Resident sibling paying property taxes until inherited house sale--financially fair/appropriate?

Question

My two siblings and I are working out our inheritance, one piece of which is our late mother's home. My wife and I had been living here, rent-free (and unemployed and at a mid-career impasse/life confusion/etc), when she passed away in September. Things have been somewhat in limbo for emotional and paperwork reasons (and some understandable procrastination) but now it is getting to the point where we need to have a plan in place. My sister has offered us an option, and I just want to suss it out here.

She has said the house will not be ready to go on the market until about March or April, since we need to get much of our mother's possessions out of the house so that the closets look empty, etc, so that the house will sell. [which I'm not as sure about, but go with it for a moment]. My wife and I have discussed with my siblings possibly buying this house--which I asked about on this forum recently--but are not yet sure what we want to do. My sister said that we could stay here during this time of readying the house, but, and here is the key point: we have to pay the property taxes and homeowners insurance, as well as the utilities.

I told her that would be OK, but now I'm a little less sure about this arrangement, at least in terms of us paying the entire property tax and insurance. It occurred to me that whether my wife and I were living in this house, the property tax and insurance would need to be paid; if the house were empty until April, I assume my two siblings and I would split the amount, each paying 1/3rd of the amount.

I could see asking my wife and I to pay the full tax/insurance if that magically only applied to occupied homes, but since the tax and insurance must be paid whether the home is occupied or not...I'm not sure why we should have to pay all of them, other than that it would be more pleasant for my siblings (though less for us).

My sister's very briefly stated justification was that since my wife and I are getting the benefit of living here, we should pay the entirety of the property taxes and insurance. But, of course, neither of my siblings have any opportunity to make use of this benefit, since they are happy in their own properties. In fact, my being here provides a service to the family, in that by living here we are monitoring the home and caretaking it. Yes, of course, we get a big benefit out of it, too, but only we can make use of it.

I could definitely see paying the full property taxes if our staying here prevented the house from selling, and, in fact, that would still not even be fair to my siblings and I wouldn't do that. But the point is, if my wife and I don't take this "deal" and don't live here, this pre-sell period is going to have an unoccupied house sitting here anyway, which our family is unwilling to rent out.

It is sort of like that episode of I Love Lucy where the Ricardos are going to California by car and the Mertzs ask if they can go with them but then say they don't have to pay any gas because the back seat is going to CA anyway. Of course, the Mertzs' weight would reduce mileage considerably, but my wife and I living here will not affect the property taxes and insurance at all.

I am willing to pay for all the utilities. Strictly speaking, some of the heat and electricity bill would be paid whether anyone is in the house or not, since we have to keep the pipes from freezing and there is a minimum customer charge each month, but I would be willing to pay those fully because that seems more like splitting hairs. The additional property tax and insurance, though, will be something like $3k spent by my wife and I over the period discussed--and more if we wind up staying here longer if the house doesn't sell and we have no other option.

Is there any financial conventional wisdom that would inform as to whether this arrangement would be considered fair/appropriate?

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EDIT: Wanted to emphasize that, in the eyes of my siblings, this house cannot be rented out during this pre-sell period. If we were to move out, it would sit here unoccupied, incurring the same property taxes, insurance, and a smaller cost of utilities.

Answer 1

One way to look at it is to ask yourself what you would have to pay if you moved out and rented a house or apartment on your own. If the cost of doing that is comparable to the cost you pay by living in the house, it would seem that that is a reasonable price for that arrangement. In other words, consider the price of a substitutable good (namely, comparable housing).

Your arguments are not really sound from a purely financial perspective, but that doesn't mean they're not sound, it just means you probably shouldn't try to argue your case solely on the economic merits. From what you describe it sounds like essentially your mother was your landlady and let you live there rent-free to help you out in a tough time. In some sense your siblings are now your co-landlords (along with you yourself) and must decide whether they want to do the same. An extension of your logic would suggest that no landlord would need to charge rent, since the landlord must pay all the taxes/upkeep for the house regardless of whether it is rented or not. Of course this is not the case; you pay rent for the privilege of occupying the property, and the landlord uses some of that rent to pay the property taxes, building maintenance, etc. It is only by virtue of your landlords being your siblings that it makes sense to divide the expenses with them. (If your mother had been renting out her house to non-family tenants, would you consider letting the tenants stop paying rent at this point?) It certainly seems like something siblings might work out amongst themselves, but such a decision would be made with some amount of familial altruism in mind, not just financial considerations.

