How to split the house?

madfrenchgirl

Hellio fellow MSErs!

We are in the process of buying our first house and we are so thrilled! :T :j :beer:

We are now facing the problem of splitting the house. We know about the tenants in common agreement and we know how to split our initial capital: I brought 25k for the deposit while OH brought 2k (after fees), and we took a 118k mortgage. So the tenants in common agreement should relflect this:

Me 84/145 of the house
OH 61/145 of the house

However, and this is the first tricky part, we are going to contribute equally to re-decorating and renovating the house: how do we split this and make it legal? We were thinking about: if there is a profit in the sale of the house, then we share the profit half-half.

The second tricky part would be: what happens if any of us make an overpayment? If I make a 5 grand overpayment on the mortgage, how do I make sure that my shares are up 94/145 instead of my partner having 5k and me having 5k (while it was my money)? If OH signs a letter recognising this, would that be receivable? Or do we need to go back to the sollicitors and pay 150 quid to get the tenants in common agreement re-written?

I know this is a tricky question and it might look like we dont trust each other but you'll never know what is around the corner! Plus I dont want to ask the sollicitor as they might charge us for it on top of what they are aready making out of us.

Talking about what is around the corner, if I ever came to die, I would like my share of he house to go to my Mom and not my Dad (whom I havent spoken to for 2 years). How do I make sure that the default rules of inheritance will not apply? Would the Post Office Will document be enough?

Thank you in advance for the answers!

Dora_the_Explorer_5

congratulations on your first step onto the property ladder, you are certainly making some wise decsions re the TIC and percentage split.

However, and this is the first tricky part, we are going to contribute equally to re-decorating and renovating the house: how do we split this and make it legal? We were thinking about: if there is a profit in the sale of the house, then we share the profit half-half.

That looks fair - half the risk and half the profit.

The second tricky part would be: what happens if any of us make an overpayment? If I make a 5 grand overpayment on the mortgage, how do I make sure that my shares are up 94/145 instead of my partner having 5k and me having 5k (while it was my money)? If OH signs a letter recognising this, would that be receivable? Or do we need to go back to the sollicitors and pay 150 quid to get the tenants in common agreement re-written?

Sorry, haven't a clue - maybe you should seek advice from solicitor now as part of the work currently being done.

Talking about what is around the corner, if I ever came to die, I would like my share of he house to go to my Mom and not my Dad (whom I havent spoken to for 2 years). How do I make sure that the default rules of inheritance will not apply? Would the Post Office Will document

Make a will.

Dora_the_Explorer_5

oops - got cut off!
As the solicitor is already doing conveyancing work for you why not get him to draw up a will for each of you. You are making a substantial financial investment and need to know that your wishes re inheritance are worded correctly - DIY wills often mean people make DIY mistakes.

distilled

I'm not being funny but this is a rather complicated legal matter and you're going to need a solicitor at some point so instruct one now. This is not the place for such specialised advice.

madfrenchgirl

Distilled,

I already have a sollicitor. Just dont want to give him more occasions than necessary for them to make me pay even more.

Dora,

Thx for the advice.

If I actually phone them, could they charge me for verbal advice?

I know I might sound paranoid there but hey!

silvercar

If I make a 5 grand overpayment on the mortgage, how do I make sure that my shares are up 94/145 instead of my partner having 5k and me having 5k (while it was my money)?

Strictly speaking it shouldn't be a divisor of 145 it should be the current value of the property at the time the over payment is made!

At some stage you have to switch between the different deposits you are both making and the shared (equal) risk in buying the property you are both making. Presumably the day to day running costs will be split 50:50.

You talk of splitting the profit, what happens if there is a loss? What happens if one of you wants out, does that force a sale?

exil

Sorry, this whole thing seems daft to me. OK you put in different amounts of capital: but over the years you will be earning different amounts and therefore contributing
in differing proportions to the finances, and doing different amounts of contributions "in kind" (housework, repairs, child care).

For this reason, on a divorce settlement the likelihood is that assets (inc. house and pension rights) will be totalled up and split 50-50.

If you shuffle off, then willing your share of the house to someone other than your OH is going to leave the OH homeless.

Unless you're going to word the will so that if you are still hitched, your share goes to the OH and THEN to parents - in which case you do need a lawyer to draw up the will.

madfrenchgirl

in case of a loss, we thoguht about:

current value - ((original value-current value)/2)

and this will be re-allocated according to the original arrangement. half the profit, half the loss.

then if one of us wants out and if the other one wants to stay, then the one staying would have to buy the other back (as if that was possible)... other wise sale and re-allocation according to the agreement above.

does that seem fair and doable?

stattoma

hi, just wondered how this was resolved in the end please? Girlfriend and I just going through a similar process and I wondered if you had any advice. I would like her share to rise by 1 per cent each year (I know I'm sooo generous!). Hopefully this can be reflected in the TIC agreement.