Property dispute advice

Discussion in 'Legal Issues' started by Edsullivan, 13th Feb, 2020.

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  1. Edsullivan

    Edsullivan Member

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    I co-own a property with my brother in the UK, which came about as the result of an inheritance.

    We can’t agree on what to do with the property now that probate has gone through.

    I have no plans to return to the Uk and would like to sell up.

    My brother lives in NZ, but is planning to return to the UK in the next couple of years. He wants to rent it out between us initially and then buy me out down the track. At the moment, he can’t afford to buy me out hence the need for renting it out until such time as he heads back and can get a Uk mortgage.

    I can foresee lots of problems if we try to manage the property together from such a long distance and it is also an old property that needs some maintenance before it is rentable anyway.

    The problem is that my brother is digging his heels in and communication has now broken down between us.

    Has anyone been through something similar? I will be seeking a lawyer for advice, but I thought I’d ask if anyone has experienced this type of situation before and had any tips for me?

    I would prefer to work something out between us if possible rather than bringing in lawyers, but I don’t know what else to do.
     
  2. Beano

    Beano Well-Known Member

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    Why not just lend him the money so he can own both shares and avoid the problem.
    Life is too short to have a family dispute.
     
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  3. Edsullivan

    Edsullivan Member

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    I don’t have the money to lend him unfortunately.

    That’s one of the reasons I’m worried about renting it out.

    The house is a bit of a money pit and I’m concerned about the upfront costs of getting it in a fit state to rent out as well as the ongoing costs of maintaining an older property.

    I agree that life is too short and I would really like to sort this out amicably if possible.

    Just wondering if anyone else has any suggestions that I haven’t considered?
     
  4. willair

    willair Well-Known Member Premium Member

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    Why not take a week off fly over too NZ and have a face to face talk after all you are still Brothers as i don't think who ever left you both this property would want their hard earned money end up in a never ending legal dispute..imho..
     
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  5. wylie

    wylie Moderator Staff Member

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    If you can sell, he could use his share to buy something else in just his name.

    Or hold on to it if you don't need the money now. What sort of work needs to be done to the UK property before it can be rented out? Once that initial money is spent to make it rentable, is there likelihood that this property will need money thrown at it to keep it rented?

    Managing it from a distance should be no different to managing one here, if you have a good property manager looking after you.

    Assuming you value this relationship with your brother, I'd try very hard not to allow a house to ruin it.
     
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  6. bunkai

    bunkai Well-Known Member

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    It sounds like you have to spend some time getting all the concerns on the table (both yours and your brother's) before deciding what to do. Google "getting to yes". Link
     
  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    It is fairly common. You should be able to go to court to appoint a trustee to sell the property. That would cost a fair bit which would come out of the proceeds, but starting it may prompt him to give in or agree to buy you out.

    Legal Tip 70: Two owners of a property - one wants to sell the other doesn't Legal Tip 70: Two owners of a property - one wants to sell the other doesn't
     
  8. Edsullivan

    Edsullivan Member

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    Thanks everyone. I’ve already tried face to face discussions during a visit to see my brother in NZ last year, which went no where.

    The house has flood damage and some structural issues. Would also need new kitchen, bathroom, heating system and windows throughout before it could be rented out. It’s an old Victorian house, with high probability of on going issues down the track.

    Neither of us can afford to do everything that’s needed to prepare it for a rental. At least if it was sold, we could sell it ‘as is’.

    I’ve tried putting forward the argument that we could both take our share and invest it elsewhere, but that didn’t go down well.

    I don’t see how I can rent out a property jointly with the situation as it is, as brother no longer taking my calls. How would we sort out issues that might crop up if there is no communication between us as joint owners?

    I think my next step is legal advice. Perhaps some kind of mediation might help from a neutral third party?
     
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  9. wylie

    wylie Moderator Staff Member

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    How much would the property bring if you sold in such bad condition?

    Can you afford to let it sit empty? You would sell to your brother (or to a stranger) for a reduced price unless you pour money into it.
     
