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rated:
How many of you have inherited fractional interests in property? 

Myself and two relatives each inherited a 1/3 interest in a Southern California home worth potentially $600-700k, with no instructions on what to do with said house.  The house is 1950's vintage and in poor shape.  Needs a new roof, electrical and plumbing work, new windows (old wood windows are seized up), and all new HVAC since the system is broken and unrepairable due to being 45 years old.  Also, a lot of plaster and exterior stucco damage from earthquakes.  At the very least, it's going to take $40k to make the house reasonably livable again, and more like $75k to bring it up to modern standards.

While us relatives get along fine, and always have, there's a desire by one of them to KEEP the house for sentimental reasons and rent it out.  Like me, she only has a 0.333 say in the matter.  The second relative has a 0.333 say as well, and she may want to live in/own this house someday.  I may end up on the losing end of a 2-1 "vote".

What are my options to cash out my 1/3 interest if we can't agree to sell the house?

 

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Exactly, everyone is always on good terms.  Right up until the point where they aren't.   So, when the party with the mo... (more)

drodge (Jan. 08, 2017 @ 7:10p) |

If you mean that two get a mortgage and use that to buy out the third, that's the only logical way to do it.  I'd do tha... (more)

drodge (Jan. 08, 2017 @ 7:15p) |

As myself and others have said, this is your best course of action, and I echo that things will get worse over time (it ... (more)

faloun (Jan. 09, 2017 @ 10:31a) |

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The wise thing to do, assuming all involved can agree to it, would likely be to get the place fixed up (borrowing the money needed, if need be) and then sell.  Of course, someone has to take responsibility for arranging for the repairs and the relatives often think all the supervisory work should be uncompensated.

Otherwise, dump the house on the market (be sure to avoid all the parasites who will try to get an unlisted deal) using a local real estate agent and split up the cash.

Keep in mind there is likely a very valuable property tax abatement under Proposition 13 which may be transferable to other property after sale if the matter is properly handled.  Mostly people just let the abatement evaporate, often because they are ill-informed  (don't count on the county assessor for reliable info on this-you'll need a lawyer).

If no agreement can be reached it is possible to file a partition suit to force a sale--but, not too good for family relationships.

Perhaps the person who wants to hold on to the house can buy the other two out.

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MrKlick said:   
Perhaps the person who wants to hold on to the house can buy the other two out.

  
That would be the easiest thing to do, all other options are messy.  But if everybody gets along no long term damage should be done unless somebody lawyers up.

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kriskos4 said:   
MrKlick said:   
Perhaps the person who wants to hold on to the house can buy the other two out.

  
That would be the easiest thing to do, all other options are messy.  But if everybody gets along no long term damage should be done unless somebody lawyers up.

Often in these situations, the party who wants to keep the house doesn't have cash to buy the others out.

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BostonOne said:   
Often in these situations, the party who wants to keep the house doesn't have cash to buy the others out.


Well, the good news is they can put 33% down on the mortgage.




If OP doesn't mind being "That Guy", there's this option, but it sounds like both co-owners would be seriously upset:

https://www.google.com/search?q=partition+lawsuit

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If the first relative is unmovable and really wants to sink a bunch of money into repairs then let a bunch of renters ruin the place again, I think it's in your interest to encourage the second to go along with that too. Is it possible that if they split it, they could buy you out?

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runningair said:   Myself and two relatives each inherited a 1/3 interest in a Southern California home worth potentially $600-700k...

 

Been there, done that.  You will all be better off simply selling the house and splitting the proceeds.  

What the house is potentially worth is good to know if you contemplate fixing it up, but what is the actual market value of the property?  I'd get an appraisal done now, as-is, so you have some basis for moving forward.  If it is worth $500k in its present condition, let the other two buy you out at 1/3 of that price and move on.  Even if the fixer-upper potential is a good investment, I wouldn't do it.  Take the money and run.

It may be too late, but you could also have refused the inheritance altogether.  At a value of $200k or so, not saying that would be the bests alternative for you, but if the value was lower, that would be an alternative worth considering just to avoid the headaches.
 

