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Private Lender to Keep Waterfront Properties on Georgian Bay (Parry Sound) in My Immediate Family

cathybarker

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Hi Everyone.

This question is for me and is emotional to ask. Hopefully I can give you the readers digest version.

There are 3 adjacent, waterfront, drive to properties on Georgian Bay in the town of Parry Sound that have been in my family for 5 generations all with year round homes and in my parents trust. Both my parents are now deceased.

Two of the properties have been appraised. One (83 Oakridge Rd.) is for $600K and the other (85 Oakridge Rd) is $570K. The third was my parent's principle residence and was appraised for tax purposes only at $1.5M. None of these have been listed yet.

The executors, a retired lawyer and retired accountant are to sell these properties and the funds to be distributed equally among myself and my 3 siblings, so 25% each.

My family, meaning my children and grandchildren don't want the money but want the properties instead. This means I have to payout my siblings 75%. This is the challenge.

As mentioned these properties are all in a trust. I can't take the properties "in lieu of" and then get a mortgage for the balance because of the trust. So I have to get funding to buy one, two, or 3 of them.

My son and his family is presently living and renting 85 Oakridge Rd and want to buy it. However, he can only afford around a $400K-$450K mortgage. The executors can only accept $570K. Any suggestions for them?

I have been finding ways to try to buy 83 Oakridge for the $600K. I automatically have 25% equity. There are other assets in the estate which would allow me to payback a mortgage or reduce it considerably if I could get one. The kicker here is I don't know when, can't guarantee anything and the worst of my parent's will is everything must be transferred from either of my parent's trust to my trust. BUT I have a co-trustee which is my sister who has to agree to anything that I want to do with anything in my trust. So if she says no I don't want to payback that mortgage I am in a stalemate.

My husband and I don't have the income to support a mortgage of this size. There are the other assets though. If somehow we were able to get a mortgage it would have to be as either a rental property or I was thinking my husband & I could live there as our principle residence but then rent it out so many weeks of the year as weekly rentals to pay back the mortgage until such time as my trust and the assets in it become available to me. Again, don't know when or how much.

I have spent thousands of dollars on lawyers. Most advise to break the trust but my one brother who is representing himself won't or can't make that decision. It has been 3-4 months now.

My sister, lives in B.C. who has agreed to resign as my co-trustee but in order to do so I have to go to court and they are backlogged due to Covid. In the meantime the executors can proceed with listing and selling the properties and there is nothing I can do to stop them. It seems so unfair.

The third property I was thinking of making it into a triplex which can easily be done because there is an apartment in the basement already. The up two floors can easily be divided. Might as well dream big. The huge advantage of this property is it has most of the beach between the 3 of them.

The other thing I would like to add is that my husband and I presently own 2 rental properties. The one is worth $250K with a mortgage of $175K which we just remortgaged last October to take out the equity to buy our other rental property. The second rental property is about $300K with a mortgage of $221K. Both have 5 year fixed terms. Looking into penalties and interest charges if we were to sell these 2 properties.

My family have done everything we can think of to try to keep these properties. My children have even sent personal letters to each of my siblings to please keep these properties in the family, rent them and take out a monthly income. Once these properties are gone we will never get them back. The response from my siblings is, through their lawyers, "sell them and at the highest price".

This is a very long post and hopefully enough information for comments. Please don't be afraid to say, given the trusts and all the legal ramifications let the properties go, wait for the dust to settle and then go from there. I have to ask though in case I am missing something.

Thanks in advance.
 

Tina Myrvang

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Hi Cathy,

After reading this it got me thinking maybe you need a Joint Venture partner. If these properties are currently rented, it would make a good investment.
 

Thomas Beyer

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Find a MIC (mortgage investment corporation) that will lend you (or your son) the required money.

You need to buy one asset from the trust to be fair to all parties .. maybe 2. Why do you need to buy all three?

MICs lend money at 6-16% depending on asset value, loan to value, risk of borrower, income of borrower and net worth of borrower.

