In the cases that I’ve seen, the ones who want to keep it buys out the others.
Had a tenant of mine, his dad passed away, left the house to him and two siblings. He wanted to move into the house, his siblings, both out of state, wanted to sell.
I suggested he buy them out, but he replied he had no steady income at the time, and his wife with the steady job passed away the year before.
I advised him he can easily get a “no doc mortgage” for the home, that was free and clear, for the best rates, if the mortgage is for 65% FMV. So, got a mortgage, and it turned out at 65%, it was exactly the amount needed to buy out his siblings 2/3 share.
The estate will most likely need to be probated. Although you don’t indicate what State you are in, I presume that the total assets exceed the maximum threshold for summary probate.
What usually happens in situations like this is that the personal rep. is appointed and ultimately required to liquidate the estate. This normally means selling to a 3rd party, but it doesn’t have to work out that way.
I have probably completed 700-800 buy-outs (or work outs, if other parties become represented by their own legal counsel). They key is to find a way to pay the cost(s) of administration of the estate and reallocate the equity that satisfies all parties.
Sometimes this can be done by “selling” certain estate properties to heirs or beneficiaries with offsets for the equitable interests for their distributive share of inheritance.
Sometimes the estate rep. can obtain financing directly to the estate to pay the costs and buy out the other heirs who ultimately wish to receive a cash distribution.
Lastly, sometimes there is enough cash available in (or outside of) the estate to pay the essential costs and debts, leaving the heirs to use creative financing amoung themselves to reallocate the equity. This would typically be accomplished by creating notes and trust deeds (or mortgages) among the heirs, so that everything balances. This would be a Peter Fortunato kind of deal.
Posted by John Merchant on May 21, 2007 at 19:46:39:
As Jimmy correctly states, ultimately, if parties can’t agree among themselves the court could and would order the property to be partitioned and/or sold and the money distributed.
It’s quite rare for a Judgment of Partition to actually be entered because the threat alone is enough to do the trick.
Any lawyer with any experience is going to recognize that the inevitable is Part. or sale of the property and encourage his client to settle and avoid the court costs and his own fees for trying a case that’s going to get the property split or sold no matter what he does.
if the parties are in disagreement, but amicable, they can make a deal amongsth themselves (as FC suggested).
if its nasty, the deal gets trickier. one of the people who want to sell should (a) hire a lawyer, and (b) have lawyer write short letter encouraging cooperation, and threatening a partition action. This (a) does not cost that much money, because all the lawyer did was write one letter, but (b) it will definitely get the non-sellers attention. Often, they will come up wth an offer to take out the sellers, so they can keep the property. sometimes, they see the light, and decide to cooperate with the sale. but…
if this does not move the non-sellers into action, file the partition suit. the end result will be a judicially-supervised sale of the property, and a lot of senseless legal fees. Only once did I ever have to take this step, and it settled quickly after the complaint was filed.