How much does my partner owe me when he buys me out.

System32

Hi all,

I recently recided to sell my partner my half of the house as we have ahd a falling out and I need to get out. We've had the house for about 5 years he put the inital depost (20%) of £40,000 down and we then split the rest 50/50 giving us a total split of 40/60 (20% deposit his then splt the remaining 80%).

The equity is around 60,000 at the moment as the house has lost value, now my friends keep telling me I should get 40% of the 60K (24k)which while it sounds nice doesn't seem all that fair as that is almost more than I've paid over the years.(im not trying to screw him over even though I really want to) surely he gets his deposit back first or at least the 20% of the total value then we split the remainder 50/50.

Any advise would be welcome (If I do get 24,000 the beers are on me)

Thanks John.

unhappy_with_ecar

I'm not really an expert on this but from what you are saying, you bought a house for . He put down a 40,000 deposit and you had a joint mortgage for 160,000. So the total purchase price was 200,000. You don't say who paid the stamp duty on this.

You say the equity is now £60,000 but don't say what the house value now is but that it has lost value, however taking the remaining mortgage balance out there is £60,000 of equity. He has an investment of 40,000 that is his. Which means the balance of the equity is 20,000 and half of that is your entitlement i.e. 10,000.

However, the bank may not agree to simply remove you from the mortgage and he will probably have to get a new mortgage in his sole name and effectively buy the house at a price that you both agree to and that the bank values the property at. The old mortgage will be settled and the balance of the equity less his initial deposit will be your entitlement (again about 10,000).

He may argue that if he paid all the stamp duty he is entitled to some of that back from your stake and that's something you need to haggle out between the two of you.

Unless of course you were in a civil partnership - in which case you should see a solicitor because the situation covering the deposit changes somewhat.

System32

Thanks for the quick responce, we split all the bills/fees outside of the deposit 50/50 so it really is just the despoit that is causing the confusion.

That sounds pretty much what I was expecing. the only question then really is do I need to pay half of his remortgage fees as well or is that now his responsability?

unhappy_with_ecar

Well, its his choice to buy you out - I would say that remortgage costs are his responsibility unless you feel a moral obligation if you ran off with someone else for example!! Be careful what you agree to, because once you agree to bear some of the costs you may find that there's not much of the 10k left!!

LilacPixie

I find it to be a difficult question to answer.

His remortgage fees are his. As he wants to buy you out then its his responsibility to cover the fees in doing so IMO.

Did you have any documentation regarding what happens to the property when or if you seperate? If the documentation says 60% is his and 40% yours then presuming 60k equity you would get 40% of that from my understanding.
I could be totally wrong though.

My thoughts were based on say the equity was only 40k, if you use the method unhappy with ecar did your partner would still have all his origianal deposit and you would have nothing despite owning 40% of the home to his 60%

unhappy_with_ecar

That's a fair point, you could reasonably argue that if the house has lost value then the value of his deposit has also decreased proportionately.

Its always hard isn't it in these situations - maybe ask him to make you an offer for your share and see how it fits with what you were hoping for. Its always best to try and do these things amicably

System32

It is pretty amicable but im sure it will get messy if I try to get more than he thinks I should be. The way I initally looked at it was with the deposit that in theory I could have moved in on day one and moved out on day two and by my friends logic gotten 40% of his deposit because esentially that would have been the house equity (I may be using the wrong word here in fairness im not that au fait with the technical terms ) but its not as I would be taking his investment from him.
Im happy to just take 10,000 and walk away sure I've invested more in the house but thats part of the thing with houses they will probably never make you more money that you put into them unless you are buying run down houses and renovating them in a few months then selling on. A house mortgag is a long term loan to give you a roof over your head.

unhappy_with_ecar

Sounds like you are sensible. It may be worth just looking at the percentage decrease in the value of the property and adjust his deposit accordingly. That would be fair. So if the house has lost 10% in value since you bought it then his deposit is now worth £36,000 and not £40,000. Prices go up as well as down and its not your fault that the value went down, it would be fair that he takes a hit in that as well, otherwise the reduction in value is just being knocked off the extra cash over and above 40,000 and not the whole value of the house which isn't fair.

LilacPixie

This its very muddy TBH. It depends on how things are between you and if you ever have to have contact with him again.

I have thought of another theory. Just to confuse everyone and make it even more messy. you own 40% of house, he ownes 60% so basically 40% of value is yours and 60% is his. Say mortgage is 160k and house worth 220k. you would own 88k of house to his 132k. If you minus of you 80k mortgage liablilty you walk away with 8k. He on the other hand would have 52k.

Think you need to seek legal advice on this as no doubt he will be as a solicitor will be required to oversee the removing of you from title etc.

System32

Thanks for the help guys, looks like its a visit to a soliciter in the morning, I they will be the real winners at the end of the day.

LilacPixie

I think thats for the best System32. I hope it all progresses quickly and amicabily. Relationship breakdowns are hard on all involved and as you have obviously lived toghether 5+years you wil of invested alot of time and emotions in not only the house but also in your former partner and relationship.

Is your falling out a finally permenant one?? Not repairable?? Don't rush into anything would be my main advice especially if the seperation is very recent.