8 tips to avoid selling: How to keep your parents’ house in the family

You can withdraw or pledge capital from the second and third pillars (the so-called homeownership incentive (WEF)) to become your own homeowner. However, this has some disadvantages. Taxes are paid when retirement capital is paid out; This also applies to the WEF. In addition, retirement benefits are also lower in later periods. In many cases, disability and death benefits are also reduced.

If you sell the house later, you cannot pay back the money from the third pillar. In the second column, the situation is different: the withdrawal of the WEF advance can be paid again. It should not be overlooked: Everything must be repaid in full, only then purchases to the retirement fund can be deducted from your taxes.

Most of the time, siblings also want the house to belong to the family. And they may be willing to lend money by not insisting on immediate payment for their shares. The contract can be adapted to your financial means and, for example, it can be agreed that the debtor will pay the money in regular installments. Or the full amount after a certain period of time. You need to agree on whether interest is due and how much you owe. Of course, it is also possible for someone outside the family to provide a loan so that the heirs can be paid.

In both cases: Credits expire after ten years. The statute of limitations is interrupted each time by interest or repayment. However, there is a risk that the statute of limitations may expire if a term and interest-free loan is given or if the debtor does not pay the installments. If necessary, the credit creditor must timely interrupt the limitation period with a receivables enforcement action.

A mortgage can be created on the property to ensure that the lender receives security for their money. It is recorded in the land registry. The mechanism behind this is the same as a mortgage, where the bank also takes a lien on the property. The advantage for the creditor is that the property can be sold if the debtor does not pay as agreed. Additionally, there is no statute of limitations on mortgages. Disadvantage: You have to draw up a mortgage note and it is quite expensive.

The spouse or partner can contribute financially to the household. He or she may withdraw early from retirement provisions or seek an inheritance advance or gift from their parents. When it comes to an inheritance advance, it is important to regulate who the parents will give it to; Just to their own children or to both partners? Because this will play a big role if the relationship breaks down. In exchange for financial participation, the spouse or partner is usually registered as a joint owner in the land registry.

Real estate prices have increased rapidly in recent years. Especially if the inherited house is in a city such as Zurich, Basel or Geneva, the market value can be almost unaffordable. You can therefore agree on a so-called family price, i.e. a lower price for the sibling. It would be particularly unfair for the beneficiary to sell the house after a short time at a much higher market value. To avoid this, you can contractually tie the family price to a profit sharing clause. And to prevent the homeowner from secretly selling the house to the highest bidder, a right of first refusal is entered in the land registry. In this way, other heirs will learn when and at what price the house will be sold.

There is no legal deadline requiring the dissolution of a community of heirs. The siblings may also decide to forgo the division for now and keep the house in the community of heirs. However: There is a lot of potential for conflict in communities of heirs because decisions must always be made unanimously. In case of disagreement, heirs can easily block each other. That’s why it’s best to lay out all the important points in a contract: who bears what costs, how do you decide on investments? In addition, heirs can agree to go to mediation in case of dispute. This can often prevent legal action. And it is useful to have a lease agreement between the community and the heir living in the house.

Instead of keeping the house in the community of heirs, you can dissolve it and transfer ownership to a simple company, GmbH or AG. This can be a good solution, especially for homes with more than one apartment. The heirs thus become shareholders who can make decisions more easily and sell their shares in accordance with the regulations in the law. However, there are some costs: for incorporation, depending on the type of company, as well as property gains tax, transfer tax and title deed fees.

Procedure for taking over the parental home

1. Determine the value of the property: First of all, the heirs must agree on the value of the house. This requires an up-to-date forecast. Ideally, the heirs will have the valuation done together and agree in advance to accept the result. If there is no one-size-fits-all expert, you can hire two estimators and agree to take the average of both estimates.
2. Clarify financing options: The heir who wants to inherit the house must obtain general information about his financial possibilities. And if you want to increase the mortgage: contact several banks and compare offers. It is also important to clarify whether the heir can assume the mortgage alone or whether the spouse or another person can or even must be jointly responsible for the mortgage. As a rule, the bank requires that the jointly responsible person is also registered in the land registry as a joint owner.
3. Discuss options: Inheritance communities often fail due to communication. If the mood is bad, many people assume that others will reject it anyway. Or you don’t want to come across as a supplicant. However, it is important that the options are discussed together and that all joint heirs are on the same page. Even when things get tough: A suggestion you never make has no chance in the first place.
4. Mediation: Different interests often conflict in the community of heirs. Old roles and real or perceived injustices within the family often also play a role. This makes it difficult or even impossible to conduct objective and solution-oriented negotiations. An expert can help you get out of this predicament. The mediator supports the community of heirs in negotiating a good solution while remaining at a fact-based level. Of course, this assumes that all heirs are willing to sit down together and work on a solution.

But no deal?

If the heirs cannot reach an agreement, often the only option is to sell the house. But heir communities can fail even for this reason: Everyone must agree to and eventually sign the sale.

Any heir can file a lawsuit at any time for the division of the inheritance and thus take everything to court. However, the process is quite expensive and complex. Therefore it is usually only considered if all attempts at division have failed and the heirs are hopelessly at odds.

If the estate consists only of the disputed property, the court cannot transfer the house to the heir. He must give the sell order to the highest bidder. One small consolation: The heirs are allowed to bid at auction, so they have one last chance to buy the house.

Special case solution

Nadja Schmid’s family finally managed to reach an agreement and found a solution that worked for everyone. The mother gets the usufruct right of the house, and the brother becomes the owner of the house. His brothers lend him money. They signed a loan agreement with the notary. The brother must repay the money to his siblings in installments, but this is only possible once the mother moves out. Nadja Schmid is happy with this arrangement. And I am happy that the house remains in the family: “We must adapt to each other to find a good solution, otherwise something like this cannot be achieved.”