Find a lender or JV partner and buy one, maybe two assets.

Show the MIC a plan how you repay them in a year or two.

Keep in mind your siblings desire to maximize cash in hand as they aren’t attached to the properties. That makes sense. Perhaps one or two of them can be co-buyers or lenders with an agreement to buy them out.

Start phoning a few mortgage brokers with a plan how to pay them back and detailed networth statements.


Bon chance.

Thomas
 
Last edited:

Martin1968

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My advice would be to never ever jeopardize Family (sibling) relationships. I come from a family of 6 siblings, each with their own personalities and wishes, having gone through the loss of our parents about 20 yrs ago. Family meetings and potential problems were solved JUST between the siblings, no spouses allowed, and with keeping our parents wishes in regards to family ties in mind. Appointing the oldest sibling as a trustee by mutual agreement. No amount of money or personal gain, from our perspective, could ever replace the bond we have!

For your children that live in the 570K house, they are no party to the will, and if they wish to purchase the property they live in, then yes they would have to pay the desired amount. Only seems fair to your siblings (and their children) 570K minus 450K mtg would mean a 120K DP. Not a huge gap. You could possibly be creative and work something out.

For the rest, I would advice to sell, and keep it simple.

Hope this helps.
 

Thomas Beyer

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My advice would be to never ever jeopardize Family (sibling) relationships. I come from a family of 6 siblings, each with their own personalities and wishes, having gone through the loss of our parents about 20 yrs ago. Family meetings and potential problems were solved JUST between the siblings, no spouses allowed, and with keeping our parents wishes in regards to family ties in mind. Appointing the oldest sibling as a trustee by mutual agreement. No amount of money or personal gain, from our perspective, could ever replace the bond we have!

For your children that live in the 570K house, they are no party to the will, and if they wish to purchase the property they live in, then yes they would have to pay the desired amount. Only seems fair to your siblings (and their children) 570K minus 450K mtg would mean a 120K DP. Not a huge gap. You could possibly be creative and work something out.

For the rest, I would advice to sell, and keep it simple.

Hope this helps.

Well said.

Buy it (with your own money or borrowed money or a JV partner). Or move on.

Decide how important your relationships are to your three siblings, their spouses and kids. Very important? Don’t care?

No need to spend money on lawyers as situation is pretty clear to a neutral third party. Parents could have gifted you one property equating roughly 1/4 of their total estate and cut you out of the rest of the will but didn’t.

You have no more rights than the other three siblings. Put yourself in their shoes and ask “what is fair here”.

As such, find the money and write an offer on 1, 2 or 3 properties. Money is either a mortgage or equity or a JV.

Lessons for others with siblings with similar estates of aging parents: write up the will BEFORE the parents die if a certain property has sentimental value to one child but not to others - ie give the one child a certain property and less or none of the rest of the estate - based on appraised values and mutually agreed to by all heirs and, of course, the parents !!

Thomas Beyer, Asset Manager, Investor, Community Improver, Author, Father, Mentor www.prestprop.com
 
Last edited:

bizaro86

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This seems like a potential situation where a lease-to-own might be of value.

The investor buys the property, with an agreement to lease it back to you/your son. You have the option to buy it at a specified (higher) price during the term of the lease. You pay an upfront fee for the option.

That gives you time to get your portion of the money from the estate, and to arrange mortgages etc.

The highest value property might be a challenge for this, as the required rent there would likely be very high.
 

Michel Lafleur

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Lots of good advice already; I like the lease option idea. Or $450k MTG + $120k DP also make sense. Could you gift letter some DP $ to your son to bridge the gap and help them buy?

You could try a game of attrition - let the market pay good money for the first one or two properties, and then you use your 25% from those sales to buy the property you're most attached to. With this plan, you should have no issue finding short term money knowing you'll have that 25% equity coming.

Asking around for registered funds/RRSP money many be a good way to raise the money you need.
 
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