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    • jb1989
    • By jb1989 13th Sep 17, 2:41 PM
    • 23Posts
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    jb1989
    Currently own property with friend. Buying out help/advice.
    • #1
    • 13th Sep 17, 2:41 PM
    Currently own property with friend. Buying out help/advice. 13th Sep 17 at 2:41 PM
    Hi there, found this place a great help in the past and hoping it is again today. Please excuse the length of my post. I'll try and be as precise as possible without rambling.

    I bought a flat with a good friend 3 years ago. We were both in our early twenties and had decided to purchase a property rather than rent. We were both living at home and could afford a deposit. We both saw the property as an investment and made a mutual agreement that we would live in it for a few years before either of us changed our living arrangements.

    My flatmate met a girl soon after we purchased and she is now wanting to purchase a property with him. This means our flat will need to be sold or I will need to buy him out.

    My first question is. How do we work out the price in which I would need to buy him out?
    I have come to the conclusion that we would get the property valued by a few companies, work out an average, then minus the amount left on the mortgage and split that in half.

    My flatmate has asked/queried if its possible for him to sell his half of the property to another friend or family member at an increased value to what I would have to buy him out at?
    I'm unsure if this is even allowed but it seems shady to me. We have worked out roughly (based on other flat prices in the building) how much I would need to give him and he was expecting the value to be higher. He has asked what the laws are in terms of him simply selling his 50% at a higher value to someone willing to give him a few thousand more than I would.

    If he would rather sell up am I obliged to sell even if I have the funds to buy him out at more than he would likely get when selling?

    I have guessed at a valuation higher than I'd actually expect the flat to get and worked out the amount of money I would have to give him which I believe would be slightly more than if we were to sell due to added costs for solicitors and what not. I am also confident that the bank would allow me to take over the mortgage on my own as the remaining amount is less than I would qualify for if I was to buy a new home for myself. The amount needed to buy him out could be borrowed from family members who are willing to help.

    Thanks in advance.
Page 1
    • G_M
    • By G_M 13th Sep 17, 3:23 PM
    • 41,100 Posts
    • 47,242 Thanks
    G_M
    • #2
    • 13th Sep 17, 3:23 PM
    • #2
    • 13th Sep 17, 3:23 PM
    What does the Deed you set up when you bought say should happen in these circumstances? Or did you not look ahead when forking out £x00,000?

    How do we work out the price in which I would need to buy him out?
    Establish the market value in the usual way.

    My flatmate has asked/queried if its possible for him to sell his half of the property to another friend or family member at an increased value to what I would have to buy him out at?
    Provided you agree, why not? But you'll have to be happy co-owning with the 'friend', and this time I suggest you plan ahead and Execute a suitable Deed!

    If he would rather sell up am I obliged to sell even if I have the funds to buy him out at more than he would likely get when selling?
    If he's willing to sell to you and you are willing to buy, what's the problem?

    He's unlikely to find a buyer for his share other than you.....
    and no one can buy his share without your consent.
    • Alter ego
    • By Alter ego 13th Sep 17, 3:30 PM
    • 2,077 Posts
    • 1,987 Thanks
    Alter ego
    • #3
    • 13th Sep 17, 3:30 PM
    • #3
    • 13th Sep 17, 3:30 PM
    Are you joint tenants or tenants in common? If TIC he can sell to whom he likes legally. If JT you both need to sell to a new buyer (could be yourself)
    Ignore me if you like, it's not the real me anyway.
    • Chappers27
    • By Chappers27 13th Sep 17, 3:36 PM
    • 52 Posts
    • 56 Thanks
    Chappers27
    • #4
    • 13th Sep 17, 3:36 PM
    • #4
    • 13th Sep 17, 3:36 PM
    When I did a similar thing, we had a Deed of Trust drawn up. In retrospect, it didnt help as the solicitors cocked it up. Anyway, could you not move out too? Why would you want to hang on to it?

    If you say you can borrow funds from family members then its a no-brainer to buy him out. You can then rent the room out and get the mortgage part-paid for that way, whilst enjoying the capital increase.
    • jb1989
    • By jb1989 13th Sep 17, 3:41 PM
    • 23 Posts
    • 0 Thanks
    jb1989
    • #5
    • 13th Sep 17, 3:41 PM
    • #5
    • 13th Sep 17, 3:41 PM
    When I did a similar thing, we had a Deed of Trust drawn up. In retrospect, it didnt help as the solicitors cocked it up. Anyway, could you not move out too? Why would you want to hang on to it?

    If you say you can borrow funds from family members then its a no-brainer to buy him out. You can then rent the room out and get the mortgage part-paid for that way, whilst enjoying the capital increase.
    Originally posted by Chappers27
    The issue is. If I was to say "I can buy you out for X amount" and he wanted more. Could he then ask someone else to buy him out.

    The way I see it, he has moved the goal posts and I am in a position to buy him out and manage it myself but I'm unsure if he legally can do what he wants with his half or if we have to agree.