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Keep it simple and put on the market for quick sale as-is. Any possible appreciation from repairs/improvements will be minuscule compared to the hassle of dealing with these family members, construction/rehab loans, and contractors.

Clean out house. Sell house quickly. Divide profits by 3. Done.

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Chargum85 said:   Keep it simple and put on the market for quick sale as-is. Any possible appreciation from repairs/improvements will be minuscule compared to the hassle of dealing with these family members, construction/rehab loans, and contractors.

Clean out house. Sell house quickly. Divide profits by 3. Done.

  This is the obvious answer. Fixing it up while tracking spending and labor costs across the 3 owners would be a nightmare. If the person who doesn't want to sell can't buy it out, then it's too bad for them. Explain to that person that you don't want to start a business relationship with a family member, because that's what you're doing. Would you go into business with each other if you didn't happen to both inherit this property? No? Then inheriting something isn't really a good reason to start a business with someone you otherwise wouldn't.

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What does the executor have to say?
Is the estate out of probate yet?
Is there any mortgage on the property?

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runningair said:   How many of you have inherited fractional interests in property? 

Myself and two relatives each inherited a 1/3 interest in a Southern California home worth potentially $600-700k, with no instructions on what to do with said house.  The house is 1950's vintage and in poor shape.  Needs a new roof, electrical and plumbing work, new windows (old wood windows are seized up), and all new HVAC since the system is broken and unrepairable due to being 45 years old.  Also, a lot of plaster and exterior stucco damage from earthquakes.  At the very least, it's going to take $40k to make the house reasonably livable again, and more like $75k to bring it up to modern standards.

While us relatives get along fine, and always have, there's a desire by one of them to KEEP the house for sentimental reasons and rent it out.  Like me, she only has a 0.333 say in the matter.  The second relative has a 0.333 say as well, and she may want to live in/own this house someday.  I may end up on the losing end of a 2-1 "vote".

What are my options to cash out my 1/3 interest if we can't agree to sell the house?

 


Unfortunately, you're running into the issue of minority rights-- where you're stuck with an asset you don't really want and it's being managed in a way that you don't like.  

If you're going to share an asset with another person, I think there always ought to be some sort of exit clause where you can trigger an auction between you and the other party and force them to either buy you out or sell to you.  I've always thought about this with two person condo or airplane shares where if someone moves, etc.

I think your best bet is to talk to them and say-- hey, if you guys really want to keep it, would either of you be willing to buy me out?  Alternatively, let's fix the place up and make it a productive asset.

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Chargum85 said:   Keep it simple 
I see what you did there

https://en.wikipedia.org/wiki/Fee_simple

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Watched this happen to my mother.  Inherited partial ownership of her father's house after his death, then spent the next 15 years trying to get her brothers and sisters to do SOMETHING about it.  Ended up being a ton of work and hassle - none of them wanted to sell because they thought it was worth more than it was, but were unwilling to put any work or effort into fixing up/maintaining the place.  It lost thousands of dollars in value during that time frame, from pipes freezing over the winter to critter infestations and drained what little money was left in the estate.  She did eventually manage to sell it, but we just found out from relatives in the area that it's now condemned due to structural issues that popped up while it was uninhabited.

Maybe you have different relatives who would actually live in the place and fix it up, but barring that I'd work on convincing them to sell.  Stay sympathetic to the sentimental value of the home, but point out the volume of work/money needed to fix it up and maintain it as a rental property.  Point out that business arrangements like this put a lot of strain on relationships (especially with family) and say that you value your relationship with them too much to risk it over an object like a house - something that is bound to cause issues if you fix it up or let one of them live in it.

Ask if your dead relative really wanted to "gift" hundreds of hours in labor, thousands of dollars in restoration costs, and strain on your family relationships -  or did they just expect you to sell it and split the proceeds?  There are always other houses, and it might be more important for this one to go to a "good family" so that it can have new life.  You can be picky about who buys it and make sure they're going to fix it up and not demo/rebuild.

