Seperation - Undertstanding agreement

Bean_69_99

All, (apologies for length, but detial needed!)

After getting on the ladder with my partner, all is not well.

I have recently reviewed our ownership agreement and not sure if I made the right choice at the beginning or what maths skills I had are evading me at this moment!

Agreement was that net of sales / costs etc I am entitled to 62.5, my partner 37.5.

This was on the basis that I put up the 25% deposit, so that 25% is mine, and we each owned half of what remains. Makes sense?

However I've just worked it back (assuming selling price same as purchase price), to work out what the 'pay off' would be if we seperated, and it's a lot more than I expected to my partner?
I'll use simple round figures to start.

house value 100'000
Net of mortgage (73.5) and costs (2.5) 24'000
@ 37.5 9'000
@ 62.5 15'000
This means that in a "fair" calculation I'd owe her £9'000 to seperate with me buying her out???

but when i think about it logically rather than numerically it goes like this...

House at 100'000, less my deposit of 25% is 75000 with a mortgage remaining of 73'500 and costs to sell of 2'500 there's no money left over to pay her off for as the costs of selling outweigh what we've payed off of the mortgage...

This means if were to sell up and split, she'd get nothing. If we were to split it and me pay her off she'd get 9k of my £... this makes no sense?!

Is this a logic or a maths problem?

How do you all see it as impartials?

Should I look at it differently?

Really appreciate the help.

DVardysShadow

She must have seen you coming! What you have done is put in all of the initial equity and you are taking out 67.5% of the final equity. This arises because you are notionally dividing the spoils after paying off the mortgage.

If that is what the agreement states, you have made a costly mistake. But you should review your agreement and consider whether it allows an alternative way of reading the division of the spoils. If the shareout of value is done notionally before paying off the mortgage, you get 62,500, she gets 37,500 and you each pay 50% of 75,000 to clearing the mortgage.

Bean_69_99

States as follows:

In the event of a sale the net sale proceeds shall be calculated by deducting from the agreed sale price of the property

the amoutn outstading under the mortgage, legal fees agents commission and valuers fees

payment to myself of a sum equivelent to 62.5% to take account of the deposit of 25% paid on the initial transfer

payment to partner of a sum equivelent to 37.5% of net sale proceeds

In my mind, me buying her out and avoiding all the fee's should be a way we can both benefit...

BitterAndTwisted

I hope that your partner has only been contributing 37.5% of the mortgage payments. It's the only way I'd have agreed to signed up to that.....

Bean_69_99

Aside from realising the poor quality of my typing, reading back vconfirms your summary reads true...

I have indeed entered all equity and in a rather poor show of sense have agreed to split that equity upon seperation.

Bean_69_99

Looks like its just been a (massive) oversight...

BitterAndTwisted... that would stand true IF the agreement had been correct, but in reality, its been a good investment from my partners point of view. (no equity in, but over a third out)