When you and your family members have inherited property here in Southwest Florida, decisions need to be made about keeping and sharing that property or selling it. Selling inherited property is usually the easiest course of action, especially if there’s no mortgage. Many real estate firms will buy estate properties in an “as-is” condition for cash. This is the fastest way to liquidate an inherited property with as little hassle as possible. If there is a mortgage in place, the bank may agree to a short sale. This keeps your inheritance from having to cover the mortgage payments. But the process can be cumbersome.
However, family members can’t always agree to sell. In these situations, you will need an experienced real estate attorney, like those in our offices at ZinnLaw to help you navigate these tricky waters. Here are a few options to consider:
Option 1: Buy out your family members’ portion of the property
When it comes to working out what to do with inherited Southwest Florida property, you have several options that don’t involve going to court. The first is for one family member to buy out the rest. Here’s an example of what that scenario could look like.
Mark, Ann, David, and Jennifer inherit their father’s home. Mark wants to keep the home and live there with his family. The other three siblings want to sell it. To keep the peace, Ann, David and Jennifer decide Mark can keep the home if he’s willing to buy out their portions.
For simplicity’s sake, let’s say the house has an appraised value of $200,000. That means each of the four siblings has a $50,000 stake in the house. If Mark wants to buy out his siblings, he’ll owe each of them $50,000 for a total of $150,000. If Mark doesn’t have that amount in cash, he’ll need to figure out how to finance the purchase. He may also be responsible for paying closing costs, real estate commissions and other fees.
After closing, full ownership will transfer to Mark from his siblings. If at any point in the future, Mark decides to sell the house, any potential money he makes is his to keep. His siblings no longer have a stake in the home.
Option 2: Make a private arrangement with your family members
Buying out your family members may not be an option if you don’t have the cash or can’t get a loan or mortgage for that amount. In the example above, if Mark wants to buy his sibling’s portions of the home but can’t secure financing, he could negotiate a financial arrangement with Ann, David and Jennifer.
Mark could get a promissory note drafted up for his siblings’ share of the home’s property’s appraised value. He would then pay his siblings monthly or yearly installments, with interest (similar to a bank mortgage), until he buys out their interests. This removes Mark’s siblings from any liability related to the home and gives the siblings extra income. It’s possible to write the promissory note in a way that gives Ann, David and Jennifer the power to foreclose on the house if Mark defaults on the payments. This type of arrangement often creates a sticking point for many families, but it allows a safeguard for the siblings who are selling their interests. We recommend that you have a promissory note written up by an attorney to ensure all of the legal terminology is in the document to truly protect your assets.
Option 3: Work it Out
Sometimes a home is more than just a house, and selling your childhood home can be emotionally draining so it’s often difficult to move forward with a sale. When the “for sale” sign goes up in the yard, it symbolizes the closing of a chapter of your life. Many people want to keep their parents’ or grandparents’ home out of sentimentality or nostalgia. But if your family members aren’t of the same mindset, feelings of resentment and frustration will soon surface.
Allowing a property to create a rift between you and your family members is never a good thing. It’s almost certainly not what your deceased loved ones would have wanted when they wrote their will or living trust. That’s why talking it out is often the best approach. Listen to everyone’s point of view and discuss the emotions that are motivating you or your loved ones. Make it clear you want to hear their side of things. Make sure your family understands the financial ramifications of keeping the house. Who will pay the property taxes? What about lawn maintenance and homeowners’ insurance? By highlighting the financial implications, you may be able to steer your family members to the reality of their situation.
Allowing a property to create a rift between you and your family members is never a good thing. It’s almost certainly not what your deceased loved ones would have wanted when they wrote their will or living trust. That’s why talking it out is often the best approach. Listen to everyone’s point of view and discuss the emotions that are motivating you or your loved ones. Make it clear you want to hear their side of things.
Put your own self-interest on the back burner. Make sure your family understands the financial ramifications of keeping the house. Who will pay the property taxes? What about lawn maintenance and homeowners insurance? By highlighting the financial implications, you may be able to steer your family members to the reality of their situation.
To find out more about these laws that affect real estate, call Brian Zinn. Give us a call for a free consultation to look over your case (239) 418-1529 or go to our website https://www.zinn.law