Living in house inherited from mother. Do I have to continue to pay the rent?

Recently on our legal forum a user asked, “Last month my mother died and left her house to me, my brother, and my sister. I am wondering if I still have to pay rent if I live in the house?”

If you and your siblings inherited a house together there are several options for dealing with the property. Arrangements, however, generally do not include you living there rent free (even if there is not a remaining mortgage) without your siblings having any say in the matter. Let’s take a look at the options for you and your siblings.

Options for inherited property

1. Rent the home yourself or to another tenant

If you or either one of your siblings wants to keep the property you can decide together to rent the home yourself or to another tenant. If you decide to rent to another tenant then you and your siblings would each receive a percentage of the rent. The division could be equal or if one of the siblings is more involved in the care or upkeep of the property they could receive a larger percentage for their troubles.

Now, you mentioned living rent free. Although your siblings may agree to this arrangement, it’s likely they will not. And why should they? You are living in a property that also belongs to them. They are much more likely to want to sell the property or at the very least rent to someone who is willing to pay for the benefit of living in the home.

2. Sell the property

Another option for the property is to sell it. Given the appreciation of property in many cities it’s likely that your mother’s home is worth much more than it was when she bought it. With this in mind, you and your siblings might decide to sell the house and split the proceeds from the sale.

What if you don’t want to sell the property? You have may have the option to buy out your siblings (unless this is specifically prohibited in the will). A buyout will allow you to pay your siblings for their share of the home and then have the deed transferred into your name alone.

A buyout can be completed either by trying to get the funds through a lender or through a private agreement with your siblings. If you decide to make it a private sale you will need to have a written agreement which states the appraised value of the sale, the amount you will pay in monthly installments, and the interest owed. Your siblings may also wish to formalize their legal options to foreclose on the home if you fail to meet the terms of the contract.

Forced sale through a suit for partition

The most contentious and difficult decision will come if none of you can agree what to do with your mother’s home. For example, if you want to keep the property but you cannot afford to buy out your siblings, and they want to force a sale but you are against it. 

In this situation the law is on your sibling’s side. In fact, they can file a lawsuit for partition allowing a judge to force the sale of the inherited home and terminate the co-ownership of the property. The process for suit for partition will vary by state, but you can assume the costs will be higher than if you can all agree on what to do without the state’s interference. In fact, in states such as California you will have to pay for the court to assign a referee (who gets the property ready for the sale), an accountant, and potentially a broker.

Bottom Line:

There’s no reason your siblings should allow you to live in the home rent free. At the very least they would probably expect you to pay them a percentage of the rent each month. Other options include agreeing to rent the home to another tenant, selling the home, or if none of you can agree, having the court force a sale by filing a suit for partition.