The Lemon Fool

Brother A lived with parents for over 40 years until both parents died.
Brother B left home in his early 20's, fended for himself got married and had kids.

Both parents died within a year of each other and left all assets equally between Brother A and Brother B. The last parent died 11 months ago. Brother A has continued to live in the parents house and hasn't paid any rent or offered to pay any rent to Brother B. Brother B doesn't mind but just wants his fair share from the property value.

Brother A intends to carrying on living in the house and purchase from brother B.

Brother A had the house valued by the dominant estate agent in the area the week after their last parent died and they stated £420,000 to market and will get at least £400,000 realistically.

Brother B has asked for £200,000 to transfer title to Brother A based on the valuation not reflecting the fact that house prices in the area have appreciated by 10.6% over the past year. Brother B has said Brother A can keep all the furniture, white goods etc etc as part of the arrangement for no additional cost.

Brother A says the house isn't worth more than £350,000 despite the above and won't agree to the transfer value.

Brother A and Brother B have had a good relationship until now.

What should Brother B do now given the house would likely be marketed above £460,000?

JonnyT wrote:Brother A and Brother B have had a good relationship until now.

What should Brother B do now given the house would likely be marketed above £460,000?

I assume this is in England. He could draw Brother A's attention to the fact that B can get a court order requiring a full sale, and A doesn't have a cat in hell's chance of resisting it. A might then take a more realistic view on valuation.

Presumably there is not enough cash in the estate to cover the amount 'owed'?

Dod

I take it you are brother B. I take it brother A has no children. If you do not need the money, and brother A is willing to will all of his estate to your children...? There may be some tax advantages to such an arrangement.

It is not worth falling out over £25,000 and in any case you do not know what you might get for the property on the open market. You would need to deduct costs of sale from the proceeds. Negotiate a deal.

Dod

Get a new valuation to show its worth more than £400k, but then accept £200k based on the valuation at death, not half of the current valuation, and ignore rents and value of the contents. As others have said brother A might look a lot less fondly on brother B's children in their will if there is an argument, and any escalation is likely to wipe out any other sums in legal fees.

It presumably was valued for probate, so use that value. The brother who lived in it for 40 years with his parents, presumably helping look after his parents as they got older, probably feels he has a moral right to the house he has lived in for so long.

Unless the other brother desperately needs the money, he should go along with what his brother wants, though if that makes the value 350k and less than probate value that is a difficulty. Normally if a house is sold for less than probate value within, I think, 4 years, you can substitute the sale price for IHT purposes and get a tax refund. But HMRC might regard the sale to the brother as not an arms length transaction.

Brother A inherited more cash/other assets than required to pay off Brother B and had over £300k of investments 10 years ago and hasn't spent anything as cars were provided by his employer etc.

Brother A lived almost scott free paying nominal board for over 40 years. He had a period of 6 months where one parent was terminally ill but carers visited twice daily. It didn't affect his employment etc.

JohnB wrote:Get a new valuation to show its worth more than £400k, but then accept £200k based on the valuation at death, not half of the current valuation, and ignore rents and value of the contents. As others have said brother A might look a lot less fondly on brother B's children in their will if there is an argument, and any escalation is likely to wipe out any other sums in legal fees.

That's exactly how Brother B wants to play it, but Brother A likely won't play ball.

How worldly is A, and how rich? Perhaps £200k would decimate his savings, and he knows in his heart he can't afford to continue in the house, but can't face the upheaval to his life. How much does B need the money? How do each feel their parents would react to the situation?

JonnyT wrote:Brother A had the house valued by the dominant estate agent in the area the week after their last parent died and they stated £420,000 to market and will get at least £400,000 realistically.

I do find myself wondering if this is a whole story. "Dominant" estate agents have a reputation for massively over-valuing in order to get the business, whereas more sensible and moderate agents tend to value more accurately and ethically but as a result, lose the business.

Forgive me for wondering if Brother A actually obtained valuations from three estate agents and Brother B has conveniently selected the highest valuation of the three.

Also, in a rising market I'd say valuation at the time of inheritance is what counts. If the marklety had fallen would Brother B have happily accepted a current, lower valuation I find myself wondering.

