I went around to my folks the other day and bumped in to a neighbour of theirs and got chatting. She's batty but friendly and we have chatted often - usually because I park outside her place rather than risking an oil leak (happened before) on dad's drive.
Same style of bungalow as my parents - value about £450k - would have been up for £500k last summer - a couple sold for £499,950 when the owners passed away - all no onward chain.
The neighbour has sold their bungalow to a "we buy your home and you can live in it until you die" outfit.
I was interested in this, because I was offered the chance (and turned it down) a few years ago to buy a property with a life time tenant - no rent.
The neighbour is 79 and in mediocre health. Her life expectancy is 83 (average UK for women).
I asked and was allowed to see the contract.
It allows her to live in the property until she dies.
She is responsible for all utilities, council tax etc.
She is responsible for all maintenance and there is a schedule - exterior woodwork to be painted every 7 years or sooner if required etc.
She is responsible for all repairs - she needs to insure it - not sure how that works as she's not the owner now.
When she passes there is a £5k - a fixed amount not a percentage - residual value - which is payable to her estate.
If any maintenance is outstanding then the residual value will be reduced accordingly.
And the offer she accepted and received......
£70k - I've seen the bank statement!
Oh, there's more, there was a £3k fee to use the solicitors that the buyers recommended, because they're really nice, efficient and cheap! They also wanted her to pay their legal fees - I couldn't see what they were.
I can't believe this is legal. Anyone worth reporting to? Any action that could be taken - obviously by her relatives - kids work abroad but do come back to check on her every couple of months - so probably have no idea.
(I've done a company check on the buyers and it's like "Russian Dolls" - companies owned by companies - with no obvious real person.)
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The average life expectancy of a female at 79 is actually 90 - but your point stands. What a rip off, especially if she's in poor health.
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Don't get me wrong, I've seen a home sale on a similar basis where it actually looked like a reasonable deal, not generous by any stretch but when you added compound loss of earnings on the money paid by the buyer at 3% above base (expensive) over 15 years, the amount paid seemed about right.
There was a 5% discount on the property price and a bit of haggling re the seller didn't have to pay estate agency fees etc.
Then at the end, the house would be valued by 3 local estate agents and 33% of the property's value at that time would go to the estate - so the kids got something.
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I think it's the next miselling scandal.
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Zippy, you imply that this woman lacks mental capacity. Do you think she is demented or has some other problem affecting her ability to make rational decisions.
If the answer to that is yes then there is a basis to challenge the sale. Are there relatives, even distant ones, who could support her to do that?
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Just what I was thinking…fortunately I got both P of A in place before my mum was diagnosed with Alzheimer’s 15 month ago.
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The deal she got seems utterly exploitative - but what should be put in place to protect people.
As a society we broadly assume all adults have financial capacity. At what point does "slightly batty" become lacking capacity. She signed the deal (it seems) without consulting anyone - perhaps no one else had any potential interest anyway.
POA does not help. It does not prevent an individual from acting, it merely enables another to act on their behalf in particular circumstances.
Legislation may close one route to exploitation, but the unprincipled can be very inventive. It won't stop an alternative scam.
Personally I regard most of these "raise cash against your home deals to fund a happy retirement" as a last resort. The terms of even the best are questionable.
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I would say she’s probably mostly ok but does keep referring to old prices - she thinks a new car is £4K, that’s probably what she paid for her new then Fiesta in 2001!
I don’t think she got any independent financial advice - she used solicitors recommended by the outfit.
My folks have the contract numbers for her kids so I will drop them a message. They do come back every couple of months (ones in Dubai the other is in USA).
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Shocking.
I'm not a fan of solicitors when they are 'recommended' by the other party to a transaction. The solicitor in acting for her had a duty of care and whilst we don't know what passed between them and the lady it wouldn't surprise me if they have not counselled her as they should.
I have only once used a solicitor recommended by the other party and I had to remind them very emphatically at one point that they were working for me.
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>> Shocking.
>>
>> I'm not a fan of solicitors when they are 'recommended' by the other party to
>> a transaction.
Yup had a shocking experience with solicitors recommended by estate agents, I sacked them in the end and they tried to come after me for loss of fees. They failed.
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The seller of this house I bought used a solicitor that was taking ages. I discovered he'd been fined £15K, with a further £15K costs by the solicitor's disciplinary tribunal for (amongst other things) taking 14 years to deal with a probate case. It was a probate sale. I contacted the seller, who arrived at said solicitor's the next day and sacked him.
It appeared all the local estate agents and solicitors knew his reputation, but never warned anyone. When I was selling, I left an A4 sheet on a table with the details and warned the agents I wouldn't deal with any buyer using him.
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Lifetime tenancy - astonishing con - IMHO - Manatee
