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Can a sale of jointly inherited property be forced?

including wills and probate
MrCake
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Can a sale of jointly inherited property be forced?

#235358

Postby MrCake » July 9th, 2019, 9:53 pm

A is the sole executor. There are a few small specific bequests and after paying these the will states that the residue of the estate is left 50/50 to A and B. The only asset remaining in the estate is a freehold house with no mortgage. A wishes to buy B’s share in the property and B is willing to sell to A if a value can be agreed. Both parties agree that the probate value of the house is no longer the current market value. What happens if A and B cannot agree on a price? Can B force a sale of the property? Or can B sell just their share (presumably at a lower than pro rata price – not many people will want half a house)?

Jabd2001
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Re: Can a sale of jointly inherited property be forced?

#235381

Postby Jabd2001 » July 9th, 2019, 11:11 pm

I don’t know the answer to whether the sale can be forced.
However, I have faced a similar situation concerning how to agree a valuation for sale of a property jointly inherited.
We were advised that the fairest way to determine the market value of the property was to put it on the open market, and then the inheritor who wished to purchase should put in an offer in the usual way. This worked very well for us, as our property was selling in a strong market so we could set a deadline for offers and the beneficiary who wanted to purchase could match the best offer. In a weaker market it might be harder to achieve timely offers. Not sure how well it would work if not all beneficiaries are also executors, because A has a conflict of interest between maximising value for the beneficiaries and obtaining the cheapest price for the half share of the house.
Another approach would be to agree in advance to take the average of say three estate agent valuations. However in a strong market these might not be accurate, and tend to be pretty variable too.

scrumpyjack
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Re: Can a sale of jointly inherited property be forced?

#235433

Postby scrumpyjack » July 10th, 2019, 8:19 am

I would have thought the Executor has a duty to realise the assets and distribute the proceeds in accordance with the Will. The Will left the residue to be shared, not the house. Obviously if the beneficiaries agree to receive a half share in the house rather than cash, that's fine, but I doubt if the Executor could force half ownership of a property on B when he cannot then sell that share at a fair price.

Re the increase in value of the house:- If sold within 2 years of death, I believe the estate has a CGT allowance like an individual, but not after that. If the ownership of the house is transferred to the beneficiaries, they will each have a CGT allowance to use against the sale of the house, or B will have a full CGT allowance to offset against the sale of his share of the house.

I'm not a lawyer, but no doubt CK can give a definitive answer.

Jabd2001
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Re: Can a sale of jointly inherited property be forced?

#235560

Postby Jabd2001 » July 10th, 2019, 3:04 pm

Thinking about it further, I think scrumpyjack is right, that B can force the house to be put up for sale, if they do not wish to inherit a half share of a property but would rather realise the maximum amount of cash value. That seems to chime with the discussions I remember, which did involve professional advice. A can choose to buy the house at that point. I’m not sure B can reasonably prevent A from buying the property if A makes the best offer - but from what you say, B is happy to sell their share to A as long as they receive fair market value.
(Your question doesn’t really make sense, as A wants B to sell the house. I think what you mean is, can B force the house to be properly marketed? I think the answer to that is yes, as it seems to me the most reasonable way to obtain fair value for the beneficiaries. Certainly when I was in Bs position, that was the obvious course of action and, as I said, it worked out well for us in terms of reaching an agreement that everyone felt comfortable with).
If things are getting difficult between A and B, it may be helpful to get a solicitor’s opinion.

9873210
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Re: Can a sale of jointly inherited property be forced?

#235663

Postby 9873210 » July 10th, 2019, 6:43 pm

A negotiated sale between A and B can avoid certain costs and inconveniences. This can be considered if they are on good terms.

Jabd2001
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Re: Can a sale of jointly inherited property be forced?

#235928

Postby Jabd2001 » July 11th, 2019, 4:04 pm

9873210 wrote:A negotiated sale between A and B can avoid certain costs and inconveniences. This can be considered if they are on good terms.

Ultimately the sale will have to be negotiated! The key issue is agreeing a fair basis for determining the value of the house. If A is a willing buyer, and the property is unlikely to sell quickly, then B may be willing to sell at below market price or at an agreed valuation. However, my experience suggests that a price agreed without actually testing the market may result in B receiving far less than the market value (in our case valuations were between 60 and 80% of the achieved market price, so the extra value achieved far outweighed the additional estate agent costs). That is not a recipe for remaining on good terms!


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