Splitting equity on break-up - help?

jim5432

Ok, as briefly as I can manage...

gf and I bought house for 105,000 in 1999, 95,000 mortgage and equal deposits.

we paid equal shares of mortgage until we broke up in 2003. The house was valued with average of 3 valuations at 225,000 but we decide not to sell

Since then we have kept the house on in joint names but I have been the sole payer of the mortgage from 2003 to date. For the sake of argument assume house now worth 275,000

Legally, were the house to be sold now - who is entitled to what??? (there is, and never has been any legal agreement between us and we are unmarried)

Any help gratefully received - particular from people who have experienced something similar

m_13

Did you buy as joint tenants or tenants in common? Joint tenants own 50% of a property each whilst tenants in common can own unequal shares.

You both paid £5,000 deposit in 1999, paid equal shares of the mortgage until 2003 and so until then had equal shares in the house.

It would seem fair that at the very least you regain her share of the mortgage payments you paid from 2003 to date.

From compactlaw:

If you are not married you may still have to deal with financial issues after your separation because, for example, you have a property which you own jointly with your partner.

If you and your partner are not able to decide what is to happen to any joint property then you can ask the court to decide.

You can apply for an order to sell the property and for the court to decide the value of your interest in the property. For example, you might want to argue that you should receive more of the sale proceeds because you paid the deposit or made a greater contribution to the purchase price, or paid part or all of the mortgage.
The court will have to look at the intention behind these payments, e.g. did you make the payments as a gift, a loan, or payment of rent, or for example, was it intended by you and your partner that you should have an interest in the property ?

It is important to keep details of any payments you make as you will need to prove you have made these payments in order to establish your interest in the property.

Were you ever engaged? This may change things.

There is one way in which you as part of an unmarried couple might have the same protection in financial disputes as married couples. Under the Law Reform (Miscellaneous Provisions) Act 1970 an engaged couple who separate will have the protection of any law which relates to the property rights of husband and wives. All you need to show is that there was an "agreement to marry" and that this agreement has been broken.

jim5432

well I guess it was joint tenants - it was our intention that we owned it 50/50 hence the equal deposits and mortgage payments while we were together.

No we were never engaged.

The logic from the ex-gf is that she thinks she should not have to repay 50% of the mortage repayments since 2003 (which I have effectively been paying for her) because she could have insisted on a sale in 2003 and taken her money and used it elsewhere, and therefore the money I have paid off (her half of) the mortgage since then is effectively some sort of rental she sees me as paying for being able to remain in the house and not having been forced to sell it at the time.

To me this seems a bizarre argument because all the time I am paying the mortgage - her debt is reducing and her investment value increasing (or at least it was lol!!). Ultimately her 47500 mortgsge will reach zero without her hardly having paid any of it back to anyone! something doesnt seem right there!

DigitalJedi

So has your GF remained in the house since 2003 along with you? If so why has she not been paying?

If she moved out then it could be hard to claim 50% of mortgage payments since she's incurred living costs elsewhere whilst you've enjoyed the sole occupancy of the house.

I had a similar issue some time ago with my ex and my solicitor advised me it would cost £5k - £7k to sort out in court. Of course there's never a guarantee either. So it might be worth compromising a little or just writing it off for the sake of moving on with your life. All depends on how much you are talking about though.

jim5432

DigitalJedi wrote: »

So has your GF remained in the house since 2003 along with you? If so why has she not been paying?

If she moved out then it could be hard to claim 50% of mortgage payments since she's incurred living costs elsewhere whilst you've enjoyed the sole occupancy of the house.
.

No she moved out. I see the point about incurring expenses elsewhere but nevertheless, despite the fact that I have sole occupancy she of course still has her investment in the house. So whilst she has been living elsewhere the house has increased in value by 50,000 - in that time she would have paid mortgage payments totally around 20,000 so to my way of thinking it all evens itself out - her 25k share of the increased equity goes to me less 5k - she hasnt paid anything in that time which has enabled her to service her living costs elsewhere. She is still left with the increased equity in the house from the time she lived there with me and was paying the mortgage

DigitalJedi

Trust me i totally see where you are coming from. I am simply reiterating what my solicitor told me when I enquired about the same.

So basically it comes down to, would you risk £5k-£7k (assuming my solicitors estimate is accurate and similar to yours) to take your ex to court to get £20k whilst there's every risk you may simply lose or even if the judge splits the difference you are still not gaining much. Only an outright win would make it worth your while. This will take months and since you have nothing documented, she could be really devious and start claiming you said it was OK etc. just to muddy the waters (cos she has no proof either). Is it worth it?

I'm not saying dont make a stand. I'd certainly at least get a solicitor to send some snottograms to see if you can scare her into compromising since she would also be looking at some hefty legal bills if she decides to fight.