Best of luck, and sorry for your loss.

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I don't think it's possible to "lose a vote" in this scenario. I imagine any course would have to be unanimous, because they can't rent the house without your consent and they can't force you to put up money for the repairs. Simply politely explain to them that you don't have any interest in being a landlord, and that the only two course of action to which you will consent are a sale or a buyout.

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Rajjeq said:   I don't think it's possible to "lose a vote" in this scenario. I imagine any course would have to be unanimous, because they can't rent the house without your consent and they can't force you to put up money for the repairs. Simply politely explain to them that you don't have any interest in being a landlord, and that the only two course of action to which you will consent are a sale or a buyout.
  Not all.  Make a petition to partition.  If the other two aren't willing to buy you out, ask the judge to force the sale.  As long as you come in looking reasonable and aren't trying to gouge the others on price, the judge isn't likely to force you to stay in a co-ownership arrangement.    I'd start by trying to reason with the others by explaining that if it gets ugly, the situation is likely to end in a cheap sale and you'll all get screwed.  You have to have a spine and stand up though and let them know you aren't interested in the long term prospect of co-ownership.
 

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all parties to a deed must sign off for loans or sale. so you cannot be outvoted. as mentioned get a true appraisal to know what your 1/3 stake represents. Then they either buy you out or you can quit claim or nothing gets done until there is a unanimous decision.

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Get the appraisal done at this point.  I would express the two options you currently will accept for your portion of the inheritance in wirting.  1. being a buy out from the other two parties of 1/3rd of the independent appraisal in the current state or  2. A sale at market price and take 1/3rd of the profits.  Explain you don't have sentimental concern or the desire to get involved with realestate and that you need to pay off your home, car, kids college ect... with the proceeds.  I don't think the desire to keep or live in the house will work unless the other two buy you out so they can fight later over rights.  Going to have to be firm on your position otherwise you might get eeked out of anything that is rightfully yours.

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uuuuut said:   
Chargum85 said:   Keep it simple and put on the market for quick sale as-is. Any possible appreciation from repairs/improvements will be minuscule compared to the hassle of dealing with these family members, construction/rehab loans, and contractors.

Clean out house. Sell house quickly. Divide profits by 3. Done.

  This is the obvious answer. Fixing it up while tracking spending and labor costs across the 3 owners would be a nightmare. If the person who doesn't want to sell can't buy it out, then it's too bad for them. Explain to that person that you don't want to start a business relationship with a family member, because that's what you're doing. Would you go into business with each other if you didn't happen to both inherit this property? No? Then inheriting something isn't really a good reason to start a business with someone you otherwise wouldn't.

  
Not to mention that 2 of the people kinda want to keep it for sentimental reasons, so they are going to want all sorts of upgrades specific to their tastes that won't be of benefit to the OP.

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uuuuut said:   
Chargum85 said:   Keep it simple and put on the market for quick sale as-is. Any possible appreciation from repairs/improvements will be minuscule compared to the hassle of dealing with these family members, construction/rehab loans, and contractors.

Clean out house. Sell house quickly. Divide profits by 3. Done.

  This is the obvious answer. Fixing it up while tracking spending and labor costs across the 3 owners would be a nightmare. If the person who doesn't want to sell can't buy it out, then it's too bad for them. Explain to that person that you don't want to start a business relationship with a family member, because that's what you're doing. Would you go into business with each other if you didn't happen to both inherit this property? No? Then inheriting something isn't really a good reason to start a business with someone you otherwise wouldn't.

  
Not always. My brother and I went through this with my father's house when he passed. His house had about 25 years of deferred maintenance. We were faced with sell his house as-is and get about $400k for it or do some cosmetic work, put on a roof, and fix some exterior painting and sell it for over $550k. We put in about $25k in repairs, including the roof and sold it over asking. So, for us the little bit of time and money was worth an extra $50k a piece. Of course we did a lot of the work ourselves but it was a good brother bonding experience for us. 
 

