sue btw)
It turns out the property was actually worth $200,000 at that point.

So the charity could sue
a) the attorney Barney for breaching his fiduciary duties
b) Bart to recover the other $100k

 

And assuming that the solicitors/lawyers who were acting on behalf of both sides clearly knew about the situation of purchase (price/conditions/details), wouldn't they be obliged to act and advise in the best interests of either party if they felt it was a messy or bad transaction in any way? Neither solicitor/lawyer has communicated to either party that this sale shouldn't go ahead for any of the reasons mentioned above.

Can you point me in the right direction of information regarding the responsibilities I have as a buyer buying off a related party?

 

No offence or judgement taken.
The moving to a better area is purely my point.
This is what we did.
My question should have been 'I'm sure you wouldn't you sell any of your property/houses to buy a worse off property/house that cost you more in the same or worse area?'

 

I have just come across this thread and haven’t read every post.

I would like to know whether anyone seriously looked after the interest of the elderly lady who owned the property.

Last time I looked, the Aged Care bond (RAD) does not have to be paid in cash. Also, Centrelink gives a person’s home a nominal value (something like $180,000), not its market value, under the Assets Test. From memory, the person has two years before the market value comes into play.

Selling the home means the cash is now counted in the Assets Test. This can have a big impact on the cost of Aged Care.

My knowledge is a couple of years old. We didn’t sell my Mum’s home when she went into Aged Care. Maybe the rules have changed.