ᐅ Transferring ownership of an unrenovated house – experiences and tips?
Created on: 18 Sep 2018 11:40
M
Merymery
Dear 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 15:0911ant schrieb:
However, only the renovation needs to be financed here, since the right of residence is offset by the saved purchase price (which therefore does not need to be financed). However, the brother also needs to be paid out. And then it becomes a question of how well the family gets along.
The house is valued in its current condition (at whatever value that may be). Why should the brother accept a loss in value because of the right of residence (if he is difficult)? So the question is what value the house currently has for the settlement between the two children, and on the other hand, what value it has for the bank after the transfer and registration of the right of residence.
If the family gets along well, then all of this is no problem.
But in this case, we can only look into a crystal ball, since we have no values at all.
nordanney schrieb:
Why should the brother accept a loss in value due to the right of residence? The house is, of course, valued before the establishment of the right of residence when calculating the brother’s payout. Upon the mother’s passing, her right of residence expires, and the sister then has a property free of that encumbrance. Therefore, it logically follows that the brother’s inheritance share—which the payout is meant to replace—should not be affected by this encumbrance.
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nordanney schrieb:
How well do you get along as a family? If it’s very good and it’s not about a few euros more or less, then just agree on a value yourselves. Done and dusted.
If you want it precise and also to properly assess the right of residence (depending on your mother’s age, her apartment might actually be worth nothing), then consult an expert.
Notary fees for the transfer are reasonable. Tip: a transfer from mother to you does not incur property transfer tax. From you to your husband, it does. So maybe transfer the whole property to you first and then half to your husband (to avoid property transfer tax).
Thanks for your opinion and the tip! We get along well. And basically, I can hardly imagine he’s going to make a fuss about it. He and his wife plus children live in the parents-in-law’s house, or rather, the house already belongs to my sister-in-law. So they have already dealt with the topic of transfer and payout from that side...
But of course, you’ve seen stranger things happen...