Selling and equity split after a break u

Mort123 · 14 October 2016 at 9:41PM

Hello,

I'm hoping for some advice.

My boyfriend and I bought a property together with different deposit amounts and own it as tenants in common.

He put in 50k deposit and I put in 30k. We decided to split everything else (mortgage payments, fees, stamp duty and a new bathroom) 50:50.

Naively, in the throes of love we had an unclear arrangement about how we would split the sale of the house.

We have split up and I feel completely trapped in the house and unclear what my financial options are and whether I can afford to buy on my own.

Can anyone help with a suggestion of what might be reasonable based on the facts?

Thank you

silvercar · 14 October 2016 at 9:48PM

Has the property changed in value?

One way would be to take your initial deposits back as they were put in and then to split the remainder 50/50. assuming that either the property has increased in value or that some of the mortgage has been paid back.

Given that you've been paying the mortgage 50/50, you should both get back your deposits (as paid in) and the amount reduced on the mortgage (50/50) as you've both paid it equally. Then you can discuss amicably the split of the remainder.

QuiteConfused · 14 October 2016 at 11:01PM

When I split with my ex (tenants in common) he bought me out and paid me the deposit I had put in plus 40% of the equity (minus the deposit he had put in) as our mortgage split was 60/40. Was the simplest way. If there is enough equity I would suggest you each take your deposit and then split the remaining 50/50.

Thrugelmir · 14 October 2016 at 11:03PM

You need to have an adult discussion with your ex.

getmore4less · 15 October 2016 at 8:12AM

if you have paid everything else 50:50 then the 2 basic ways to do it are

A.get your money back split equity 50:50
B. full equity based shares less your share of the debt

do the numbers and see what rage you have.

I will do an example you can do it with real numbers.

£200k property(purchase price all fees and the bathroom)

deposit 1. 50k 2. £30k mortgage 120k == £60k each

mortgage now £110k £55k each

Value now £240k

A. get your money back
£240k -£80 - £110 = £50
1. £50k + £25k=£75k
2. £30k + £25k = £55k

B Equity less share of the debt.

1. £50k + £60k = £110k = 55%
2. £30k + £60k = £90k = 45%

1. £240k*0.55 - £55k = £77k
2. £240k*.45 - £55k = £53k

Mort123 · 15 October 2016 at 5:21PM

Thank you. It has increased in value dramatically, so quite a lot is at stake.

One idea I had was to split the increase in value this way:

The first quarter of the increase 60:40, according to our deposit amounts which were equivalent to 1/4 of the property value at the time we bought. And then the remaining 3/4 of the property 50:50, as the increase in this portion of the property value is owned by the loan from the bank, which we contribute to equally.

Does this sound sensible or am I being too nice? I don't think a 50:50 split of increased value will work as he always pointed out he should benefit from putting more in upfront.

Thank you

silvercar · 15 October 2016 at 5:33PM

Legally if it is held as joint ownership that is 50/50 unless specified differently.

I think you are being too nice (a) because your deposit enabled him to buy a property of higher value and (b) because selling up releases him from ties to you and allows him the freedom to buy elsewhere and get all his equity back.

The first quarter of the increase 60:40, according to our deposit amounts which were equivalent to 1/4 of the property value at the time we bought. And then the remaining 3/4 of the property 50:50, as the increase in this portion of the property value is owned by the loan from the bank, which we contribute to equally.

If this has any merit then the calculations should be on the 1/4 after the mortgage is deducted and so include the deposits paid - so his deposit of 50k has risen to x and your deposit of 30k has risen to y.

I don't think a 50:50 split of increased value will work as he always pointed out he should benefit from putting more in upfront.

If you know he will play hard ball, you should also start at a demanding point, so you can meet somewhere in the middle.

xylophone · 15 October 2016 at 7:31PM

do the numbers and see what rage you have.

Let's hope not!:eek:

getmore4less · 15 October 2016 at 7:43PM

Mort123 wrote: »

Thank you. It has increased in value dramatically, so quite a lot is at stake.

One idea I had was to split the increase in value this way:

The first quarter of the increase 60:40, according to our deposit amounts which were equivalent to 1/4 of the property value at the time we bought. And then the remaining 3/4 of the property 50:50, as the increase in this portion of the property value is owned by the loan from the bank, which we contribute to equally.

Does this sound sensible or am I being too nice? I don't think a 50:50 split of increased value will work as he always pointed out he should benefit from putting more in upfront.

Thank you

That's similar to B. above except the first 1/4 should be split 3/8 5/8 if 80k was a 1/4 of the cost to buy.

[Deleted User] · 15 October 2016 at 8:02PM

Another way of looking at it (and probably fairer from your ex's viewpoint) is that he put 62.5% of the deposit down, you put 37.5% down and everything else was shared equally. Once sold, it would seem reasonable for him therefore to receive 62.5% of the proceeds and you 37.5%.

Whether or not you can afford to buy on your own or not is your problem, not his.

The Legal situation may be different, but just stating what seems fair and reasonable (why should you benefit from his larger deposit)? If he invested more money in the stock market than you, his gain (or loss) would be greater than yours. Fortunately your house has increased in value, so you both gain - he more than you.

itchyfeet123 · 15 October 2016 at 9:42PM

Sleazy wrote: »

Another way of looking at it (and probably fairer from your ex's viewpoint) is that he put 62.5% of the deposit down, you put 37.5% down and everything else was shared equally. Once sold, it would seem reasonable for him therefore to receive 62.5% of the proceeds and you 37.5%.

That disadvantages the OP by disregarding that s/he has paid more than 37.5% when accounting for mortgage payments etc.

The simplest way would be to tally up the total amounts paid and divide the proceeds (i.e. money from sale minus remaining mortgage, agent fees, etc) from the sale in those proportions. Eg paid to date deposits 50k + 30k and mortgage, say, 10k +10k. So ex has paid 60k and OP 40k, and they split proceeds 60% to 40%. The more that has been paid towards the mortgage, the more even the split becomes, to the point that if you had finished paying the mortgage (and ignoring interest for simplicity) ex would have paid 50k +120k and OP 30k +120k, making the proportions 170/320=53.1% for ex and 150/320=46.9% for OP.

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Selling and equity split after a break u

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