It is best that inherited property is divided “equally” among the heirs!
There are many who think this way.
In this article, I would like to explain about the potential loopholes and trouble accompanying the equal dividing of the inherited real estate.
The more eligible heirs there are, the more difficult becomes the dividing up of the property after one’s parent or relative has passed away.
This is because that it is necessary for all eligible heirs to gather all at once to conduct a discussion pertaining the property division.
Assuming that the property under contention is a piece of land and a house build upon it. In this case, we would all be puzzled as how this could be divided up.
Many think that it is best for the property to be divided evenly among everyone. But is that really the best choice?
All heirs own the inherited real estate
Owning a real estate by more than one person is equivalent to ownership under a “shared name”It may seem like up a peaceful solution, but actually, it could lead to much trouble later on.
What happens under a shared name?
1． The house cannot be sold without the agreement of all heirs.
Let’s assume that under the joint inheritance, one of the holders start to think,
“I want to sell the inherited house”.
However, in order to sell the entire house, consent from each and every one of the other stake holders must be acquired.
The house could not be sold off if even one of the co-owners express disagreements.
One could possibly sell off only the section that he or she owns, however only a single section of a house would not be highly evaluated from real estate agents.
Because it will be difficult for ordinary people to buy it, it could possibly be bought at a very low price by the real estate agent.
2． If the majority of the co-owners disagree, the property cannot even be managed
Did you know the rule that “the management of the inherited real estate requires the agreement from more than half of the heirs.”?
Even if one of the co-owners wants to repair the house, he would need to get permission from more than half of the other joint holders.
The same applies when one wants to rent out the house, such as when no one is living in it at the present.。
3 Must continue to pay property tax
One must pay property tax while owning real estate every year.
It doesn’t feel reasonable to have to pay property tax for a real estate which you cannot manage freely.
There are still more disadvantages of shared name inheritance!
More and more co-owners
When one of the co-owners passes away, that person’s property will be inherited by multiple pf other people, thus the number of co-owners will increase.
As the years pass, there would be so many co-owners that it would be hard to keep track of everyone.
From my point of view, the worst scenario is when a total stranger (to you) suddenly appears and takes hold of someone’s stake.
Not likely to be able to use as collateral
Many financial institutions do not allow co-owned real estate to be used as collateral when borrowing a loan.
(* There are some exceptions)
This is also an important point.
The joint holder would be decided out of your reach.
If you receive a loan with your co-ownership as collateral and it goes bad,
The stake would fall into the hands of a total stranger (third party person).
Due to the disadvantages mentioned above,
As an inheritance expert, I can’t recommend joint ownership of real estate.
Please take the next generation in to consideration when inheriting real estate.
Please conduct a thorough simulation!
Since this is an important matter, we recommend that you consult an expert ahead of hand.