House purchase question

Mods

I recently got engaged (you may congratulate me here) having being with my girlfriend (who is known as missscousemouse round these parts) for almost four years. Now that we'll be getting married within a year or two, it has become imperative that we sort out the rather fortunate/unfortunate housing situation she has been in for some time as soon as possible. I'll try to be as brief as possible in explaining the situation...

Basically, she jointly owns the house where we live with her ex partner (and 'father' of my two lovely, soon-to-be step children). He left around 6 or 7 years ago and has since remarried and had another daughter with his wife.

Since he left the property, he and my partner have each paid half each (£275 x 2) towards the mortgage and have agreed to put the house on the market and share any equity (around £31k) 50/50. However, the seemingly stagnant housing market means that viewers are rare and not a single offer has been made on the property in six years. Here are the rough property statistics:

Purchase Price: £120,000 (2004)
Deposit paid: £31,000 (at time of purchase, funded partly through sale of previous jointly owned property and funds from my ex-partner)
Loan Outstanding: £73,600 Repayment Mortgage (August 2012)
Current Valuation (hypothetcial): £105,000 (August 2012) (subject to independent valuation)
Equity in property: £31,400 (August 2012; £105,000 less £73,600)
Buildings insurance: £120 p.a (current estimate)


It is obvious that my fianc! and I need to break away from her ex partner completely as far as the house is concerned and I think me buying out her ex seems the cheapest, most straight forward solution. The situation we’re in presents numerous complications some of which I don’t need to spell out but some I might have to so here goes...

Effectively, his share of the mortgage payment works to his advantage in killing two birds with one stone as this apparently fulfills both his share of the mortgage AND his child maintenance obligations according to her solicitor. Note that they both pay the money direct to the mortgage provider so no money ever passes through my fianc!’s hands from him for the kids.

In my eyes, this means that he is either neglecting to fulfill mortgage payments or child maintenance payments. Let’s say we are able to get him to state on the record that the money he pays to the mortgage is child maintenance, then we might challenge his claim to 50% of the equity upon sale of the house. Conversely, if his payments were purely for the mortgage then he owes my partner child maintenance going back several years.

The reason I mention all this is because I feel that this information could be used in to our advantage in buying him out of the house. However, what I actually suspect is that all this is redundant as the courts would see him as joint owner and thus rule that he’s entitled to 50% equity anyway so this leaves my fianc! and I with a few options with the best one being to bid on his half of the house so that we can assume joint ownership of the house and get rid of him. We know that he wants a quick sale and is hoping we will make him an offer. We also know that he is having money troubles and has taken a second job and is perhaps under pressure from his wife to sell his share. I have a decent amount of savings and a reasonable salary I could use and the bank have told us they would have no problem putting me on the mortgage instead and even lending us more for home improvements which the house badly needs.

So, what I’m asking is what would you do? How much would you bid? What would you do if he changed his mind and refused to sell to me? Anyone been in a similar situation before?


I’m worried that if we do nothing and remain in the house as things are, then he will essentially see a return on the money he pays towards his kids through the equity from a house sale.

Sorry for boring you and thanks in advance for helping.

daska

If the CSA and mortgage payments would be about the same then personally I think I'd go to the CSA so that he had to pay it as maintenance, that would take that part of the finances away from the mortgage payments and make it clear what his actual contribution to the mortgage was. Paying the mortgage instead of maintenance doesn't exempt him from maintenance it just muddies the water. He wouldn't get a return on maintenance...

Fire_Fox

If there has not even been a silly offer in six years then the house is massively overpriced or it is in such a bad condition/ poorly presented as to make it appear unmortgageable or indeed both. Where are you getting your hypothetical valuation from? IMO get three estate agent valuations done 'for quick sale' and offer based on that: I suspect there is far less equity than you believe. If the value of the property has not increased in the last six years then there is no return on the money he has paid on the mortgage in that time, any profit would relate to before the recession. Plus he has been paying out yet not living there, whereas your partner has been getting a roof over her head for her half. Both have been contributing towards a home for their children = maintenance. Once the sale completes get the CSA involved to see if there is any back maintenance owed and to formalise things going forwards.

daska

Sorry FF, there's no any back maintenance owed prior to a claim being started with the CSA so that's a non-starter. The point is that at least part, if not all of his 'mortgage contribution' should have been child maintenance. He's legally obliged to pay maintenance, it's not an optional extra and it's not an investment that pays a financial return. The fact that he's been allowed to pay it direct makes it look like something it's not.

Fire_Fox

daska wrote: »

Sorry FF, there's no any back maintenance owed prior to a claim being started with the CSA so that's a non-starter. The point is that at least part, if not all of his 'mortgage contribution' should have been child maintenance. He's legally obliged to pay maintenance, it's not an optional extra and it's not an investment that pays a financial return. The fact that he's been allowed to pay it direct makes it look like something it's not.

What are you sorry for, you aren't disagreeing with me?? I said "see if there is any" and pointed out the ex is not making a profit but paying for a roof over the childrens' heads.

FBaby

Totally agree with Fire Fox. The house value must have increased until 2008ish and then significantly decrease to now be under the initial price (I didn't even know there were any areas where house value was less now then in 2004...). This means he has been paying for a house losing money AND not enjoying actually living there.

I really don't see how it is fair to expect him to get less than 50% on this basis.