    I don't want to move out simply because I am located incredibly close to work and in an idea position.
    • jb1989
    • By jb1989 13th Sep 17, 3:42 PM
    • 23 Posts
    • 0 Thanks
    jb1989
    • #6
    • 13th Sep 17, 3:42 PM
    • #6
    • 13th Sep 17, 3:42 PM
    Are you joint tenants or tenants in common? If TIC he can sell to whom he likes legally. If JT you both need to sell to a new buyer (could be yourself)
    Originally posted by Alter ego
    Can you explain the difference? We own the property 50/50. You'll have to excuse my naivety. We were both first time buyers.
    • jb1989
    • By jb1989 13th Sep 17, 3:44 PM
    • 23 Posts
    • 0 Thanks
    jb1989
    • #7
    • 13th Sep 17, 3:44 PM
    • #7
    • 13th Sep 17, 3:44 PM
    What does the Deed you set up when you bought say should happen in these circumstances? Or did you not look ahead when forking out £x00,000?

    How do we work out the price in which I would need to buy him out?
    Establish the market value in the usual way.

    My flatmate has asked/queried if its possible for him to sell his half of the property to another friend or family member at an increased value to what I would have to buy him out at?
    Provided you agree, why not? But you'll have to be happy co-owning with the 'friend', and this time I suggest you plan ahead and Execute a suitable Deed!

    If he would rather sell up am I obliged to sell even if I have the funds to buy him out at more than he would likely get when selling?
    If he's willing to sell to you and you are willing to buy, what's the problem?

    He's unlikely to find a buyer for his share other than you.....
    and no one can buy his share without your consent.
    Originally posted by G_M
    He is stating that if he could gain more money by selling his half then he would turn down my offer to buy him out despite that being the correct amount he would walk away with if we were to sell. I.E. I don't want to share the property with someone else if I am in a position to buy him out.

    He wants to gain as much as he can as he would need a deposit with his girlfriend for a new property. I would obviously not want to pay him more than what was fair give or take a few hundred quid. The way I see it, he has moved the goal posts in terms of wanting to buy a new place with his girlfriend and I'd rather not get stuck living with someone else or having to pay a huge amount more than what he would get if we were to sell.
    • Chappers27
    • By Chappers27 13th Sep 17, 3:49 PM
    • 52 Posts
    • 56 Thanks
    Chappers27
    • #8
    • 13th Sep 17, 3:49 PM
    • #8
    • 13th Sep 17, 3:49 PM
    Whenever there is a remortgage there is consent to sell form to be filled out by people that live there. If he tries to sell it without your knowledge, youll be sent a consent to sell form - which you dont have to sign. When all is said and done, you need a conveyancer. Get one on a free consultation and explain the situation.

    Go to the Land Registry website and get the deeds. I think its less than £10 or something. Contact the mortgage company and tell them too.
    • Chappers27
    • By Chappers27 13th Sep 17, 3:52 PM
    • 52 Posts
    • 56 Thanks
    Chappers27
    • #9
    • 13th Sep 17, 3:52 PM
    • #9
    • 13th Sep 17, 3:52 PM
    https://www.gov.uk/joint-property-ownership

    https://www.goldsmithwilliams.co.uk/marketing/your-guide-to-owning-property-together.pdf
    Last edited by Chappers27; 13-09-2017 at 3:54 PM.
    • Slithery
    • By Slithery 13th Sep 17, 3:54 PM
    • 186 Posts
    • 256 Thanks
    Slithery
    You must have decided whether you were going to be joint tenants or tenants in common when you purchased. None of us know what you decided.

    What does your paperwork from the purchase say?
    • G_M
    • By G_M 13th Sep 17, 6:31 PM
    • 41,100 Posts
    • 47,242 Thanks
    G_M
    Ah - there's mention of a mortgage. In both your names? So how is that going to work if
    * he tries to get his name off the mortgage (lender will refuse)
    * he redeems the mortgage (nice! He pays it off you have a mortgage free house!)
    * his 'buyer' tries to take out a joint mortgage with you (you refuse)
    * his 'buyer' tries to take out a mortgage in his sole name (lender will refuse as you are also on the Title Deeds

    Basically without your cooperation he cannot sell, unless
    1) you own as Tenants in Common (see previous links) AND
    2) his buyer pays him in cash
    • xylophone
    • By xylophone 13th Sep 17, 7:07 PM
    • 22,881 Posts
    • 13,243 Thanks
    xylophone
    Tenants in common have individual rights in their property. They can dispose of their shares in it as they wish. So A can sell his interest.

    But, putting the property on the market for sale affects the other co-owner. If B doesn’t want to sell the property, he could refuse to sign the property transfer document which would make it difficult to complete the sale to a buyer.

    The Form A Restriction

    Form A (Restriction on dispositions by sole proprietor)

    No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court.
    • mrginge
    • By mrginge 13th Sep 17, 7:37 PM
    • 4,128 Posts
    • 7,318 Thanks
    mrginge
    Well in theory you could offer him less than market value, since if you don't sell he'll be on the hook for additional stamp duty with his GF
    • G_M
    • By G_M 13th Sep 17, 9:36 PM
    • 41,100 Posts
    • 47,242 Thanks
    G_M
    Well in theory you could offer him less than market value, since if you don't sell he'll be on the hook for additional stamp duty with his GF
    Originally posted by mrginge
    Or to put it another way, in practice you could offer less than market value for all the reasons already listed.
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