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I'm looking at this in my future. I own half a house, halfway across the country, with a sibling I'm not on speaking terms with. Said sibling was also living in one unit of the house up until a year ago, I've recently discovered that she moved out. I'm hopeful that since she no longer resides in or near this property, she will be interested in a quick sale when our mom passes. If not, partition suit will be the first order of business after the funeral.

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runningair said:   How many of you have inherited fractional interests in property? 

Myself and two relatives each inherited a 1/3 interest in a Southern California home worth potentially $600-700k, with no instructions on what to do with said house.  The house is 1950's vintage and in poor shape.  Needs a new roof, electrical and plumbing work, new windows (old wood windows are seized up), and all new HVAC since the system is broken and unrepairable due to being 45 years old.  Also, a lot of plaster and exterior stucco damage from earthquakes.  At the very least, it's going to take $40k to make the house reasonably livable again, and more like $75k to bring it up to modern standards.

While us relatives get along fine, and always have, there's a desire by one of them to KEEP the house for sentimental reasons and rent it out.  Like me, she only has a 0.333 say in the matter.  The second relative has a 0.333 say as well, and she may want to live in/own this house someday.  I may end up on the losing end of a 2-1 "vote".

What are my options to cash out my 1/3 interest if we can't agree to sell the house?

 

  If one wants to keep the house, I suggest they buy out the other two.  Had a similar issue many years ago, and that's exactly the way things ended up.  No problems.

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As others said, get the appraisal done, agree with the others that is the best course and ask them if they know any appraiser. In the end if your selected appraiser comes in low (in their eyes) than it may be because you picked a 'bad one', and they will want another done. So let them choose, or at least agree that your choice is a good one before paying the person.

Appraisal comes back $450K. Offer to sell your share at 10% below (so $135K), saying that that since appraisals are estimates and there are transaction costs on selling, you want to be sure they get a fair deal. In the end getting out from this thing hassle-free will be worth the $15K left on the table.

If they are not going along with that, for whatever reason, offer to buy the reasonable one's (2nd relative) share for $135K. Let her understand that if she is unwilling to buy at that price (above), she should be willing to sell. This works better if you can literally cut a check for that amount.

Now, assuming you are still moving forward, and own 2/3rds of the house, you will be able to move to market and sell the house fairly straight-forward

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Chargum85 said:   Keep it simple and put on the market for quick sale as-is. Any possible appreciation from repairs/improvements will be minuscule compared to the hassle of dealing with these family members, construction/rehab loans, and contractors.

Clean out house. Sell house quickly. Divide profits by 3. Done.



This is the correct answer. Only other option is if one of the others really wants it, they buy the others out at current market value immediately.

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in my state you can sue for a partition suit, which forces a sale. But it's the nuclear option and mostly enriches the lawyers.

I'd also frame my thinking of the house being worth what it is right now., as-is. You didn't inherit a 700k house if you can't sell it right now for 700k.

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wilked said:   As others said, get the appraisal done, agree with the others that is the best course and ask them if they know any appraiser. In the end if your selected appraiser comes in low (in their eyes) than it may be because you picked a 'bad one', and they will want another done. So let them choose, or at least agree that your choice is a good one before paying the person.

Appraisal comes back $450K. Offer to sell your share at 10% below (so $135K), saying that that since appraisals are estimates and there are transaction costs on selling, you want to be sure they get a fair deal. In the end getting out from this thing hassle-free will be worth the $15K left on the table.

If they are not going along with that, for whatever reason, offer to buy the reasonable one's (2nd relative) share for $135K. Let her understand that if she is unwilling to buy at that price (above), she should be willing to sell. This works better if you can literally cut a check for that amount.

Now, assuming you are still moving forward, and own 2/3rds of the house, you will be able to move to market and sell the house fairly straight-forward

  You can't sell unless you own 3/3rds, or you have consent. I'm not sure how buying out the more reasonable one will help in any way.

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You will still need to file for partition (if an agreement couldn't be reached)...but in a position of 2/3rd majority holder he would be in a much better position to move this forward to a conclusion (whichever direction was pursued).

