Introduction
I, Mark Roemer Oakland, believe property inheritance can become a complicated matter, especially if you have many siblings. Generally, when inheriting a property such as a house, each sibling is entitled to an equal share unless stated otherwise. However, with the inheritance of the asset comes many responsibilities as well such as making urgent repairs, updating the insurance policy, handling maintenance, and more. If you don’t want to handle such hassles, you can choose to sell your inheritance property to your sibling.
The Options
Let’s look at the options when inheriting a house with siblings:
1. A buyout – This is the simplest option when one sibling wants to live in the property and wants full ownership while another sibling wants to sell their share. The buyout process generally involves the following steps:
- The house and everything it includes is appraised by a professional to figure out the fair market value of the house and its contents.
- All the debts are added up and subtracted from the total appraisal value.
- The final amount is divided by the number of siblings to determine the share of each sibling.
- The sibling that wants to purchase the remaining share gathers the funding through special lenders that specialize in estate funding. These include banks that offer probate, trust, or inheritance loans.
- The money is paid, and the legal ownership is transferred.
2. A private arrangement – The cheapest way to deal with selling and transfer of legal ownership of inherited property is to come to a private arrangement since it would allow you to save lawyer and court fees. For instance, if you want to sell your inherited property, you can accept a predetermined amount of money each month until the home is paid off.
Generally, when you co-own properties, you can put the agreement in writing using two commonly used structures — Joint tenancy and Tenancy in common.
3. Split the profits after selling the home – If both you and your sibling don’t want to live in the house, the best option is to sell the house and split the profits equally. This is a great option since you don’t have to bear any additional responsibility after selling the house such as maintenance and other ownership responsibilities. However, it is important to note you have to pay capital gains tax if the value of the home increases in value.
4. Renting out the home – Renting out the home is the best option if your sibling cannot afford to sell the house or get a loan but doesn’t want to live in it either. This will help to cover property management expenses such as taxes, repairs, mortgage payments, and more.
Conclusion
I, Mark Roemer Oakland, suggest you file a partition lawsuit if your sibling refuses to negotiate or leave the property. When you file a partition lawsuit, the judge will examine the case and decide what to do with it. In most cases, the judge will simply order the house to be sold. However, you should consider this the last option since it can do lasting damage to your family and finances.