Help Needed Please - Info on Non Cohabiting Couples owning a house

Vicks1978

This is a very strange situation and I would appreciate any info and advice anyone can help me with.

My friend and his fiance bought a house together 3 years ago when they got engaged. He lives in the property and his fiance still lives at home with her parents and was to move in when they got married.

They have now split up and need to sell the house.

We've looked on loads of websites and can't find any info regarding this kind of situation.

The jist of the situation is: She put a £20k deposit down for the house, but as he lives in the property he pays the mortgage every month. She's now sent a solicitors letter saying she wants her £20k back plus interest on top of her 50% / 50% share of the house proceeds.

Does anyone have any advice if she can do this and what is she entitled to??

Thanks!

mountainofdebt

What percentage of the house price did the £20K represent?

Did she pay any of the household bills?


I think a fair starting point would be to offer the same percentage of the profits from the house as the £20K represented and then split the proceeds down the middle.

rizla01

I assume that without the 20k that she put up, he wouldn't have been in a position to purchase the house and the remainder is the mortgage that he has been paying.

That should counteract the fact that she hasn't paid any bills and I would expect a judge to award her whatever that 20k is worth today.

I.E. Purchase price, say £180 - value now £240 - profit = £60 .....therefore 20k + 180/20= 1/9th of 60k ..... therefore £26,666.00 PLUS 50 % of the remaining profit. (£33,333.00 /2 = £16,666.00).

Total £26.666.00 + £16,333.00 = £42,999.00 less percentage for legal & selling fees at purchase AND resale not forgetting CGT if it applies.

Wings

There are so many ways of looking at this, really a case of the two of them coming to a mutual agreement, without reducing the monies they will be receiving through the expense of a long drawn out legal argument.

I thought the solicitors/her offer was reasonable.

kingkano

Surely if she gets her 20k + interest back, he gets his repayments + interest back? Then they split anything left after selling costs 50/50. This way everyone is back to where they started.....?

silvercar

They need to come to an agreement and be very grateful they are looking at a profit to split rather than a loss to cover.

TJ27

I don't know of any recognised formula but if it was me I would try to come to some sort of amicable agreement if possible. Legal fees have a habit of accumulating.

A friend of mine recently got divorced and went legal big time. She eventually got a letter stating that she was to get £46,000 from the sale of the house. This was roughly what she had expected. She then read the letter again, carefully, and discovered that actually it said four thousand six hundred. Her solicitors took the lion's share.

zzzLazyDaisy

There is a simple legal formula. The house was registered at the land registry. It was registered in one of two ways - 'joint tenants' or 'tenants in common'. (Just to confuse the issue, this has nothing to do with tenancies as in rental, it is just the legal definition).

If the house was registered as a joint tenancy, then the house must be sold and the proceeds split 50/50. The fact that she put more in than him, and he has paid the deposit, is irrelevant.

If it is tenants in common, then the land registry document will state what shares they own - 70/30; 50/50 or whatever. If the agreement was that she would get back her £20K plus 50% of the proceeds, there will be a statement to that effect.

Most likely it was bought in joint names as joint tenants (because they were planning to marry and wanted to own the house equally), but the only way to find out is to look at the land registry deeds.

Her solicitor may have already done this and know what s/he is talking about. More likely it is scare tactics.

mayb_2

When my son split with his girlfriend she had put in £5000 deposit on the house they had bought. He was earning more than her salary and paid the largest share of mortgage and bills. When they split he wanted to pay her off and get out of the situation a.s.a.p. They agreed that she should get back her deposit and 50% of the increase in value on the house and they legally transferred the ownership of the house into his name only. He remortgaged to get the money to pay her. The value of the house had gone up and so had his wages so this was not too difficult as he was the main mortgagee earnings wise anyway. The legal fees were about £250 I think.

If the other half has made no contribution other than the deposit then half of the increase in value on the house alone is more interest than you could ever hope to earn in three years I should imagine. So it sounds a bit greedy to want interest on the £20k as well as a 50/50 split.

This sounds expensive but if you sell a house you have to pay the estate agents etc. Presumably he will have to buy another house to live in and incur more fees. If there is a penalty on the mortgage redemption he will have to pay that too. The house should have increased in value a fair amount in the last three years and it might be worth looking at this option and perhaps bringing in a lodger rather than selling and starting again. Best/cheapest to arrange it between themselves though whatever they decide.

silvercar

zzzLazyDaisy wrote: »

If the house was registered as a joint tenancy, then the house must be sold and the proceeds split 50/50. The fact that she put more in than him, and he has paid the deposit, is irrelevant.

This is not right. The house can only be sold if both parties agree. The land registry will not dictate how the proceeds are divided only how the property is owned. The parties involved need to agree on the split.

shameless-about-money

silvercar wrote: »

This is not right. The house can only be sold if both parties agree. The land registry will not dictate how the proceeds are divided only how the property is owned. The parties involved need to agree on the split.

The Land Registry should have the details of the % share and if it doesn't, then it will be 50/50 if the mortgage is joint.