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burgerwars said:   
runningair said:   How many of you have inherited fractional interests in property? 

Myself and two relatives each inherited a 1/3 interest in a Southern California home worth potentially $600-700k, with no instructions on what to do with said house.  The house is 1950's vintage and in poor shape.  Needs a new roof, electrical and plumbing work, new windows (old wood windows are seized up), and all new HVAC since the system is broken and unrepairable due to being 45 years old.  Also, a lot of plaster and exterior stucco damage from earthquakes.  At the very least, it's going to take $40k to make the house reasonably livable again, and more like $75k to bring it up to modern standards.

While us relatives get along fine, and always have, there's a desire by one of them to KEEP the house for sentimental reasons and rent it out.  Like me, she only has a 0.333 say in the matter.  The second relative has a 0.333 say as well, and she may want to live in/own this house someday.  I may end up on the losing end of a 2-1 "vote".

What are my options to cash out my 1/3 interest if we can't agree to sell the house?

 

  If one wants to keep the house, I suggest they buy out the other two.  Had a similar issue many years ago, and that's exactly the way things ended up.  No problems.

  
Pretty much this, figure out a value as it is now and have the other two buy you out (one can end up with 2/3 or both with half - not your issue) -- set a fair figure that is a little low (I would think $150K or so would be a good point, pending estimates)  Whatever happens you want to be clear before the reno starts.  

And do NOT offer to carry the note, if this place money pits them then you want to be clear.  Even if one person buys the other two out it is a fairly low mortgage for SC with a decent equity.  If he can't get that one approved then you would rather not be doing business anyway.

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If no one wants to manage the project, a motivated RE agent with contractor connections could help supervise the remodeling project paid for by the siblings. You could get multiple times your money back by making the place look attractive for sale.

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I'm the OP. More info...

1. I would consider buying out the other two. The house is in a good location, low property taxes, no HOA. All that being said, the stresses of buying a fixer-upper just to make it livable again are less than enticing. It begs the question whether more extensive work, like a full blown remodel, should be done at the same time.

2. If I was committed to option 1, a relative suggested "rent to own" for the time being, with 100% of the rent otherwise payable (by me) to the other two going toward house improvements instead. Then, after a year or two, re-evaluate if we want to keep the house.

3. My sentimental relative believes the market value should be greater than or equal to appraisal value at the time of appraisal. She doesn't realize the simplistic nature of these real estate appraisals and how they fail to account for many things. That's part of the psychology behind her wanting to keep the house.

4. I have no desire whatsoever to force a sale in court.

5. After our other relative died, sentimental relative had a new will/trust drafted up for herself. The lawyer inserted a clause leaving any remaining interest in said house to me and the other relative 50/50. So let's say she bought me out, I would reacquire my 1/3 interest in the house upon her death. On the other hand, if we each held onto the house as 1/3 owners, I would acquire an additional 1/6 interest upon her death. At that point, my ownership interest would increase to 1/2.

Can you see how frustrating this is?

...

If the house were sold ASAP, I'd be VERY tempted to take my share of the money, $200K (or whatever amount), move somewhere like Texas, and pay cash for a much nicer house without all the problems.

The only thing holding me back -- and thus giving Option 1 any consideration at all -- would be family reasons. Not everyone is keen on the idea of moving 1500 miles away. We also have elderly relatives in the area with no children of their own, and nobody else to watch after them.

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if you do option 1 wouldn't it be best to buy them out now? If not the way I understand #2 is you pay for all the improvements and they will get a portion of the profits of the fixed up house. Maybe I am missing something.

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runningair said:   How many of you have inherited fractional interests in property? 

Myself and two relatives each inherited a 1/3 interest in a Southern California home worth potentially $600-700k, with no instructions on what to do with said house.  The house is 1950's vintage and in poor shape.  Needs a new roof, electrical and plumbing work, new windows (old wood windows are seized up), and all new HVAC since the system is broken and unrepairable due to being 45 years old.  Also, a lot of plaster and exterior stucco damage from earthquakes.  At the very least, it's going to take $40k to make the house reasonably livable again, and more like $75k to bring it up to modern standards.