  10. Edsullivan

    Edsullivan Member

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    Actually worth a lot, even in its current state. It’s located in a very expensive area in the UK and is on a very large block. We’ve been approached by a developer who is interested in purchasing it ‘as is’.
     
  11. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    My outside the square solution is for you to keep it as is and your brother to rent it from you at 50% rent until he heads back and can get a loan.

    The advantages of this is that no money need be spent on it, he secures the right to buy it when he can and you get some income on it until he is living there.
     
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  12. Edsullivan

    Edsullivan Member

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    That’s a very novel idea and one I hadn’t considered before.

    I guess that’s what I was hoping for when I posted this thread. I feel like I have tried to think of a number of potential solutions that would suit both of us and have hit a dead end.

    I’ll definitely consider that further.

    Anyone else have any out of the box solutions?
     
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  13. wylie

    wylie Moderator Staff Member

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    I cannot imagine your brother would rent it from you if he's not even taking your calls, and can't afford to buy you out now. I believe you may need to take the advice from Terry above and force his hand.

    What are your brother's plans once he gets a mortgage on the house and has moved back to the UK?

    Will he renovate it in to live in it, or will he develop it, or sell it to a developer once he's bought you out?

    Unless he plans on living there, then I can't imagine why he wouldn't just sell now to someone offering a good price.

    Did you have a good relationship before this poisoned chalice was left to you both?

    How would you feel if the relationship falls apart over this?

    Whether he buys you out or a developer buys you both out, it is worth considerably less if it is not habitable.

    I think your decision may rest a lot on what his plans are for the house (live in it, sell it). Why buy you out unless he plans on renovating it to live in it?

    I guess being an inheritance, you don't have debt on it, so I assume the longer you hold it (rent or no rent), the more valuable the land is.

    Perhaps whatever you spend on it making it habitable might be wasted if a developer will eventually buy it.

    I don't have any out of the square ideas, but believe his motivation for holding it is key to the problem.
     
  14. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    Perhaps he could buy you out in installments?
     
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  15. wylie

    wylie Moderator Staff Member

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    Problem is what if it doubles in price from the price agreed in 2020?
     
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  16. wylie

    wylie Moderator Staff Member

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    When I was about 23 I'd bought a house with my father, brother and an ex-boyfriend. It was a cracker of a house and we did it up (cleaned, fresh paint, nothing major).

    Then my brother needed his money because he got engaged, and they wanted to build their own house. So we really made nothing, because we were forced to sell way before I wanted to sell.

    Hard to believe now that our purchase for $22k between four of us stretched us all financially and none of us could buy the other out.

    Last sale was a couple of years ago. It was shown as a property on Selling Houses Australia as a potential house to move to (fully renovated now). :eek:
     
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  17. Ryan23

    Ryan23 Well-Known Member

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    Something along the line of giving him an ultimatum such as:

    1. If he wants to rent it, get him to be responsible for fixing it up and you both receive the rental income on a long lease (i believe the standards leases are longer in the uk) but make it clear that if it becomes a rental you wont be interested in selling in the future (to him or anyone else).

    2. You both sell it now and split 50/50.

    3. He commits to purchasing it off you within 6 months.
     
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  18. Marg4000

    Marg4000 Well-Known Member

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    How can renting it out even be considered an option if neither of you can afford to bring the property up to the standard necessary for it to be tenanted?
     
  19. The Y-man

    The Y-man Moderator Staff Member

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    I know this sound totally left field - but were you counting on this inheritance? Is it a "nice to have" or a "need to have"?

    The only reason I suggest this is that perhaps the easiest out for this is just give the property to your brother to deal with and walk away? Basically say "here I'll give you my share, pay me when you can" (without really expecting any payment).


    The Y-man
     
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  20. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    When I am asked about beneficiaries accepting property co-owned with others from a will I always ask one question:
    Would you choose to buy a property with those people ??

    I dont believe I have ever had a response of Yes. And it can be easier and less problematic to have the executor sell the property so that cash is distributed, not a share of property. This would clear any accrued tax issue. If developers may have a eye out it may be worth pursuing this option as it may avoid wasting $$$ on improvements and selling costs.
     
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