Put the House on the Market
In a perfect world, siblings would happily agree to sell their parents’ home and divide the proceeds equally. The transaction would be at “arm’s length” with an independent real estate appraiser determining the property’s fair market value. In other words, no sweetheart deals between family members. Before a sale, the estate must pay the costs of owning the home after the parents are gone, such as taxes, mortgage payments and other common maintenance expenses.
Perhaps one sibling has a deep sentimental need to keep the family home, while the others do not. In such a scenario, that person could purchase the interest of his siblings and acquire individual ownership. One gets the house while the others get cash and everyone is happy. If cash proceeds aren't available, other family property could be substituted to match the value of each sibling’s interest in the house. What happens when one sibling is already living in the home and essentially becomes a squatter after the parent’s death? The estate has a duty to charge rent until the sibling can relocate and the house is sold. The key question is whether the sibling in possession will sell. If not, court action may be necessary.
Share the Home
Sometimes, siblings agree to keep the property and share its use. Such scenarios are not far-fetched. Consider two unmarried, older siblings. Such a house-sharing arrangement could help ease the financial burden of home ownership and provide them with companionship. Other scenarios might include using the house as a vacation or holiday property. For instance, the extended family might gather at the house each holiday season. Another option is keeping the home as rental property and dividing the income between siblings.
Next Stop: The Courthouse
If the siblings are hopelessly deadlocked, the only option may be the courthouse. One sibling can file a lawsuit known as an “action in partition.” In partition, the court usually orders the property sold to a third party. This ensures fair market value is achieved and neither sibling is able to influence the price. If the will states the property is to be divided equally, the heirs are entitled to a full accounting of the estate. Expenses related to the property, such as taxes, mortgages and broker's fees, will be deducted from the sale price before the siblings receive their share of the proceeds.