Property Inheritance Help (renters, insurance, condos)

[Indy_Darrin]

My sister and I recently inherited a condo. It is located on the North side of Indy and is worth around $80,000. The condo is paid off. My sister and her husband have been living there the past 6 months for free. I would either like for them to buy me out or sell the condo ASAP. They are wanting to live there for the next year (for free) then put it on the market. They told me the market is bad now anyways. They claim this would allow them to save money and get on their feet. However, they just received about $80,000. I want to be fair and reasonable. But i'm not sure what is fair? Should they be paying me rent? Should I try and force selling the unit before they destroy it? This could get ugly.

[domergurl]

Lawyer up my friend.

[Chuckity]

Get a lawyer. Fast.

Nothing can destroy a relationship like money can.

Anyway, you didn't ask this part, but Indiana also has a nasty thing called inheritance tax. Another reason to talk to a good attorney.

[TraderJack]

If the will says to 'share equally', you'll probably need to sell it and split the money - market conditions have absolutely NO bearing on the will's conditions. Contact a lawyer.

[rrah]

Well of course she's saying the market is bad. If you sold it she would lose her free home. I would be concerned about the condition of the condo after she is living there for another year. We have one "mooch" relative. Over time we've learned the best way to deal with her is to just say no. Maybe your sister doesn't fall into this category, but if she's just inherited $80,000 and needs to live rent free to get back on her feet I would put her in that category.

Much depends on the will and how it is now deeded. In all likelihood you can force her to sell it. The way I would look at it is that this is unexpected money and be happy with it's present value. Is another year really going to increase the value of the condo in such a way that it's worth the headache?

Yes, I sound like a real meanie, but it comes from experience.

[ImGibby]

Well first I would have to say no way would I allow her to live rent free in something you own half of. I would either boot her out and sell it ASAP, rent it out to her, or if it were me, I would keep the darn thing since it is paid for and rent it out to someone else. That way you both get monthly cash flow and will still profit when you do decide to sell it. (Holding on to is a good option because you probably could sell it for more in a year or two than you could now...but she is using the market as an excuse to live rent free.) Renting it out to someone else is a solution I would think even a mooch would agree with being in both your best interests...if she doesnt go for that, or any other options, get a lawyer. It is a renters market out there my friend, you could have that rented in 3 weeks...if you don't let the grass grow.

[ImGibby]

P.S.

If she needs more money to "get on her feet" than what the monthly cash flow from renting it out would provide, you could always refinance it for whatever it takes to make her happy...for example, if she decides she needs $10k, you could take out a morgage for $20k on the house...you get $10K, she gets $10k, and you split the monthly rent income.

If you go the route of renting it out, I would advise you contact a lawyer and set up a LLC. and quit claim the property over to the LLC. It will cost about $500 - $1000 to do this, but then you have a legally binding document that specify who owns what percent (50 / 50 i assume) and how the profits are to be distributed. A LLC will also provide you with liability protection to keep your personal assets seeperate from the cond...that way if a tenant decides to sue you, they can't go after your house, car, 401k or anything else you might have...or if someone sues you personally, the condo would be safe. Just a word of advice, you can't be too careful in this sue happy world we live

[ImGibby]

Oh yeah...I dont know where the property is located, but lets say you could rent it out for $800/mo ( a fair avg in this city, assuming some of the lower end stuff) that is $9600/yr. Lets say the property appreciated $10 in the next yr (doubtful, but we will give her the bennifit of the doubt) That means half of that would be yours, so you get an extra $5k than you would if you sold it now.....mean while she lived there rent free for the year which means she would bennefit $9600 + her $5k =$14,600....vs your $5k!!!! Yup, looks like she is looking out for herself on this one.

Which brings up another option, if you are willing...let her live there for a yr rent free, but figure out what the place is worth rent wise, and when you sell it that amount gets subtracted from her amount and added to yours. Get it in writing and notarized. That way would be too complicated in my opinion, but I understand you proably want to keep the peace...but you should not have to do so at a financial loss to you. Either way, this thing needs to be a 50/50 deal for both of you.

[Naptowner]

Originally Posted by Indy_Darrin

My sister and I recently inherited a condo. It is located on the North side of Indy and is worth around $80,000. The condo is paid off. My sister and her husband have been living there the past 6 months for free. I would either like for them to buy me out or sell the condo ASAP. They are wanting to live there for the next year (for free) then put it on the market. They told me the market is bad now anyways. They claim this would allow them to save money and get on their feet. However, they just received about $80,000. I want to be fair and reasonable. But i'm not sure what is fair? Should they be paying me rent? Should I try and force selling the unit before they destroy it? This could get ugly.

Since the condo is half hers, half the rent money would be hers too, a point a couple people missed. The fair thing to do is to have her pay you half the amount of rent a comparable condo would go for. Are there other rented condos in the development? That might be something to check out to put a number on the value of the rent.

The LLC idea isn't bad if you plan to hold the property for awhile and have tenants living there. But the probate order should provide explicitly who owns what portion of the condo - you don't need an LLC to establish that you and your sister should share in the expenses and/or proceeds of the property. And an LLC won't save the condo if someone sues you personally, since your personal assets include all your ownership in the LLC. Yes, your agreement may give your sister the right to buy your shares before anyone else, but that just means she would have to come up with half the value of the condo in cash just to buy your units of ownership so you could pay the judgment. If you're only going to hold it for a year or two until you can sell it, it's cheaper for the two of you to go in on a good liability and umbrella insurance policy than to set up an LLC.

If the condo's paid for and it's only worth $80,000, why can't your sister buy your half from you? Even with shaky credit she should be able to get a loan for half the value. Another option would be to sell it to her on contract, meaning you would stay on the title to the property until she paid it off, and she wouldn't have to get a bank loan.