What do you do when you inherit a home with someone else and one person wants to sell and the other does not? This can get awfully tricky and very controversial. This is where probate may need to step in. It’s an all too common problem, especially among families but there are a variety of solutions that the parties can take.
First up, verify that both parties own the property outright. Has it gone through probate or was it inherited through will? Does the will give guidance on how to distribute the property? Probate courts will enforce a person’s last will and testament as closely as possible if there is one. If there is no will there will not be an initial discussion on who does what with the property.
Often times, the will will state that both parties, in most cases siblings, own the property together. These siblings or whichever two parties are involved, will need to figure out if there is a mortgage that needs to be paid off. Is there any equity in the house and should you obtain an appraisal of the property to find out what it is really worth? If the property has very little equity, it may not be worth it to fight over the property however, if the property is free and clear of all mortgages it complicates the situation some. If the home is valued at a certain amount, both parties will own equal portions of the property. For instance, if the house is $600,000 and it is currently worth this, each party will receive $300,000, or split among however many people are involved.
If one sibling or one party wants to sell, this usually means that they are in need of the cash or simply do not want to have to deal with the property. The other party simply could buy out the sibling that wants to sell for half of the value of the asset. If the property is owned free and clear, and one party is unable to buy out the other party, that party may need to take out a mortgage on the home itself in order to buy out the other party.
If this is the case, you’ll need an appraisal on the property. The appraisal should be split between the two parties evenly (or however many parties are involved). Once you have determined fair market value for the home, the party that wants to keep the home can buy out the other party. If there is a mortgage on the home, both parties will now be on the deed and be responsible for the mortgage. Again, one party can buy out the other and then maintain full responsibility of the mortgage.
If the person that wants to sell wins out, when the home is sold on the open market both parties may not receive the full amount that the home is worth. There are closing costs, repair costs and real estate commissions which will need to be paid as well as any mortgage or liens. This reduces the net proceeds that will be divided between the two parties.
If there is no agreement to be made, the alternative is a litigation called “partition”. This is an act by court order or otherwise to divide a current estate into separate portions representing the proportionate interests of the tenants. This can get messy and it can cause division in the family so it’s best to try and resolve the real estate issues on your own. Courts will typically not require two or more people to continue to own real estate when one of them wants out. The suit for partition can be filed in the local courthouse that will either force a resolution or sell the property to a third-party and divide the net proceeds. However, the emotional wise there are usually no winners in this situation.
Read more: Do I need probate court proceedings?
Dividing a property, selling a home or choosing how to go about resolving conflict after a person dies can be extremely messy and uncomfortable often times will need to find the best resolve for everyone involved. For more information about probate court, dividing real estate or answers to your probate questions contact my office now.