Mods

Thank you all for your responses. I shall consider them all more fully before replying although this one jumped out at me so shall reply now.

Fire_Fox wrote: »

What are you sorry for, you aren't disagreeing with me?? I said "see if there is any" and pointed out the ex is not making a profit but paying for a roof over the childrens' heads.

The ex will argue he's paying for a roof over their heads but hear me out. Let's say that house prices remain the same for the next ten years or increase, and in 2022 when my youngest step daughter is 18 the house sells. He would effectively make a return on the money he's 'paying to keep roof over their heads'.

275 x 12 x 10= 33,000 (This is how much child maintenance he would be paying for the two kids over the next ten years as things stand).
The house is currently on market for £129k. Let's say it sells at that price in 2022 with no mortgage left to pay with both my partner and him entitled to 50% of the equity....see where I'm going with this? Of course, I maybe way off the mark here but that's why I posted on these forums; to gain insight.

daska

Fire_Fox wrote: »

Once the sale completes get the CSA involved to see if there is any back maintenance owed and to formalise things going forwards.

OK, I'm not truly sorry, I was just correcting your implied suggestion that CSA can back-date maintenance when in fact they can only work from the date a claim is made. Unless missscousemouse has already made a claim that is ongoing, which you have to admit seems highly unlikely given that she's been accepting him making mortgage payments directly to the lender on the advice of her solicitor, and she doesn't make any mention of it on either of her threads, the suggestion that there might be back maintenance owed is distinctly misleading.

And mortgage payments don't equal maintenance if they're paid with a view to profiting from them. They are due to the resident parent to use for the benefit/care of their child/family unit - the RP can then spend or invest the payment as they choose and are entitled to receive the return on any investment.

Hence my suggestion that they maintenance is paid to missscousemouse from henceforward and that she pays the mortgage using them.

Mods

daska wrote: »

OK, I'm not truly sorry, I was just correcting your implied suggestion that CSA can back-date maintenance when in fact they can only work from the date a claim is made. Unless missscousemouse has already made a claim that is ongoing, which you have to admit seems highly unlikely given that she's been accepting him making mortgage payments directly to the lender on the advice of her solicitor, and she doesn't make any mention of it on either of her threads, the suggestion that there might be back maintenance owed is distinctly misleading.

And mortgage payments don't equal maintenance if they're paid with a view to profiting from them. They are due to the resident parent to use for the benefit/care of their child/family unit - the RP can then spend or invest the payment as they choose and are entitled to receive the return on any investment.

Hence my suggestion that they maintenance is paid to missscousemouse from henceforward and that she pays the mortgage using them.

Thanks again, Daska et al. My thoughts exactly but what you outlined in the last paragraph is problematic. He ex's name is on the deeds so assuming this entitles him to 50% equity, this will then mean he can claim half the house sale money having stopped paying for the mortgage.

I think our options are as follows:

1) I buy her ex out. Offer a max of about £15 k having obtained official evaluation, etc. Up to him whether to accept but I think he will given that he has taken a second job, constantly demonstrates anxiety over house sale and thus suggests he has money worries and debts.
2) Stay in the house regardless. This is also problematic (I like this word, btw) though because if he stops paying mortgage then my partner will chase him for CSA through official channels but this could end up being less. This would mean that either myself or my Mrs will have to stump up the rest of the mortgage money without benefiting from receiving further equity as deeds show her ex owns half and is thus entitled to half.
3) The 'nuclear' option: My partner and I leave the house and pay not a penny to the mortgage. This means the mortgage lender will chase both parties for the money. Her ex may decide to pay it all every month (and even move in which my Mrs doesn't want), in which case my fiance is still entitled to half the equity. She could then chase CSA through official channels as he's not contributing to the roof over the children's heads anymore. Alternatively, her ex might not be able to afford it so the matter will come to a head that way.

What do you all think?

FBaby

Mods wrote: »

Let's say that house prices remain the same for the next ten years or increase, and in 2022 when my youngest step daughter is 18 the house sells. He would effectively make a return on the money he's 'paying to keep roof over their heads'.

But from your previous posts it is quite clear that this was never the agreed arrangement since the house has been on the market since he left the property. The fact that the house hasn't sold in 6 years is more a failure on your partner than her ex since she had more control over the presentation of the house/dealing with viewing etc... Surely the matter of the house not selling should have been tackled much sooner. I assume her ex didn't because indeed, he had less to lose, but I don't understand why your partner let in on for all this time, unless she realised that being able to stay in the house was not such a bad thing.

I still don't think it is fair to expect him to get less of a return because the house hasn't sold in all this time.

FBaby

Option 3 is very dangerous. If he owns anothe house, he won't be able to afford paying the full mortgage of the joint property and it is highly unlikely his wife will want to move there. Most likely, he will default and give both himself and your partner bad credit. This might have a bigger impact on her if you then want to buy something together. It might be more a possibility if he is only renting, but again, it's a massive big risk to take that could backfire badly.

Option 1 is from far the best option. The 50/50 equity is not massive money (I know everything is relative!!!), but it means that fighting a 40/60, even 30/70 which would be really hard to argue is not going to change your life positively as choosing option 3 could potentially change your life in a very negative way. Better to lose a few thousands, than risking a bad credit record and not being able to afford another property for a long time.