What happens when family can’t agree on value of inherited house?

My father died and left the house to his three children in equal shares. The solicitor is the executor of the will.

The house was valued a number of times. We got it valued (twice), my brother got it valued and the solicitor got it valued as well. My other brother got it valued at an inflated price.

All the valuations by myself, one brother and the solicitor came in at €150,000 to €160,000. The other brother got it valued at €195,000, way over the odds.

I have offered to purchase the house valued at €160,000 and one of the brothers is anxious to proceed believing this to be a fair offer. The other brother insists he wants his share of the value at €195,000. If not, it has to go for sale.

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Ms M.A., email

Sometimes you wonder just how precisely a will should be written to avoid the sort of bitter recriminations among family that can have such a long-lasting impact on family relations.

There’s an often naive assumption – especially among parents – that their children automatically get on, or will pull together in the common interest, despite ample evidence to the contrary as they are growing up. It’s almost a “you wouldn’t let me down, would you?” approach.

Unfortunately, common blood doesn’t guarantee a common life perspective. Even in the most harmonious families, children develop their own character, connections and outlook on all sorts of things. By the time we are adults with our own families we might find it difficult to actually live again with our adult siblings even though we keep in touch and consider ourselves to be close.

Still, most people will compromise as it is clear that a dispute over a shared asset benefits no one. Your father here has tried to do his best by the family. There are three of you and I’m guessing that, as with many families, his home is his major asset.

Valuation

An executor needs to get a valuation for the purposes of probate and that valuation will also be taken by the Revenue Commissioners for the purposes of assessing any capital acquisitions tax – inheritance tax in simple English, though my guess is that it won't apply here.

In most cases, that valuation would be accepted as a fair one in situations like yours where more than one person inherits the house and one is looking to see if they can buy the others out. After all, the solicitor has no personal interest in the estate so there is no reason to suppose he would either inflate or minimise the valuation.

However, there is no obligation to do so and there is also the issue of any time lapse between the executor’s valuation – which must be an assessment of what the property was worth on the date of your father’s death – and now where you are weighing up the possibility of buying your brothers out of the property.

In most areas it has been a rising market, so you might expect the price to have risen from any valuation the solicitor secured. However, the €195,000 assessment secured by one of your brothers is a full 30 per cent ahead of the solicitor’s valuation so, on the surface, that sounds more than a little steep unless there is a big gap in time between the two figures.

And, of course, even if you agreed to that amount, he would be paying about €5,000 capital gains tax on his €65,000 share because, whether he likes it or not, the solicitor’s valuation is the baseline for the Revenue assessment of what it was worth when you three inherited it.

The bigger issue for you is what you can do about it? And, in truth, the answer is very little.

Market value

It appears your brother is being somewhat unreasonable here, even if he believes the three other valuations grouped around the €150,000-€160,000 mark undervalue the property. But you cannot simply outvote him because you think he’s wrong-headed.

Under the will, each of you legally owns a third of the property. Either you come to an agreement on valuation for a buy-out or, if you cannot agree, you let the market decide by putting it up for sale.

You could of course pursue a legal action against the brother but I cannot see the grounds and, in any case, most courts would resolve the issue by deciding the property be sold, so you would be worse off as you would be in the same position but with a bill for legal fees.

There’s nothing stopping you buying the property in the market though, obviously, putting it up for sale would incur some costs in the form of estate agent and legal fees.

The bigger issue is if you put it up for sale the market agrees with you on valuation – ie that no offers come in substantially above €160,000 – but the brother still refuses to sell as he clings to his view that it is worth more.

In that case, if you cannot resolve your differences, you might need to go a legal route to force this brother to accept the market rate for the property. But be warned, pursuing such an action can be an expensive and drawn-out process.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.