Inheritance does not just refer to money – it may also refer to properties. You can buy out an inheritance when several people inherit property from an estate. Siblings can become joint owners of an estate with equal shares. A sibling buyout arises if one sibling wants to keep the property while the others want to sell. Legal advice comes in if the siblings cannot come to agreeable terms.
If you inherited a house with a sibling, you have options on what to do with the property. In most cases, you have equal shares unless stated otherwise in the will. To make the deal much easier, you need to find an inheritance funding company like United Farm Mortgage.
- Keep the Home: Make the property your vacation home so that everyone in your family can enjoy it. Having joint ownership means you have equal rights to spend time there and equal equity in the property.
- Sell or rent the house: This is an option if neither you nor your siblings want to keep the property. You need to determine how to divide the rent and the upkeep of the house. If you choose to sell, profits should be split after selling at market value.
- Suppose you cannot agree on what to do: You may need to go to court and let the judge decide on the order of sale of the home. A third party will take over in getting the property ready for sale. This will affect your profits since the third party will get a cut from the amount paid.
If you agreed on a sibling buyout, the process would be more straightforward. You just pay your sibling cash for their share of the property, and they will sign a deed of sale over to you. You can also mortgage the property for half the value if you are willing to take on the debt.
If you cannot mortgage, set up a private arrangement. You can indicate how much you will be paying for the property with interest in the contract. Determine monthly payments until the property is paid off. In addition to the contract, you need a Deed of Trust to recognize the agreement.
If you want to buy the property from your siblings, you will need to come up with the cash to pay for your share of the inherited property split between siblings. Traditional lenders like banks won’t provide a loan for a property with other owners. Your best choice is to find a money lender like United Farm Mortgage for funding.
How does this work? The lender pays the money directly to the estate, which goes to the siblings selling their part of the property. The sibling who will keep the house will assume the loan and pay the lender. Interests are higher than banks, but approval comes quicker to move forward with the buyout. Bring some cash because probate loans can only provide for as much as 70% of the property value. The lender will determine the percentage of funds and the loan terms. After refinancing, the property title will go to the sibling buying the rest of the property.
If you want to keep the property but your siblings want to sell, you may be forced to sell if you can’t come to a compromise. One of your siblings can file a court action to require the property to be sold and split the proceeds between the siblings. Your house will then be listed for sale through an auction or a real estate listing. You can bid on the property or make an offer.
If real estate is involved, you will need to go through court. You and your siblings will need to reach an agreement, or the court will force the sale. If you want to buy out your siblings’ shares, you will need to have cash in hand. There are a lot of loans from reputable companies like United Farm Mortgage to ensure your assets are protected.
- Get the property inventoried and evaluated. All contents of the home are part of the property value unless otherwise directed. The market value puts a price on everything, ensuring that all beneficiaries get an equitable payout. This valuation will provide you with the amount you need if you consider a sibling buyout.
- Finalize if you can reach an agreement with your siblings. Talk to them so you will know their decision. When you’re all in agreement, the next steps can proceed. If you have the cash to pay them for their shares, then they can sign over the deed of sale to you. If not, then you will need to secure funding.
- Find a lender. Unless you have cash, you will need to get a loan. It would be best to find a lender who specializes in probate or trust loans. The estate technically still belongs to your parents.
- Consider other loan and refinancing options. Explore your options to raise cash. These include home equity loans, money lenders, credit unions, and refinancing loans.
- Get expert help with sibling buyout. You have to be smart in dealing with buying out other beneficiaries.
Understanding the sibling buyout process is not that hard, but it takes work. Siblings don’t always see eye to eye. Even if you think that you are on the same page about the property, anyone can change their mind down the road and derail the whole plan. To avoid these bumps and keep your relationships as positive as possible, do the following:
- Document everything.
- Consult with lawyers.
- Discuss with friends who can listen and provide advice.
- If discussions with family get too emotional, cool off and come back to be ready to negotiate.
Inherited homes are almost always sentimental because of close family and relatives’ passing. This can lead to siblings disagreeing on what to do next. It’s essential to understand your options so everyone’s well-being will be considered.