ᐅ Transferring ownership of an unrenovated house – experiences and tips?
Created on: 18 Sep 2018 11:40
M
MerymeryDear Forum,
We are planning a renovation of my parents’ house and are unsure about the best order of steps to take.
The current situation is as follows: my family and I (2 adults and 2 children) live with my mother (63) on two separate floors. My brother lives about 20km (12 miles) away, and we have a good relationship.
Since my mother is the registered owner and would like to transfer the house (130sqm (1400 sq ft) + 90sqm (970 sq ft) of living space, with a plot of 2300sqm (0.57 acres)) to us with lifelong residential and usufruct rights for herself, we would also like to compensate my brother accordingly.
Unfortunately, we do not currently know the value of the house and land—meaning their market value—on which we could base the compensation. Also, since my mother is hopefully going to live in the house for many more years, these “costs” should be taken into account.
We would like to use the current value of the house as a basis, as the upcoming renovation will certainly increase the property’s value.
So what is the most practical order to proceed?
As far as we know, we need to:
- visit a notary or solicitor for the transfer and to compensate the brother
- go to a bank or similar to secure a loan
- have the house appraised by a building expert to determine the amount we need to pay
- contact a construction management company to obtain quotes and determine the necessary loan amount
Of course, we want to avoid making multiple unnecessary trips. Also, each visit to the notary or other professionals will likely incur additional costs.
Should we first ask a construction company for a quote, as they would handle the renovation and might also be able to estimate the current value of the house? Or does the valuation have to be done separately by a certified appraiser?
Based on that value, we would agree on a compensation amount with my brother and then go together to the notary to notarize the agreement, update the land registry, etc.
After that, should we go to the bank to finalize the loan?
Are we missing anything or making any wrong assumptions?
Do you have any advice for us?
We would be very grateful for your help.
Best regards,
Merymery
We are planning a renovation of my parents’ house and are unsure about the best order of steps to take.
The current situation is as follows: my family and I (2 adults and 2 children) live with my mother (63) on two separate floors. My brother lives about 20km (12 miles) away, and we have a good relationship.
Since my mother is the registered owner and would like to transfer the house (130sqm (1400 sq ft) + 90sqm (970 sq ft) of living space, with a plot of 2300sqm (0.57 acres)) to us with lifelong residential and usufruct rights for herself, we would also like to compensate my brother accordingly.
Unfortunately, we do not currently know the value of the house and land—meaning their market value—on which we could base the compensation. Also, since my mother is hopefully going to live in the house for many more years, these “costs” should be taken into account.
We would like to use the current value of the house as a basis, as the upcoming renovation will certainly increase the property’s value.
So what is the most practical order to proceed?
As far as we know, we need to:
- visit a notary or solicitor for the transfer and to compensate the brother
- go to a bank or similar to secure a loan
- have the house appraised by a building expert to determine the amount we need to pay
- contact a construction management company to obtain quotes and determine the necessary loan amount
Of course, we want to avoid making multiple unnecessary trips. Also, each visit to the notary or other professionals will likely incur additional costs.
Should we first ask a construction company for a quote, as they would handle the renovation and might also be able to estimate the current value of the house? Or does the valuation have to be done separately by a certified appraiser?
Based on that value, we would agree on a compensation amount with my brother and then go together to the notary to notarize the agreement, update the land registry, etc.
After that, should we go to the bank to finalize the loan?
Are we missing anything or making any wrong assumptions?
Do you have any advice for us?
We would be very grateful for your help.
Best regards,
Merymery
N
nordanney18 Sep 2018 11:50How well do you get along within your family? If very well and the difference of a few extra dollars doesn’t matter to you, then just estimate a value yourselves. Simple and done.
If you want it to be precise and also properly evaluate the right of residence (depending on your mother’s age, it’s possible that her apartment may no longer have any value), then consult an appraiser.
Notary fees for the transfer are usually reasonable. Tip: Transfer from your mother to you does not incur property transfer tax. To your husband, however, it does. So maybe first transfer the entire property to you and then transfer half to your husband (then no property transfer tax applies either).
At the same time, take care of any renovation plans and possible financing options.
Once both are sorted (you’re not in a hurry), schedule appointments with the notary and the bank.
If you want it to be precise and also properly evaluate the right of residence (depending on your mother’s age, it’s possible that her apartment may no longer have any value), then consult an appraiser.
Notary fees for the transfer are usually reasonable. Tip: Transfer from your mother to you does not incur property transfer tax. To your husband, however, it does. So maybe first transfer the entire property to you and then transfer half to your husband (then no property transfer tax applies either).
At the same time, take care of any renovation plans and possible financing options.
Once both are sorted (you’re not in a hurry), schedule appointments with the notary and the bank.
If taxes apply, I would calculate the increase in value (due to renovation / remodeling) only after the transfer of ownership. Regardless of the importance of tax-related aspects, I would recommend consulting a tax advisor, who can then direct you to the appropriate experts. The overall situation is not unusual for tax advisors, notaries, and other professionals involved.
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N
nordanney18 Sep 2018 14:07Oh, one more thing.
Banks really don’t like usufructuary rights – they significantly reduce the mortgage lending value of the property.
Banks really don’t like usufructuary rights – they significantly reduce the mortgage lending value of the property.
haydee schrieb:
You just need to find a good notary. In my experience, tax advisors and notaries know each other quite well—in the sense of "like attracts like"—so a not-so-smart tax advisor probably doesn’t know any sharp notaries ;-)
nordanney schrieb:
Banks really dislike life estates—they significantly reduce the mortgage lending value of the property. However, in this case, only the renovation needs to be financed. The life estate is offset by the saved purchase price, which therefore does not need to be financed.
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