In my case the numbers were a lot less so i opted to simply pay the ex off and move on with my life rather than have the hassle and let it drag on over a few grand.

Finally bear in mind too that what you value your property at may not be what you get on the open market in current conditions. So say for example the house sells for £20k less than what you valued it at, your now fighting over even less.

*oooh, just thought. Not sure how flexible your mortgage is but if you do think it will take time to sort, you could see if you can just pay the interest only. That way at least you are not paying "her" debt off and you can put the capital payment part into your own account.

silvercar

From what others have said on here.

If you have had sole occupancy since 2003 then you should be paying her half the market rent for the property as you are renting her half from her; she should be making half the mortgage payments and you should be meeting the utility costs of living in the property.

Calculation of half the rent less the mortgage payment should enable you to work out who has gained/ lost and may give an idea of how a court would rule.

Debt_Free_Chick

jim5432 wrote: »

The logic from the ex-gf is that she thinks she should not have to repay 50% of the mortage repayments since 2003 (which I have effectively been paying for her) because she could have insisted on a sale in 2003 and taken her money and used it elsewhere, and therefore the money I have paid off (her half of) the mortgage since then is effectively some sort of rental she sees me as paying for being able to remain in the house and not having been forced to sell it at the time.

Has the mortgage been on a repayment basis for the whole time?

As Silvercar alludes to, since 2003, you have occupied the entire property and arguably, you owe her rent for occupying her part. On the other hand, she owes you half the mortgage repayments for that period. If the mortgage has been on interest-only since 2003, then one would probably cancel out the other i.e. the rent you owe her would cancel out the interest payments she owes you. This is not necessarily "scientifically" correct as there is no direct correlation between rent and interest rates on mortgages, but you'll find it's not been too far out over the past 5/6 six years. So let's say they cancel eachother out.

The difficulty is then if you've been on a repayment mortgage - as you've contributed to the equity - and you could argue you've done this alone. She might argue that her share of the mortgage repayments include some of the equity - remember, that we're counting the rent you owe her as payment in lieu of the mortgage instalments she owes you.

There are two ways of sortinig this out - amicably and fairly with each of you respecting the other person's position (as I think you both have a case for each argument). Or expensively via solicitors, mediation and possibly the Courts :eek:

Start at 50/50 and see what you end up with. If the mortgage has been on int only since 2003, 50/50 seems fair.

BTW, joint tenants do not automatically own a property 50/50. That is the general starting point where there is no other written agreement, but contributions and intent would also be taken into account, if the matter went to court.

Try and resolve this fairly and amicably, otherwise legal fees with leave you both with fook all

m_13

Debt_Free_Chick wrote: »

BTW, joint tenants do not automatically own a property 50/50. That is the general starting point where there is no other written agreement, but contributions and intent would also be taken into account, if the matter went to court.

From swarb.co.uk:

In a Joint Tenancy, each owns all the property. When one joint tenant dies, his interest disappears immediately before his death. Since the survivor already owns all the property, nothing passes or is transferred under any will, and little more needs be done, other than to record the death. This is simple, and convenient, but is only appropriate, usually, within the context of a marriage. Joint tenancies can become inappropriate where the parties may need to plan to reduce Inheritance Tax liabilities


Parties in a stable relationship, but unmarried, also often choose this way of holding the property, but if this applies to you, you should only do this with care. In particular, where people come to a relationship with children by a first marriage, a joint tenancy can disinherit the children of the spouse who dies first. His or her interest will pass straight to the survivor, and the children will then be dependent upon gifts made by the surviving spouse (who may again remarry). This cannot be controlled by a will very easily - property held under a joint tenancy can not be disposed of by a will.
In a joint tenancy, whatever the proportions in which the parties have actually contributed to the purchase price, and/or to the maintenance of the property or mortgage, the only safe working assumption is that any proceeds of sale will be divided equally. To put a house in joint names is to make a gift of any excess contribution to the other party.

I hope it doesn't come to sorting it out via the courts. What has triggered this enquiry? Is your ex-partner trying to get you to sell the property?

MissPrissy

Silly Silly Silly!!!
You made a very basic mistake in 2003 by not having a formal agreement that you would buy her out of her share, and therby buy her off the mortgage. Or a legally drawn up agreement that her share was 'frozen' in 2003.

She now has you well and truly over a barrel, you cant sell without her say so and she can demand her 50/50! Your only option is to go to court for them to rule that it is 50/50 until 2003 and work out the proportion you paid alone until the present time (very expensive, so is it worth it financially?) or pay up and learn a lesson for next time.

Tigsteroonie

And your reason for bumping this 2009 thread?