Mike4 wrote:I do find myself wondering if this is a whole story. "Dominant" estate agents have a reputation for massively over-valuing in order to get the business, whereas more sensible and moderate agents tend to value more accurately and ethically but as a result, lose the business.

Not just a dominant agent. The average agent massively overvalues.

Contrast: average UK house price £256k (ONS) vs average asking price £328k (Rightmove). It would appear the average price on the market is 28% higher than the average sale.

UncleEbenezer wrote:

Mike4 wrote:I do find myself wondering if this is a whole story. "Dominant" estate agents have a reputation for massively over-valuing in order to get the business, whereas more sensible and moderate agents tend to value more accurately and ethically but as a result, lose the business.

Not just a dominant agent. The average agent massively overvalues.

Contrast: average UK house price £256k (ONS) vs average asking price £328k (Rightmove). It would appear the average price on the market is 28% higher than the average sale.

True. Last house I sold, three years back, gobby "market leading" agent suggested £x. The local village agent advised asking price £0.925x, take £9x. We eventually completed for £84x.

In this case the leading estate agent is the local village agent. Brother B has suggested getting three valuations from different agents but Brother A doesn't agree and says market value has nothing to do with it.

Brother B wanted to complete the transaction straight after probate was obtained last Autumn but Brother A asked to wait until after April as some of his monies he wanted to use for the transaction were tied up in ISA's that matured then. Brother B agreed to give him this space for zero cost. i.e. no rent etc. It wasn't even discussed.

Brother A has now had 8 months free occupancy since probate was obtained.

Brother A being two years younger than Brother B wants to retire now in his mid fifties, Brother B needs another 5 years before he can even contemplate it even with the cash for the house.

Mike4 wrote:Also, in a rising market I'd say valuation at the time of inheritance is what counts. If the marklety had fallen would Brother B have happily accepted a current, lower valuation I find myself wondering.

If brother A has effectively held brother B’s inheritance invested in a house for a period surely brother B is entitled to any gains. In the event of a current lower valuation should brother A not have to bear the loss?

quelquod wrote:

Mike4 wrote:Also, in a rising market I'd say valuation at the time of inheritance is what counts. If the marklety had fallen would Brother B have happily accepted a current, lower valuation I find myself wondering.

If brother A has effectively held brother B’s inheritance invested in a house for a period surely brother B is entitled to any gains. In the event of a current lower valuation should brother A not have to bear the loss?

If the assets were left equally, then brother B is entitled to half the value of the house. Whoever the executor is has a legal duty to realise the assets of the estate for the best price and distribute the proceeds after expenses between the brothers equally. Brother B could insist the estate sells the house and brother A can buy it if he likes in competition with any other buyers. Perhaps Brother B shoud suggest that as it might concentrate brother A's mind!

IANAL but I don't think brother A has any legal right to continue living in his parents house.

Two choices -

1. Go legal and get 50% of the current value after selling fees *and* the costs of going legal; and likely destroy the relationship forever.

2. Discuss and see if you can get the best agreement close to 50%, and potentially maintain a relationship if handled sensitivity.

Pick.

AF62 wrote:Two choices -

1. Go legal and get 50% of the current value after selling fees *and* the costs of going legal; and likely destroy the relationship forever.

2. Discuss and see if you can get the best agreement close to 50%, and potentially maintain a relationship if handled sensitivity.

Pick.

I do wonder if Brother A feels he spent a good many years looking after their parents in their dotage thereby allowing Brother B a trouble-free life he might not otherwise have had, so feels he should get a good deal in the division of the house as 'soft' compensation. If he is thinking this way I'm inclined to agree with him. Might be worth raising the point if Choice 2* is selected.


* Point of Order. Surely it's one choice, between the two options. One for Pedants' Corner really

Brother A didn't spend many years looking after parents. Perhaps the last year. It was the other way around for many years.

Parents wanted to move House twice but Brother A had hissy fits so they didn't move.

The House had it's value updated yesterday by the market leader for the area and it's now market at £460,000 to £470,000

Brother B will still settle for £400,000 transfer value.

Who is / are the executor(s)?