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Buachaill, Barrister
Category: Law
Satisfied Customers: 10944
Experience:  Barrister 17 years experience
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I purchased my mother in laws house in March 2013 from my brother

Customer Question

I purchased my mother in laws house in March 2013 from my brother in law who had owned the house previously and fallen into arrears with the mortgage due to losing his job, therefore I offered to buy the house so that my mother in law would still have a home. We agreed a purchase price of £96k, the property was valued at £240k, he bought the property previously for £30k so he was more than happy with that figure. I took out a mortgage which enabled my brother in law to pay his mortgage off and to give money to other members of the family who were struggling at the time which is how we worked out the figure of £96k, the mortgage company were aware that I was buying from family and a gift of equity deed was drawn up passing the remaining equity in the house to myself. The agreement was that my mother in law pays rent of £400 per month which covers the mortgage payment, as formal tenancy agreement was drawn up. The house is very outdated, although clean and functional and it was my plan to take out an additional home improvement loan to modernise the house for her but since then our 16 month daughter has become ill and financially this is not something I can afford to do right now. Because of this my mother in law has said that I agreed to modernise the house and she is refusing to pay the rental due, the house is to current code with all safety inspections done etc it is just outdated, however she said she has been apparently advised by a solicitor that she can sue me as the agreement was that house would be modernised, this was never a written agreement more something that we discussed. We have already put a new security door on the front of the house, but currently it would be irresponsible of me to take out an additional home improvement loan as we are having to fund medication for my daughter which is currently not available on the NHS, I would not feel happy securing a loan on the property which in my view would in effect create a risk. Where do we stand, as I said the house was bought from my brother in law who had previously bought the house in 1999 in order to take the pressure from my mother in law, the mortgage was agreed in terms of a buy to let, buying from a family member and also the gift of equity was done. Where do we stand on this, my husband wants to sell the house and buy my mother in law a smaller more modern flat and give her some cash in the bank, but she is saying that we cannot sell the house, this is only an option that we have put to her to think about? I know that there are CGT implication etc, we are not concerned about this but would just like to know where we stand. Many thanks
Submitted: 4 years ago.
Category: Law
Expert:  Buachaill replied 4 years ago.

Buachaill :

1. Firstly, an agreement is binding even if only oral. Accordingly, your mother in law, can enforce an agreement to update the house if this was what was agreed, provided she continued to pay the rent in relation to the house. I know you say you only "discussed" this. But be aware that a court could enforce this agreement. Secondly, an owner of property can always sell their property if they so wish. However, in this situation, you would have to sell it subject to the existing tenant, your mother in law, remaining in place, as you will not be able to eject her if you bought the house at an undervalue to provide her with a home. This might affect the value which you get for the house.

Buachaill :

2. I would suggest that if relations get difficult that you engage in mediation to work out a solution, as legal fees involved in a row will leave everyone much poorer. YOu have a big weakness as you were sold the house at an undervalue to provide a home for your mother in law, so in law, you have an equitable obligation to provide a home for your mother in law with this.