At 1998 Richard's mother was permanently ill. For this reason she
signed her house "indeed" as a gift for her son Richard, who was
living with her. However there was a verbal agreement, that family
house will be divided between 3 siblings - Janet, Denise and Richard.
Janet and Denise own their own houses. Richard wrote a will, that when
he'll die, everything goes to Janet's son Ian. Neither Richard, nor
Denise don't have any children.
     When their mother died in 2001 Denise wanted her share from the
house, Janet gave up hers for Richard to have a place to live as she
promised her mother. Richard paid off Denise.
     In the mean time Richard got married and he is going to change
his will in favorite to his wife. Now, Janet wants her share from the
house, but more money then Denise got, because the value of the house
increased.
My question is:
" What amount of the money Janet should be paid? Original share from
2001, exactly as Denise was paid or increased amount of the money,
because of change value of real state. "

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Request for Question Clarification by tutuzdad-ga on 12 Feb 2004 19:40 PST

What state or location is the house in? What state or location was the
will filed in? Was there any probate ruling (was a court involved in
executing the will after the mother's death)?

Regards;
tutuzdad-ga

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Clarification of Question by b0b0cheeck-ga on 13 Feb 2004 14:40 PST

This house is in New Jersey ( Union county)
The mother didn't have any will. No court was involved, because
everything was desided before she died between three siblings. Too
sisters wanted for Richard to have a place to live and they persued
the mother to give it to Richard. Because Janet and Denise have own
house, there was a verbal agreement between all three of them that
when the mother died Richard would paid them off.
In 1999 Richard was seriously ill ( he went to a coma). After he got
better, Janet let him sign a will in favor for her son Jan. They would
all lose the house if he would died before his mother. It was good
plan at that time.
When the mother died (2001), Denise took her share ( Richard paid her off).
Janet didn't want her share because she knew that when Richard would
died everythig will go to her son. Not just her share, but Richard's
as well.( She didn't want the piece of pie, but whole pie. Not for
herself, but for her son - only child in the family)
In the meantime Richard got married. Now Janet wants her share from the house.
There is no question ask that Richard wouldn't paid her. There is the
question how much. The price from year 2001 when a verbal agreement
became legal or the price from 2004? Is she entitle for the
difference?

Hello and thank you for your question.

The question here is not really a question of law, it's a question of
what is fair for Janet.  The answer is that Richard should pay Janet
1/3 of what the house is worth today.


The best way to look at this is to consider the purchase from Denise
in 2001.  Of course the right price for Denise to receive was 1/3 of
what the house was worth in 2001, not in 1999 or any other date.  That
is because from 1999 until 2001 Denise owned (according to the oral
agreement that everyone is willing to follow) 1/3 of what the property
was worth, subject to mother's right to keep living there for life. 
So in 2001 when mother died, the three were equal partners in the
property.

Suppose Denise took the money she was paid in 2001 and bought a house
with it (a small house, or 1/3 of some other house).  Now, in 2004, if
Denise sold her new house, she would expect to get more dollars than
she received in 2001 because houses have increased in value.  So the
way to keep Janet equal with Denise is to give Janet 1/3 of Richard's
house's 2004 value.

Maybe Denise invested the money a different way, or even spent the
money, but the logic is the same.  Denise had the benefit of getting
the money in 2001 instead of 2004, and to keep Janet even it is fair
that she gets 1/3 of the 2004 value.

Usually in Google Answers we try to use Google and other search
methods to show that our answer is the right one.  In this case I can
only give you the definition of the time value of money that underlies
my answer.

http://vcexperts.com/vce/library/encyclopedia/glossary_view.asp?glossary_id=160
Time Value of Money
The basic principle that money can earn interest, therefore something
that is worth $1 today will be worth more in the future if invested.

Search terms used
equity "time value"

Thank you again for letting us help!

Richard-ga

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Clarification of Answer by richard-ga on 15 Feb 2004 17:32 PST

Hello again:

One of my fellow researchers has pointed out some New Jersey law that
I'll be adding to my answer for you.  Meanwhile, I'll tell you the law
helps support my answer--that the 2004 value is the correct one.  I'll
be providing the extra information for you on later tonight or on
Monday.

Sincerely,
-Richard-ga

---

Clarification of Answer by richard-ga on 16 Feb 2004 13:26 PST

Thank you for rating my answer.

Here is the clarification that I wanted to provide you.

The reason I told you the question is not really a matter of law is:

1.  Mother titled the deed as "Mother in trust for Richard" or words
to that effect, which would cause Richard to inherit 100% of the house
even though the New Jersey laws of intestate succession (which apply
for people who don't have a will) would divide Mother's probate
property three ways.

2.  Fortunately, as you say, "There is no question ask that Richard
wouldn't [pay Janet her share]."  Richard's oral contract is not
enforceable because of what lawyers call the "Statute of Frauds."  The
statute of frauds generally requires that contracts for the conveyance
of land must be in writing to be effective.  New Jersey's statute of
frauds is more generous than that of most states, but not generous
enough for Janet to be able to force Richard to buy her out or deed
1/3 of the property to her.
http://www.newjerseylaw.com/pubs/real.htm

3.  So really, the question is whether it is morally or ethically
right for Janet to receive her share at 2001 or 2004 values.  For the
reasons I gave you in my answer, 2004 values should apply.  If the
property had passed to the three siblings by Mother's will or by
intestacy, or if Richard's contract had been in writing and supported
by consideration, then it would be a legal question of interpreting
the rights of the parties arising from the delay to 2004 in paying
Janet her share.  But even then the question would turn on what the
parties (Mother in her will, and Richard and his sisters in their
contract) intended should happen in these circumstances, now that the
extra years have gone by.  Cases like that get decided as part of a
court's "equitable jurisdiction," which means that the court takes
into account how the parties have behaved and determines what is the
just or equitable thing to do.  And for the reasons that I gave you in
my answer, you would expect the court to decide that Janet deserves
for her share to be valued at 2004 market price.

Thanks again for letting us help with this question

Richard-ga