VIC Executor living in house of deceased father.

Discussion in 'Wills and Estate Planning Law Forum' started by Rollers123, 26 May 2019.

  1. Rollers123

    Rollers123 Active Member

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    The son has been living rent-free in the house with his father looking after his elderly father, paying for half of utilities and food, before his father was moved to an aged care facility over a year ago. The son continued to live rent free paying full for utilities and looking after the financial affairs and other issues concerning his father, the house and property. The said son is now the executor and a beneficiary. The other two equal beneficiaries, his siblings, are requesting he pay rent into the estate, believing the current situation is a conflict of interest. is this really a conflict of interest?
     
  2. Scruff

    Scruff Well-Known Member

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    What is to happen with the property?

    Is it being sold with proceeds divided equally or is it staying in the family with the three siblings as equal owners?

    If it is to be sold and the sale is being organised by the son, then squabbling over rent is petty and I would think against the father's wishes.

    If on the other hand, the property is to remain in the family, then it is an investment that all three siblings have a right to profit from. In this case, the property should be earning full market rent.
     
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    #2 Scruff, 26 May 2019
    Last edited: 26 May 2019
  3. Rod

    Rod Lawyer
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    He should be paying rent, at fair market value.
     
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  4. Scruff

    Scruff Well-Known Member

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    @Rod - Given that you're in VIC, is there any way the two siblings can force a tenancy agreement to be introduced in this case, given that the occupant is also an owner? Application to VCAT maybe?
     
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  5. Rollers123

    Rollers123 Active Member

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    The property will be sold in due time as the two siblings are keen to get share of the inheritance. As yet, the death certificate hasn't been issued. there's nothing in the will about rent from the property as it is all up to the trustee. The father passed away earlier this month.
     
  6. Rollers123

    Rollers123 Active Member

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    A tenancy agreement cannot be forced upon the trustee/occupant. nothing in the will stipulating rents. an agreement can be entered into, as goodwill on part of the trustee/occupant. i may be wrong.
     
  7. Rollers123

    Rollers123 Active Member

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    Is that a legal comment, or should the trustee/occupant do so as a goodwill gesture?
     
  8. Scruff

    Scruff Well-Known Member

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    There won't be anything about rent in the will because rent relates to a tenancy, which is governed by the Residential Tenancies Act ("RTA") (or the VIC equivalent - I think it has the same name).

    Estates therefore have nothing to do with rent. If there was a tenancy agreement in place prior to death, then under the RTA, the estate becomes the landlord immediately upon the death of the father. In this case, the son would effectively become the landlord because he's the executor and you therefore have a situation where the son is both landlord and tenant. The obvious problem here, is that the tenancy agreement remains enforcable under the RTA, but the two parties to the contract are now the same person, thus there is a clear conflict. Whether or not it is a conflict that is resolved by law is another question, because I don't think the RTA covers this scenario. The most important point though, is that the son can terminate the agreement all on his own because he is the executor.

    If there was no tenancy agreement in place prior to death, then clearly the father didn't wish to charge the son rent and his wishes should be respected - but only as far as practicable. If the property takes an excessive time to sell, then at some point, it must be accepted that the estate is not financially fulfilling it's potential. This then becomes an issue with the estate itself and how it's being managed. So in this case, the issue is not about rent, but potential earnings to the estate not being realised and as such, the siblings would have a right to take action against the son to hold him liable for the loss of potential income to the estate. In other words, the claim would be that the estate is being mismanaged.

    One thing the siblings need to be careful about, is that while the son may be benefiting from living rent free, it appears that he is also shouldering all expenses relating to the property. If the siblings demand rent, then they must also shoulder their share of all expenses relating to the maintenance of the property. Depending on the condition of the property, the son might easily be able to come up with tens of thousands in repairs just to teach them a lesson.

    So common sense should prevail here. As long as no one is intentionally holding up the sale of the property, then I think all parties should let this issue go. Squabbles like this could easily lead to a lengthy legal fight in the future which could be costly to all involved.

    Easiest solution? See if everyone can agree on a reasonable timeframe for the sale and if the property is not sold by that date, then the "potential earnings" issue will be addressed at that time. This can be done with a tenancy agreement or some other form of contract requiring the occupant (son or otherwise) contributing financially to the estate for having exclusive use of the property. But don't forget that it's a two way street - any such agreement must also require the other siblings to contribute to the costs of maintaining the property, just like any other landlord would have to.
     
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