Investment Property Inheritance And Home Improvement

Added July 9, 2007 by Ilyce R. Glink and Samuel J. Tamkin

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Summary: How do you divide the expenses related to home improvement and repair of an investment property inheritance? An inheritance becomes more complex when the deceased person did not maintain her share of the investment property. How can the other investment property owner be fairly reimbursed prior to sale? It's up to the investment property co-owners to work it out and if they can't they may need to involve attorneys.

Q: My grandmother is having a dispute with her niece (my aunt) about the sale of a piece of property.

The property was left to my grandmother and another sibling of hers, who has since died. That sibling left her share of the property to my aunt.

For the past 20 years my grandmother has been maintaining the property and has paid the property taxes and insurance. But the property remained vacant. At no time did anyone else contribute financially to the upkeep of the property other than my grandmother.

My grandmother now wants to recover the expenses she paid from the proceeds of the sale prior to a distribution being made to her and her niece. Can she do that?

A: You have a difficult situation. You have a property that has been left vacant for 20 years, but was kept up. It would seem reasonable that your grandmother should be compensated for the expenses she paid over the years.

It's interesting that you say the property has been vacant for 20 years. Could the property have been rented and then bring in income to cover some or all of the expenses your grandmother paid? While it seems fair to reimburse your grandmother for your aunt's share of the maintenance, if the property could have been rented but your grandmother refused to allow it (for whatever reason), it would seem unfair to compensate her for all the expenses when some or all of the expenses could have been covered by rental income.

If the property has appreciated in value substantially and your grandmother's actions were prudent to getting the property where it is today in order to reap that profit, then it's reasonable to reimburse her for not all of her expenses, but the half that her co-owner should have paid through the years.

Your grandmother and her niece should sit down with an accountant who can work through the paperwork and determine what your grandmother's share of the expenses should be and how much she should get upon the sale of the property.

If your grandmother and aunt can't work it out, then they may have to work through attorneys to get the matter resolved. However, the cost of going the attorney route could wind up costing both families quite a bit of money.

July 9, 2007.

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