Division of assets - selling after relationship breakdown

diabllo

I am splitting with my partner. We are not married. I put £50,000 deposit down from my own money and she put nothing in when we bought this house. We will have to sell it.

Both names are on the mortgage. When we sell there will be equity of about 65,000. I was wondering if I was legally entitled to a bigger portion of the profit, or whether the deposit counts for nothing? Since she makes much more than me she has contributed more to the payments per month, but still not put in half as much as my deposit equaled. Any ideas and advice welcomed. Thank you

angrypirate

Easiest and fairest way is for you to take for 50k and then to split the profit 50-50. As you say, she has contributed more to the mortgage repayments but you put in the deposit so it kind of evens itself out.

BitterAndTwisted

Did you go through any formal undertaking, like a Deed of Trust, to protect the deposit you paid when you bought the property together? If not, I think it will just be down to negotiation with your partner to reach a mutual agreement about what is fair. It's entirely possible that your partner believes that by having paid a greater proportion of the mortgage-payments their contribution now equals yours.

DVardysShadow

The fair split is done this way:

1. Work out what proportion of the mortgage each of you supported
2. Convert this into the cash sum each of you effectively borrowed and add £50,000 to your share. This gives you the effective shares of the purchase price you have each paid - you with cash and borrowing, she with borrowing only.
3. Share out the whole proceeds of the sale of the house according to the shares of the purchase price you paid.
4. Each pay back your share of the mortgage from the shares in 3 and each keep what you have left.

To get it right, 3 must be done before 4. Note too that you won't actually get to money in 3 to pay back in 4, your solicitor will pay off the lender direct - so this is all a paperwork exercise.

Depending on how you split the mortgage, it may be possible that you don't get all your £50,000 back. This will become a possibility if your share of the mortgage plus your £50,000 is less than half the cost of the purchase.

silvercar

DVardysShadow wrote: »

The fair split is done this way:

1. Work out what proportion of the mortgage each of you supported
2. Convert this into the cash sum each of you effectively borrowed and add £50,000 to your share. This gives you the effective shares of the purchase price you have each paid - you with cash and borrowing, she with borrowing only.
3. Share out the whole proceeds of the sale of the house according to the shares of the purchase price you paid.
4. Each pay back your share of the mortgage from the shares in 3 and each keep what you have left.

To get it right, 3 must be done before 4. Note too that you won't actually get to money in 3 to pay back in 4, your solicitor will pay off the lender direct - so this is all a paperwork exercise.

Depending on how you split the mortgage, it may be possible that you don't get all your £50,000 back. This will become a possibility if your share of the mortgage plus your £50,000 is less than half the cost of the purchase.

The problem with this method is that a higher contribution to mortgage payments has the same influence on payouts whether the property has been owned for 20 months or 20 years.

Strapped

diabllo wrote: »

I am splitting with my partner. We are not married. I put £50,000 deposit down from my own money and she put nothing in when we bought this house. We will have to sell it.

Both names are on the mortgage. When we sell there will be equity of about 65,000. I was wondering if I was legally entitled to a bigger portion of the profit, or whether the deposit counts for nothing? Since she makes much more than me she has contributed more to the payments per month, but still not put in half as much as my deposit equaled. Any ideas and advice welcomed. Thank you

You are legally entitled to what you are legally entitled to - ie how you hold the house. If you bought the house as tennants in common, with specific % ownership each (reflecting your deposit) then that's the % share of the sale proceeds that you are "legally entitled" to. If you bought it as joint tennants, then you jointly own the whole property and you'll have to thrash it out.

DVardysShadow

silvercar wrote: »

The problem with this method is that a higher contribution to mortgage payments has the same influence on payouts whether the property has been owned for 20 months or 20 years.

That is the intention. Higher mortgage payments mean that you are renting more of the money. But you are renting [and repaying] on the same portion over 20 months or 20 years, which would be exactly right. What it does not cope with is changes to the relative amounts paid.

sonastin

Firstly, work really really hard to reach an amicable agreement. If things get heated, walk away and calm down and try to come back in a rational frame of mind. If you end up getting lawyers involved, it will probably cost each of you more than the amount you're arguing over so it might be worth a bit of compromise to walk away with more in the long run.

Secondly, I would work out how much each of you has paid into the property i.e. deposit + each monthly mortgage payment. As an example, you've put in £50k + mortgage payments adding up to £10k over the years. Your partners mortgage payments add up to £40k in that time (as an example to make the maths easy!). So you've paid for 60% of the property and you're partner has contributed 40%. If you come away with any equity, split it in those proportions. If you find you're in negative equity I think the split should be 50/50 regardless of the input as you equally gambled on a long term investment so should share the loss of ending that investment early.

That is just my personal opinion. However you choose to approach the discussion, make sure you have sound objective reasons for your offer because it will be easier to come to a reasonable agreement if you make a reasonable argument.

paint

angrypirate wrote: »

Easiest and fairest way is for you to take for 50k and then to split the profit 50-50. As you say, she has contributed more to the mortgage repayments but you put in the deposit so it kind of evens itself out.

Totally agree, seems the fairest and least hassle way of sorting it out.

loracan1

angrypirate wrote: »

Easiest and fairest way is for you to take for 50k and then to split the profit 50-50. As you say, she has contributed more to the mortgage repayments but you put in the deposit so it kind of evens itself out.

Not if the value of the house has actually gone down. If the increase in equity is because of the mortgage payments how is that fair to the ex?

What is the difference in house value, what proportion of the mortgage was she paying?