While us relatives get along fine, and always have, there's a desire by one of them to KEEP the house for sentimental reasons and rent it out.  Like me, she only has a 0.333 say in the matter.  The second relative has a 0.333 say as well, and she may want to live in/own this house someday.  I may end up on the losing end of a 2-1 "vote".

What are my options to cash out my 1/3 interest if we can't agree to sell the house?

 

  
Refi with cash out to the person and have that person off the title (with a quit claim) and mortgage.  The cash out amount would be the buyout amount.

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after it clears probate and the 3 of u are on the title, go get a mortgage for 1/3. i assume its fully paid off, so there should be no problem getting a loan. u take the money and run, then have the title changed.

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faloun said:   Watched this happen to my mother.  Inherited partial ownership of her father's house after his death, then spent the next 15 years trying to get her brothers and sisters to do SOMETHING about it.  Ended up being a ton of work and hassle - none of them wanted to sell because they thought it was worth more than it was, but were unwilling to put any work or effort into fixing up/maintaining the place.  It lost thousands of dollars in value during that time frame, from pipes freezing over the winter to critter infestations and drained what little money was left in the estate.  She did eventually manage to sell it, but we just found out from relatives in the area that it's now condemned due to structural issues that popped up while it was uninhabited.

Maybe you have different relatives who would actually live in the place and fix it up, but barring that I'd work on convincing them to sell.  Stay sympathetic to the sentimental value of the home, but point out the volume of work/money needed to fix it up and maintain it as a rental property.  Point out that business arrangements like this put a lot of strain on relationships (especially with family) and say that you value your relationship with them too much to risk it over an object like a house - something that is bound to cause issues if you fix it up or let one of them live in it.

Ask if your dead relative really wanted to "gift" hundreds of hours in labor, thousands of dollars in restoration costs, and strain on your family relationships -  or did they just expect you to sell it and split the proceeds?  There are always other houses, and it might be more important for this one to go to a "good family" so that it can have new life.  You can be picky about who buys it and make sure they're going to fix it up and not demo/rebuild.

Best of luck, and sorry for your loss.

Same here.  Watched this same thing with my mother.  She inherited a 25% share of a vacation property with siblings.  We are going on over 20 years of it being unsettled.  She asked to be bought out over 20 years ago and still nothing.  And unlike me, she values her relationships with her siblings over the resolution and they are using it to their advantage.

I met with a couple lawyers over the years to discuss ways for it to be resolved.  The lawyer gave us the following options:

  • She could sell her fractional share to anyone she wanted (not sure how that jibes with some comments above).
  • She could become a nuisance owner; turn off utilities, change locks, report rental violations, report cash rental payments and request income tax docs.

She stopped paying taxes 15 years ago and has never received any rental income and doesn't use the property.  It's deeded to pass on to heirs rather than other owners.  So the joke among the cousins is what we are going to do with our 1/16 shares.  All four siblings are into senior territory.  Just a matter of time, but my Mom has been screwed.

My advice, settle it now and don't wait.  

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Tiggerlgh said:   if you do option 1 wouldn't it be best to buy them out now? If not the way I understand #2 is you pay for all the improvements and they will get a portion of the profits of the fixed up house. Maybe I am missing something.
  
The part you missed is if he/she was living in it -- he/she would "rent" it with sweat equity.

I know someone who got involved in a VERY similar scenario with parents properties in Boston and Cape Cod.  It wasn't hard to sell the Cape Cod property but one of the brothers moved into the other house and the others couldn't get him out to clean it up and he refused to agree to sell it -- and he couldn't afford to buy them out either.  It was pretty ugly before it ended.  They eventually were able to sell it when the deadbeat needed money (guess he ran through the Cape Cod sale proceeds) -- they scraped the funds to buy him out and then literally had to get him removed.

