Inherited property - jointly owned

[hipprum]

My sister and I jointly own a property which we inherited from our mother two years ago, We have good tenants who look after the property well and pay on time.
My sister has just gone through a divorce with her husband and now has a lump sum from the divorce settlement but still living in the marital home. She has enough money to buy herself a property but has decided that she wants to "buy me out" of my share of the property and move in herself. Over the last twelve months our tenants have installed upvc double glazed windows and doors (for which we reduced the rent by about 13% per month), new carpets, curtains, blinds and a new gas fire. I feel morally obliged to keep the tenants in the property. I am also enjoying the half share of the rent each month!
Without mentioning specific figures, I would lose out as the interest that I could earn on my 50% share in the property is a lot less than the annual rental income I am currently receiving.
Can she force me to sell even though she has enough money to buy her own property?
Another point that is relevant is that 12 months ago she lost her job, claimed JSA for about 26 weeks, and has been told that she cannot claim any benefits at all because she jointly owns the property.
I would appreciate advice on this please as it could cause a family rift which I do not want

[Sapphire]

Re: Inherited property - jointly owned

I do believe that she cannot legally force you to sell, I'm sure one of our more learned friends will pop along with more soon.

[enquirer]

Re: Inherited property - jointly owned

Check the Will, to see how ownership was allocated - tenants in common or joint tenants?

I believe that she could force a sale. However, as she has enough money to buy herself a property (cash, presumably?), and is still in the marital home, her chances of success are not as good as they might be.

The terms of the tenancy agreement also need to be considered. The tenants may be inclined to resist arbitary eviction.

The fact that the tenants have contributed to the fabric of the property is also a problem. What happens there will depend on the agreement, and whether or not the 13% reduction has been running long enough to effectively reimburse them.

[hipprum]

Re: Inherited property - jointly owned

Thank you for your replies - the will was a pretty basic document, drawn up in 1991, and stating that after debts were paid the estate was to be divided equally between myself and my sister...
She received the money from her ex husband in October and is in an easy access savings account.
The tenants were originally on a 6 month contract (from June 2011) through a letting agent and the contract has just been rolling on since then.
No, the reduction goes no where near being able to reimburse them, we agreed to the reduction a year ago and, in my estimation, would need to run at least another four or five years for that to happen. I believe this is a "gentleman's agreement" only

[IanM]

Re: Inherited property - jointly owned

Is there any way you can finance buying your sister out and using her part of the rent to pay a mortgage or loan?

[MissFM]

Re: Inherited property - jointly owned

If present ownership is as simple as described then

- your sister cannot force you to sell her your share but she can force a sale of the property on the grounds that she wants her equity. If you can afford to buy her out that is perhaps a negotiating point/alternative scenario.

It is irrelevant how much money she has and where it came from.

- If the tenancy is an AST, then you can give the tenants notice at any time (it will be on the lease how long - usually two months) It may sound harsh but you do not need to give a reason. As regards their improvements, if these were done with your permission as landlords ( which they clearly were in view of the rent reduction) then you will pay them on a sliding scale at the end of the tenancy (ask your letting agent or solicitor - basically their investment reduces with time etc.) You can (depending on the terms of your tenancy agreement) refuse to do this, making them return the property to how it was before, but it would be very unfair IMHO - although some of the stuff is moveable and they may want to take it with them so it is all negotiable.

Another option would be for your sister to rent the property from herself and you as landlords ie make yourselves a separate "landlord" entity (solicitor needed!).

[hipprum]

Re: Inherited property - jointly owned

Thank you. Unfortunately we are not in a position to buy her out which I agree would probably be the best scenario. I believe the tenancy is an assured shorthold tenancy. The improvements were done with our permission as landlords but we do not know the actual cost of the improvements. I would estimate at least £4,500

Ah well, I will just have to see if she decides to force the sale of the property - thanks anyway guys for your help :-)

[IanM]

Re: Inherited property - jointly owned

It may be worthwhile talking to your sister and agreeing to sell to her on condition the tenant is reimbursed the £4500 they have spent on the house during the tenancy and that they are given 6months to find somewhere new without any undue pressure. I'm sure your tenants would be happy to have the money and the time to find a new place to live.

Thank you. Unfortunately we are not in a position to buy her out which I agree would probably be the best scenario. I believe the tenancy is an assured shorthold tenancy. The improvements were done with our permission as landlords but we do not know the actual cost of the improvements. I would estimate at least £4,500

Ah well, I will just have to see if she decides to force the sale of the property - thanks anyway guys for your help :-)

[hipprum]

Re: Inherited property - jointly owned

Thank you for this, IanM, but the other obstacle is that I would lose out on the rental income, and interest earned by investing the lump sum from either the sale, or the transfer to her, of the property would work out around half of what I am currently earning and I cannot afford to lose over £1,300 per annum
I did suggest that if we HAD to sell the property, if there was no other alternative, then we should at least talk about re-imbursing the tenant but she was adamant that that was not going to happen. There's no easy answer to this I'm afraid.
The obvious answer to me is for her to buy a property with the money she has, continue letting the property to the tenant, and for both of us to get a monthly rental income and still own the property.

[IanM]

Re: Inherited property - jointly owned

Hi Hipprum, i'm sure you will reach an agreement eventually. You don't say how much capital you will gain from selling the house or what part of the country you live in but there are property investment opportunities out there that can turn a decent profit or income it's just a case of looking in the right places.

Thank you for this, IanM, but the other obstacle is that I would lose out on the rental income, and interest earned by investing the lump sum from either the sale, or the transfer to her, of the property would work out around half of what I am currently earning and I cannot afford to lose over £1,300 per annum
I did suggest that if we HAD to sell the property, if there was no other alternative, then we should at least talk about re-imbursing the tenant but she was adamant that that was not going to happen. There's no easy answer to this I'm afraid.
The obvious answer to me is for her to buy a property with the money she has, continue letting the property to the tenant, and for both of us to get a monthly rental income and still own the property.