Advice needed on inherited property

General Real Estate Investing
1

Here’s the deal,

My grandparents willed equal shares of a retail property to me and my brother. This property is rented by my brother for his business in Los Angeles. We will have tenancy in common for this property, I believe. This property is worth $2 million; however, my brother and grandmother (the trustee at the time) signed an agreement last year that sets his rent at $4,000 per month for the next fifty years. This drops the value of the property quite a bit, since the market rents are more like $8,000 per month. Also, my brother has an option to purchase the property for $500k, valid for the next fifty years.

I believe my grandmother didn’t understand what she was signing, since she repeatedly told me and other people over the years that I would get my fair share, 50% of the property’s worth. The original trust states that we each get equal shares of the property.

Does anyone know if these contracts must be honored, and what are the consequences for not honoring them. The current trustee, my uncle, believes that these contracts undermine the original desires of my grandparents, the trustors.

Any advice on this matter is appreciated.

2

I’m not a lawyer, but if your grandmother was of sound mind and she agreed to let him lease the property, I’m not sure how you can get out of the contract. Unless you can prove fraud, etc. an option may be to buy the brother out/make a concession so he agrees to different terms.

Consequences of “not honoring” a valid contract= civil lawsuit and damages.

3

A judge will need to decide this one. The original trust intent will take priority over any agreements with the other owner. You can always argue the trustee did not maintain the fiduciary responsibility to you when these agreements were drafted. If he becomes pissy, remind him that the 4K discount on rent is taxable income as far as the IRS is concerned.