Ex. demanding half the equity from my house...

cherylwell

Hello

I'm not sure if this is the best place to post but I'm hoping someone will be able to give me some advice...

Basically I broke up with my ex just over 3 years ago and because he couldn't afford to stay on in the house he moved out and stopped paying the mortgage. I have since been paying this on my own, maintaining the house and making improvements ect...

At the time of him moving out we agreed to have the house valued and that I would pay him half the equity when I could afford to do so, there was no rush as he was going to travel around Australia for a year. He has now decided to immigrate permantly and wants his share of the house.

The equity at the time worked out at £12,000, but it has recently dawned on me that we took out a £22,000 loan which has been added onto the morgage to pay off our debts about 5 years ago. So in theory I would be taking on that debt which is nothing to do with the house plus the morgage and on top of that I would still have to give my ex. £6,000, this doesn't sound right???

house value £170,000 (3 years ago)
outstanding morgage £136,000
Secured loan £22,000

equity (excluding loan) £34,000
loan £22,000 which leaves £12,000
£6,000 is 50% of which he would need to pay towards the secured loan???

My ex. is saying I still owe him £6,000 because the loan is part of the morgage but I caluclate it as above:

I hope I've not confused everybody and hope someone can help...!

Cheryl x

concerned43

How much of the debt was his?

cherylwell

It worked out about 50/50 as most of the debts were joint.

puddleduck

Assuming loan was 50/50; it's the same situation as the other thread about forcing a house sale.

Equity: 34k
Split 50/50: 17k each

Loan responsibility: 11k each
Cash left: 6k each

So you've already taken his part of the loan (11k) out of the equity in working out the 6k that he will get. You can't take it out again.

The difference in the two ways of working it out is at what point you decide the figure you have is "equity" - before or after taking away the loan amount. Either way, the result is the same as far as I can see...

cherylwell

Thank you for that, I was getting myself really confused. I don't want to diddle my ex out of any money he is entitled too but at the same time I didn't want to pay out money I didn' thave to!

GDB2222

Has teh equity gone up or down? How do you know what the value is now or was 3 years ago?

GDB2222

oh, and by the way, should you allow for some of the costs of selling the house in your estimate of equity? Estate agent's fees and lawyer's fees would be around £5k, so maybe half that as you have not actually sold it.

BitterAndTwisted

The property will be worth a lot less than it was three years ago, plus I'd deduct three year's worth of his share of the mortgage payments which you've been covering. The net position could be nil.

I'm assuming that this is a joint-mortgage rather than just in your name only. If so, who put how much down as a deposit?

cherylwell

The morgage is in joint names and I had the property valued by 3 estate agents and took the average value. I figured as he moved out 3 years ago it was fair to use the valuation at that time. I think maybe I need to employ a solicitor...! I hadn't even thought of taking off the amount from his non payments for 3 years, wasn't aware you could even do this. It's a very good point about the fees which would be deducted if we were to sale the house...not sure what the next step to take is...?

GDB2222

cherylwell wrote: »

The morgage is in joint names and I had the property valued by 3 estate agents and took the average value. I figured as he moved out 3 years ago it was fair to use the valuation at that time. I think maybe I need to employ a solicitor...! I hadn't even thought of taking off the amount from his non payments for 3 years, wasn't aware you could even do this. It's a very good point about the fees which would be deducted if we were to sale the house...not sure what the next step to take is...?

I agree you should definitely see a solicitor, although it's about 3 years too late. If you made the agreement 3 years ago, based on the values 3 years ago, you need to put him in the same position as if he had actually been paid out his share of the equity 3 years ago. You can't go charging him for mortgage interest since then and you can't reduce his equity because prices have moved since then. What EXACTLY did you agree with him at the time - in writing, I hope?

However, there are some issues you need to consider:

Estate agent valuations are no good at all. Those will be suggested asking prices, not actual sale prices. Pay now for a valuation by a surveyor of what the property was actually worth 3 years ago. That may well show very little equity.

If you actually agreed a figure of £12k with him then, well you are stuck with it, aren't you?

He is still on the Land Registry as joint owner and on the mortgage, no doubt, so how do you propose to deal with that?

Like I said, you needed advice 3 years ago, but better late than never.

BitterAndTwisted

If there's nothing in writing then it's all up for negotiation. If the property has dropped by a substantial amount it could end up with him paying you a sum to settle.