Tennants in common troubles

njh82

with regard to my family. yes I am as at this stage we have been together for 2 years and are not married and do not have any dependents. Therefore my will states my family will get everything and until we get married I would wish it to stay that way

sonastin

njh82 wrote: »

Thanks, well we have been together two years and have been living in rented for a year and a half. We want to get married in the future and both see the future together, so hopefully that answers the mitigating issues.

With regard to 60/40 , th emain issues with that is he can;t affrord 60% of the rennovations and I would still be paying 50% of the repayments ?

If he can't afford 60% of the renovations but he still thinks he is entitled to 70% of the house gut instinct tells me there is something very wrong with his maths!

If you both agree that % split is the best way forward, you need to do the full set of sums which needs to include his deposit, how much you are each putting into the renovation and how much you are each putting into the mortgage.

Unfortunately, as the % you have each contributed will change over time there won't be a % split that is fair throughout the term of the mortgage. If you pick a middle ground and split up early in the term, he will be hard done by. If you split when its nearly paid off, you would lose out.

The alternatives are the original plan of he gets out what he put down initially and then you split 50/50, or you structure your joint finances differently so that there is the same % share all the way through. Can your renovation funds be used to pay a share of the deposit to free up some of his money to pay a greater share of the renovation? That still leaves the question of the mortgage and whether you want a lower % of the house but I'll leave you to do the sums...

njh82

Thanks..the whole %'s thing all sounds terribly convoluted and confusing. I still think that we are in it for the long haul but 'should' things break down then he is entitled to leave with what he came with so he hasn't lost anything and anything other than that is a bonus and split 50/50...it seems the only fair way.

As much as I understand the 60/40 split I think its the psychological issue that we are buying a house together and repaying it together and it will always feel like a bugbear that he owns more of it than me, stupid but I have seen it as the kind of thing that adds insult to injury during breakups etc..

I don't think that I am being unreasonable in that as I am not suggesting 50/50 down the line and thus asking for half his deposit. He cannot predict how much interest he 'could' have made any better than we can predict how much loss/profit we would get if forced to sell... seems silly basing figures on 'hypothetical' losses and gains. I would rather deal with straight fact- he put in x so he will get x back and then as we have put 50/50 into everything else, everything else is split 50/50.

Pepzofio

Could you amend the originally agreed arrangement to include an amount towards lost interest?

e.g. He gets his £20k back plus interest @ BoE BR +1% (or whatever you agree on) for the period of the mortgage (i.e. what the BoE base rate has been throughout the duration of the mortgage, not what it is at the point where you sell). That way he gets an amount in lieu of interest based on the duration and economic circumstances of the period that the money was 'tied up' in the house.

It's not perfect, and personally I'd feel that he's benefitted from having the house so is not really entitled to any interest, but it is a compromise that acknowledges his POV, which I can understand to an extent even if I disagree with it.

roger196

Have you made a will? Consider making a pre-nup if you decide to get married.
Given the comments so far, I would be very wary of any joint credit cards or loans.
It is good to discuss finaincial arrangements before you commit, very difficult afterwards.

mclaren32

Myself and my fiance had exactly this problem, I was putting in considerably more deposit and wanted to split the house something like 60/40 but when it came to drawing up our deed of trust our solicitor threw me by saying that we couldnt do it this way and I could only give a £ figure for the split. This obviously meant that any further appreciation in value would be split 50/50 thus my deposit wouldnt return anything more than hers if we sold and went our seperate ways.

My highly paid solicitor was as useful as a chocolate teapot and couldnt find a solution that I was happy with so I ended up wording it myself and he put in the deed. It is worded as follows:

1. The trustees shall hold the proberty on a trust for land, the proceeds of sale and the net rents and rofits until sale (if any) thereof on trust for themselves as hereinafter mentioned.

2. The trustees shall be entitled to the property and any proceeds of sale thereof in the proportions set out in clause 3 below (and the net rents and profits until sale if applicable) absolutely subject to the prior deduction from the proceeds of sale of the following sums:
2.1 The legal costs and disburesements of sale together with the estate agents commission (if any)
2.2 The amount payable to the mortgagee to settle any early repayment charges
2.3 The amount payable to the mortgagee to discharge the mortgage.

3. The net proceeds of sale shall be divided between the trustees as follows:-
3.1 The greater of either £xxxx or 23% of the gross sale price after deducting the sums at 2.1 and 2.2 above to x
3.2 The greater of either £xxx or 2% of the gross sale price after deducting the sums at 2.1 and 2.2 above to x.
3.3 Any remainder thereafter to be paid equally between the trustees
3.4 In the event that the net proceeds of the sale are £xxx or less then a sum not exceeding £xxx will be paid to x and the balance if any to x.

I hope that helps as it was a pain to type out!!!

paddedjohn

njh82 wrote: »

Thanks, well we have been together two years and have been living in rented for a year and a half. We want to get married in the future and both see the future together, so hopefully that answers the mitigating issues.

With regard to 60/40 , th emain issues with that is he can;t affrord 60% of the rennovations and I would still be paying 50% of the repayments ?

With a 60/40 split you would both pay 50/50 on the mortgage and any rennovations and if you ever split up the equity would be divided 60/40 in favour of your oh.
The main downside with this idea is if you were to split sooner rather than later. eg house costs £100,000 of this £80,000 is mortgage and £20,000 is from the oh. if you split up and sell the property for even £150,000 which is an unlikely return in the short term then your oh will get roughly(after fees etc) £42,000 and your share would be £28,000 so his suggestion of a 70/30 split are very reasonable i would think

njh82

mclaren32 wrote: »

1. The trustees shall hold the proberty on a trust for land, the proceeds of sale and the net rents and rofits until sale (if any) thereof on trust for themselves as hereinafter mentioned.

2. The trustees shall be entitled to the property and any proceeds of sale thereof in the proportions set out in clause 3 below (and the net rents and profits until sale if applicable) absolutely subject to the prior deduction from the proceeds of sale of the following sums:
2.1 The legal costs and disburesements of sale together with the estate agents commission (if any)
2.2 The amount payable to the mortgagee to settle any early repayment charges
2.3 The amount payable to the mortgagee to discharge the mortgage.

3. The net proceeds of sale shall be divided between the trustees as follows:-
3.1 The greater of either £xxxx or 23% of the gross sale price after deducting the sums at 2.1 and 2.2 above to x
3.2 The greater of either £xxx or 2% of the gross sale price after deducting the sums at 2.1 and 2.2 above to x.
3.3 Any remainder thereafter to be paid equally between the trustees
3.4 In the event that the net proceeds of the sale are £xxx or less then a sum not exceeding £xxx will be paid to x and the balance if any to x.

Thanks for this...though I have to admit it doesn't make any sense to me?

njh82

You think a 70/30 split is fair? That seems very harsh to me on my part..I just don't see the problem with him getting his investment back plus 50% of any profits?

He is investing in us having a future getting on the ladder. We plan to move in 5 years as we don't want to be in a one bed city flat forever so to invest in property in this market with the intent to sell in 5 years is not a decision if he is looking to 'make interest'

sonastin

I think most of us on this forum seem to agree that your way of working things out is fair. But seeing as he has already rejected that, we are just trying to come up with alternative suggestions that you both might agree to.

If you don't want to compromise, you don't have to. But that takes us back to the beginning again and the reasons why this has come up at this point in the transaction and what that tells you about the rest of your relationship...