 Another case in Boston I know of involved three people who had split a house, one moved out but was still in theory a third owner, one died and split her ownership with the other two.  Those two "disagreed" about whether the first one had given up his interest when he moved out.  So whether the person died owned half or a third so who controlled the property -- he said he owned half and the other guy said he owned a quarter.  (similar dispute, one wanted to sell and the other wanted to reno and hold out for a lot more money)  I was renting from the estate while they were arguing the case -- it was still a long way from resolved when I moved out.

OP, be glad its still civil but either buy them out or let them buy you out.  It can get uglier before it gets prettier.

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Rajjeq said:   
wilked said:   As others said, get the appraisal done, agree with the others that is the best course and ask them if they know any appraiser. In the end if your selected appraiser comes in low (in their eyes) than it may be because you picked a 'bad one', and they will want another done. So let them choose, or at least agree that your choice is a good one before paying the person.

Appraisal comes back $450K. Offer to sell your share at 10% below (so $135K), saying that that since appraisals are estimates and there are transaction costs on selling, you want to be sure they get a fair deal. In the end getting out from this thing hassle-free will be worth the $15K left on the table.

If they are not going along with that, for whatever reason, offer to buy the reasonable one's (2nd relative) share for $135K. Let her understand that if she is unwilling to buy at that price (above), she should be willing to sell. This works better if you can literally cut a check for that amount.

Now, assuming you are still moving forward, and own 2/3rds of the house, you will be able to move to market and sell the house fairly straight-forward

  You can't sell unless you own 3/3rds, or you have consent. I'm not sure how buying out the more reasonable one will help in any way.

  Not true at all.  A judge can easily order the sale.  It's a simple argument.

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UncleJr said:   after it clears probate and the 3 of u are on the title, go get a mortgage for 1/3. i assume its fully paid off, so there should be no problem getting a loan. u take the money and run, then have the title changed.
  Except there is no chance in hell of getting a mortgage without the signatures of the other 2 people on the deed. Other than that, great plan.
 

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get a fair market value estimate and ask other parties to buy out your portion.

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runningair said:   3. My sentimental relative believes the market value should be greater than or equal to appraisal value at the time of appraisal. She doesn't realize the simplistic nature of these real estate appraisals and how they fail to account for many things. That's part of the psychology behind her wanting to keep the house.
 

  Red flag right there. You dont want to deal with someone who believes the property is worth more than what is realistic.

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runningair said:    The house is 1950's vintage and in poor shape.  Needs a new roof, electrical and plumbing work, new windows (old wood windows are seized up), and all new HVAC since the system is broken and unrepairable due to being 45 years old.  Also, a lot of plaster and exterior stucco damage from earthquakes.  At the very least, it's going to take $40k to make the house reasonably livable again, and more like $75k to bring it up to modern standards.
 

 
runningair said:   1. I would consider buying out the other two. The house is in a good location, low property taxes, no HOA. All that being said, the stresses of buying a fixer-upper just to make it livable again are less than enticing. It begs the question whether more extensive work, like a full blown remodel, should be done at the same time.
 
If you are considering buying them out to fix it up, you need to get good quotes on what you listed above. I think $75k might need to be your starting point, and like you said this is before any cosmetic upgrades are made.

Skipping 18 Messages...
rated:
JiggleTheHandle said:   
Explore every option to make one single owner.
 

  
As myself and others have said, this is your best course of action, and I echo that things will get worse over time (it got pretty ugly with my grandfather's house).  The ugliest family drama is always over money - such as 1/3 of 550k.

Put the argument this way: Would you put up 150-200k to start a property management company with your two relatives?  Do they have degrees in business?  Relevant experience as landlords or general contractors?  Are they familiar with landlord/tenant law in the area?  Is the person closest to the property willing to drive there on short notice when your tenant calls with an emergency?  What if you couldn't choose the house you're planning to rent out, and were forced to use an old fixer-upper that has a ton of sentimental value to your business partners?

If you wouldn't choose to go into business with them then don't let the choice be made for you.  Push to sell before people start seeing dollar signs and before things have a chance to get ugly.  You will be doing everyone involved a huge favor.


 

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