As someone that’s dealt with families trying to sell real estate owned jointly by several different families, owning real estate that requires all your friends and/or family to approve your sale sounds like a recipe for disaster.
That's actually how many of the most famous compounds emerged (like the "gingerbread houses" on Martha's Vineyard). Lots of summer camps that became permanent over decades.
The best resolution is for the parents to sell all of their real estate (and other illiquid assets) before they die and move into an assisted living facility or something. Maybe it's sad to lose the family home but it's sure a lot easier and less emotionally fraught to divide up cash and stocks among the heirs.
In France, there's also what's called en viager. In this system, a buyer buys real estate and then pays the seller a rent for the rest of that person's life, typically while the person continues to occupy the real estate. Then, when the person dies, the buyer takes the real estate. (In at least one situation that was well publicized, the buyer actually died before the seller.)
> In this system, a buyer buys real estate and then pays the seller a rent for the rest of that person's life, typically while the person continues to occupy the real estate. Then, when the person dies, the buyer takes the real estate.
We have that in the US, it's called a reverse mortgage. Generally it's large investment companies doing the buying, but I don't think there is any real reason why normal people couldn't do it. The downside is that it's sort ripe for abuse where the large companies doing the buying can take advantage of the elders needing money.
Not quite. If I understand correctly from your links, the person selling the property then pays to continue living there. In the system I described, the person buying the property pays the seller an ongoing fee, and the seller continues to live there.
You can have arbitrary contractual arrangements (subject to local law), but the underlying property interests still matter, especially during disputes. I believe in the US a reverse mortgage typically means the mortgager (seller) retains legal title, with the mortgagee (buyer) taking a lien. But I believe an "en viager" is closer to the common law life estate, and in the context of reverse mortgage lookalikes would mean the mortgagee getting fee simple title with the mortgager retaining a life estate. A life estate arrangement was common, I believe, in the US before reverse mortgages became a popular product.
Tax policy incentivizes selling capital assets upon death, rather than while alive.
And if one can live at home rather than assisted living, that's often preferred anyway.
IMHO, the heirs and executor should endeavor to either sell the home quickly or arrange so that only one person inherits it. Group ownership typically devolves into trouble. Although sometimes there's griping about future value changes even though the split was equitable at the time of distribution.
I'd also add creating a Trust is relatively easy and the elderly can continue living their life as they normally do. The Trust will then own the house, assets, etc., with distribution instructions included.
In support of the point above, after having to arrange housing and care for elderly relatives in that stage of life, I found assisted living significantly more expensive vs. paying a care agency to have someone live at home in the United States. You get the added bonus of more accountability of a standard of care and ensuring loved ones are being taken care of. Talking to the assisted living facility, it sounded like most of their residents were using insurance.
>I found assisted living significantly more expensive vs. paying a care agency to have someone live at home in the United States.
It really depends on the level of care necessary.
>Talking to the assisted living facility, it sounded like most of their residents were using insurance.
A lot of them don't really take insurance, but they will encourage the residents to spend all their money and then get on Medicaid/Medicare to have the government pay for everything. There is private nursing home insurance but most people don't have it because it's ungodly expensive, especially when purchased when you're already fairly old.
Great points, and devil is in the details. Insurance in this case was Medicare Advantage. In hindsight, Medicare Supplement Insurance (Medigap) would've been the better way to go for that situation and what I have loved ones using now.
Sure, that's great if everyone is on speaking terms and able to have a civil, rational discussion about the subject. But that isn't the reality in many families.
There's no requirement to split the estate "fairly" if the family doesn't get along, so there's no need to talk to everybody - all that's required is leaving a will (or, probably better, a trust, because that avoids probate) that specifies how to split the estate.
You're really missing the point. Leaving a will or trust is fine from from a purely legal perspective but doesn't solve anything for family relationships if the heirs are already on bad terms. Especially if they have emotional ties to certain assets.
My mom has owned a timeshare (which is a freestanding house) for almost 40 years at the Oregon coast with 5 other families. The families have all changed over the years and there have been small conflicts around what color the couch should be reupholstered but never any large conflicts when someone left the arrangement. It has been a source of pride that these families have shared something in this way, and a bunch of the kids like me have really benefitted in a way that we could not if we always went to a different rental.
Yes. Even when all parties are directionally aligned and fundamentally agree on everything it can be a nightmare simply to get all the ducks in a row.
But if I understand this correctly, this is just a way to allow for high density housing; there's nothing specific to friends / family here? A developer can buy a large lot and subdivide it to tiny, tiny houses. Doesn't sound pleasant to me, tbh, but high-density advocates gonna high-dense, I guess.
I think it's more about making housing cheaper than being pleasant. Plenty of people live in apartments or condos, so I suspect there is a market for it.
The problem with that is that, in practice, people barely have money to buy the house they live in and basically no one:
1) Has 500k just laying around ready buy a house out of the blue ...
2) ... that also happens to be an almost identical house next to yours.
So, 99.9999% of times it goes into the market, and the other parties feel betrayed, but the seller wants (or needs!) to sell, and things get ugly, brothers stop being brothers, etc ...
I wouldn't do it.
I also don't like the idea of having friends/family right next to me. Same neighborhood is really really nice, but same lot? Nah!
> I also don't like the idea of having friends/family right next to me. Same neighborhood is really really nice, but same lot? Nah!
There was a time in my 30s when I was a part of a very close-knit group of friends. We actually talked about the idea of building a friend compound, perhaps much later in life during our retirement years, and we were enthusiastic about it.
These days (mid-40s now), I'm still friends with all those people, but I agree that I don't need them to be on the same lot with me. I would love it if we all lived in the same neighborhood, though. Fortunately we're almost all still in the same city, at least.
I think it'd be good to start with a friends compound but then as you age, purchase additional lots so once everyone had families it would essentially be a neighborhood of friends. I'm not sure how you'd actually do that in real life without doing a bunch of new builds on land you prepurchased for that purpose though.
I agree, I don't think HOA is good idea here, at least not, "the right to veto the buyer" part. This creates a whole litany of potential moral hazards "okay, I'll approve them BUT you do XYZ or pay me ABC" or simply someone with a chip on their shoulder or feeling slighted might jam it up out of spite. It's not uncommon to see low key frustration between neighbors.
It's also worth mentioning that in California urban regions, where such a law is most applicable here, the townships are fairly highly regulated to the point of being a quasi-HOA. Specifically, various housing developments may have bylaws and rules - no HOA - but bylaws and rules enforced by the local city and burned onto the property deed. A true to life HOA in Idaho or Wyoming, for example, may offer more freedom and flexibility than a HOA-free property subject to local government in California.
Not much different than private equity that requires board approval to transfer. As long as the terms are in the operating agreement (or other ownership structure agreement), caveat emptor.
