Dividing the proceeds of a sale

JQ.

vuvuzela wrote: »

The was clearly not enough to make it obvious I wasn't being entirely serious...

. . . on the basis that your earlier contribution to the thread was that the parents should get 75% of the sale proceeds despite only contributing 48% of the purchase price, no, it seemed make it clear that maths is not your forte.

Tirian

zappahey wrote: »

You asked "what's right?" You got an answer. No need to get snotty because it wasn't the answer you wanted.

If all I wanted to hear was "read the piece of paper" I'd hardly have been asking the question, would I?

No matter. Plenty enough people have understood what I was asking and given helpful answers, even if you don't get it.

To the more helpful majority .... thanks for all the responses, it seems largely to come down to two perspectives - and I can see the merit of both sides.

My understanding is that what the parents wanted, and had said to my wife, was that they would put the deposit money in and would then take a share of the gain or loss in the value of the house when sold. The 75/25 split of proceeds of sale didn't seem to match this though, but I can see the point being made about having had the benefit of the interest free loan.

I think what I'll suggest is that we put both of the options to them, and say "here's two ways of looking at it, we're happy with whichever way you want to do it".

dodger1

Tirian wrote: »

OK, I don't know how I can make this any clearer - I am not asking about the legal situation.

We have of course talked to her parents. We couldn't have sold the house without their consent. They have told the solicitor to pay the entire proceeds to us, and that we will then discuss how to divide it.

I am simply asking about the fairest way to do so, and what a reasonable position would be. Neither they nor I are interested in a technical discussion about legal agreement. If they want to stick to what is on the form, I won't argue for a moment.

However that would result in their receiving their original investment plus 20%, and my wife - having paid a 25k deposit and paid down c. 10k capital on the mortgage, getting back less than she has put in.

So, once again ... can we just assume that EVERYONE involved wants a fair division of the proceeds. What way(s) are there to do this?

What's fair depends on the original discussion on whether the £75,000 was an investment or a loan to help their daughter. What's unfair is when one person agrees to something and then changes their mind when the fat lady sings. As a parent I would have lent my daughter the money (given if I could afford it) and agreed a repayment plan, I certainly wouldn't have done it as an investment.

You say you have a piece of paper stating it's a 25/75 split which I can only assume meant to be 25/75 after all debts (outstanding mortgage) and fees are paid after the sale. Again I can only assume that at the time all parties thought that was fair. So quite simply if everyone agreed it was fair then, well it's still fair now. Now I don't think it's fair but it appears that they all did.

You also state that "everyone" wants a fair division which can be extremely difficult simply because "everyone" involved may disagree on what is fair. As I said for me as a parent I wouldn't want to make a profit from my children. If I could afford it then it would be a gift and if I couldn't, it would have been a loan. For me that's fair, others will disagree. I am glad however that you wont argue if the parents insist on sticking to the original agreement, if that's what it was.

JQ.

I really don't see that a 25/75 split of the total sale price is fair in any way shape or form, irrespective of what was in the agreement - I suspect the parties to the agreement didn't know what they were agreeing or they did not communicate their intentions accurately.

As an example, had the daughter's circumstances changed and she needed to sell the property the day after completion at £155,000, the parents would have received £116,250 for lending their daughter £75,000 for 24hrs, a profit of £41,250, which the daughter would have had to pay them out of her own pocket. Not really very fair is it!

xylophone

They should get their money back plus 48% of the profit?
Parent puts in 75000, daughter puts in 80000.
Say house sells for £200000. Profit £45000.
Parent gets £96600, daughter gets £103400 - simples!
This seems totally fair to me.
I really find it difficult to believe that the parents expected 75% of the total sale proceeds - are you certain that this is what the "piece of paper" actually says or if it does that that was the parents' intention?

And incidentally, was this money declared to the mortgage company as a "gifted" deposit ? Or an interest free loan? Or..?

chappers

JQ. wrote: »

Wow, talk about trying to make things complicated.

The parents get back their £75k investment, they then receive 48.387% (75/155) of any uplift in value (thats' the return on their investment), ie deduct the sale price from the purchase price and times by 0.48387.

Simply:

£75,000 + [(sale price - purchase price) x 0.48387]

Some may say that the above value should be net of costs, I don't think it should as the daughter would have faced those costs with or without the parents money and the parents have not received the benefit of living in the house.

Thats exactly what I did with my father when I borrowed some money to finance a development.

In this case it is fair even if biased towards the daughter, she is the one who has paid the mortgage maintained the house etc.
The parents have mearly made an investment.

glitter123

Do you know what the parents expectations are? Sounds to me like your wife has a good relationship with them and you are both wanting to do whatever is fair.

Speaking as a parent who has been in this situation (although much less money involved), although we all viewed this as a loan it really is never our intention to take it back at any time.

Emmzi

what's right is to keep your nose out and let daughter settle it with parents. It's none of your business!

RabbitMad

Emmzi wrote: »

what's right is to keep your nose out and let daughter settle it with parents. It's none of your business!

As his wife it is his business. Purely on a financial level if for any reason she was made bankrupt joint assets would be taken to pay debtors and if this is not sorted out "fairly" there could be an extra claim on op's assets. But as a hubby he also has to e there to support his wife's decision on a personal level.

Likewise if this was his investment his wife would be able to give advice and help the OP get other points of view to agree what is fair.

Tirian

Emmzi wrote: »

what's right is to keep your nose out and let daughter settle it with parents. It's none of your business!

*Sigh* - is it full moon, or are all the trolls out for some other reason? My wife hates dealing with papers and money. Before we got married, she would leave bills unopened for months. Hence I am dealing with all the admin and finances relating to the house sale. That includes this.

Of course she will be the one who talks with her parents when it comes to dealing with this. I'm merely trying to match up what's on this piece of paper I've dug up with what my wife told me verbally about the agreement they had, and come to a reasonable conclusion.

Parents certainly won't want to make the loan in total a gift, as they have two other children to think about.