Ultimately, this is something that is probably better handled through discussion with your siblings. Unless you are on bad terms with them, you can hopefully raise these issues in a neutral way and get their perspective. If they understand you are going through a tough time, they may be willing to help you out, as your mother was. (Incidentally, one thing that is unclear to me from your post is the overall communication between siblings. You say you have two siblings, but you say only your sister is proposing this payment scheme. If all three of you are co-owners of the property, you all should probably be involved in these discussions.)

Answer 2

Your argument hinges on the hypothetical: If we were not living here, taxes and insurance would still have to be paid.

Your siblings could just as well argue that if you were not living in this house, you would have to buy a house of your own or rent an apartment. Therefore, in fairness you should pay rent to the other two siblings for the fair market value of the house, presumably reduced by 1/3 for the share of the rent that you would pay to yourself.

There are many, many people out there who would love to be able to live in a house without having to pay any rent or mortgage, just insurance and taxes. I'm one of them myself. In my humble opinion, asking you to pay the expenses associated with the house when you're the one benefitting from it sounds more than fair to me.

The fact that the others are in a position where they do not want to live in the house seems largely irrelevant to me. Would this be relevant if they were not relatives? If you went to rent an apartment, could you pick a random stranger off the street and say he should pay half the rent, because the only reason he isn't sharing this apartment with you is because he already has an apartment of his own? His likely reply would be to say, Exactly right. There's no reason for me to pay half the rent on your apartment because I'm already paying all of the rent on my own.

Your siblings are presumably paying mortgage or rent on their living space. Why should they have to pay for the house where you are living as well?

Now if it happens that you are in a position where this is a major financial strain, and your siblings have enough money that they could easily share the expense, you might approach them on this basis. I mean, to say, yes, it's fair to ask me to pay this, but I just can't afford it.

If may be that you can make a case that you are doing the family a favor by living in the house. By living there you discourage thieves and vandals, for example.

Where would you live if you were not living in this house? Let's suppose you got an apartment. What rent would you expect to pay? If it is less than the taxes and insurance on the house, that would contribute to the "helping out the family" argument. But unless this is a very big and expensive house, I think it is unlikely that you could get even a small apartment for less than the taxes and insurance. But I don't know where you live or what the housing market might be like there.

Frankly, it sounds to me like you're getting a great deal: you're getting a house to live in for a fraction of what most people pay. I wouldn't complain.

Answer 3

From my seat as an internet stranger, residing for property tax, insurance and utilities is more than fair to you. Unless the local real estate market is full of vacancies or the house has so much deferred maintenance that it can't rent, I figure you are still up at least several hundred dollars per month. My concern would be if this comes with strings attached: would your siblings expect you to do more than 1/3 of physical labor in the cleanout, repainting, yard work, furniture staging, etc? Are you on call 24 hours a day for plumbers or carpenters the lead sibiling arranges? That would be fine if it's something you all communicate and agree to. You don't want to be in a position of negotiating limits after several months of reduced rent.

Answer 4

My brother lives in my mother’s home. He refuses to work because my mother kept him up when she was alive. I can’t afford to do that. I have paid the insurance and taxes on the house since my mothers death a year and a half ago. My brother is of course fine with this. I am not. Family should not take as Advantage of family just because Mom let them get away with it. You have a good family. Rent would be a much higher then taxes and insurance. Pay the taxes and insurance and thank your siblings for their generosity. Yes you are and assist but if the house was sold they wouldn’t need a house sitter. As far as them not needing the home...I have spent 25 years working and paying for my home.. that doesn’t mean my brother should get one free. Think like an adult and understand you have a great deal.