Son and girlfriend house purchase

martinsurrey

lb364 wrote: »

So presumably he still owns exactly 25% more than her at all times? And in the case of tenants in common the split (recorded on the form) would be 62.5:37.5?

I'm in a similar situation so just wanted to double check

no, the split could be noted as anything.

if the tenants in common split is noted as 62.5:37.5 if she runs off in the first month, she gets 37.5% of the equity, which is all his.

in a case of uneven deposits it shouldn’t just be a flat % (if the parties want to protect their interests), it should either be a ring fenced amount to one party (the larger deposit) with a split of the remaining equity, or a percentage split which changes over time.

An example of a changing percentage could be as follows (this is a random way, you could use ANYTHING)

A contributes 100% of the deposit, but A and B split the mortgage equally

A gets [100%- (37.5% / 300)*number of months since purchase] of the equity

300 used as a typical 25 year mortgage (12*25=300), clauses inserted to cover shorter and longer mortgage terms caused by remortgaging.

zzzLazyDaisy

lb364 wrote: »

So presumably he still owns exactly 25% more than her at all times? And in the case of tenants in common the split (recorded on the form) would be 62.5:37.5?

I'm in a similar situation so just wanted to double check

That is the point - that split would not work.

Say they buy a house for £200k and he puts in £50k deposit (25%). At the date of purchase he owns 100% of the equity.

Sadly the relationship breaks down almost immediately, and they sell the house a few months later for £200k and after the mortgage has been paid, they are left with his original £50 deposit (ignoring fees for simplicity)

The capital paid off during this period would be negligible so neither has increased their additional equity in the property. But registering the shares as 62.5/37.5 means that she will walk away with 37.5% of the net equity, and he only gets back 2/3rds of the deposit he put in.

EDIT: cross posted with Martin Surrey

Strapped

little_miss_muppet_face wrote: »

my friend and her boyfriend moved into a new mortgaged house recently, she put down the deposit from the sale of her previous house (£50k), he put down nothing, the solicitor just wrote that into the deeds, or whatever they write it down in, so if the worst happened and they split up, she would first get her £50k back, and the remainder of the profit, (if any) would be split 50/50..

Then she has been robbed.

comeandgo

I agree strapped - that solicitor was so wrong - her 50k is loosing value every week due to inflation. I think it should have been 50k plus a percentage each year for interest or as a percentage of the house value ie its 25% of house value so that is what she gets back

martinsurrey

Strapped wrote: »

Then she has been robbed.

comeandgo wrote: »

I agree strapped - that solicitor was so wrong - her 50k is loosing value every week due to inflation. I think it should have been 50k plus a percentage each year for interest or as a percentage of the house value ie its 25% of house value so that is what she gets back

Not necessarily.

If houseprices fall, she gets her £50k back and the other party loses their contributionto the equity from the mortgage payments...

Notnecessarily.

If houseprices fall, she gets her £50k back and the other party loses theircontribution to the equity from the mortgage payments...

But itshould always be the % contribution IMO (so if the £50k was 25%, she would getback 25%, AND 50% of the remainder

monty-doggy

In my opinion if they are that bothered about small percentages after the initial 50k is ring fenced, they shouldn't be buying together at all.

Strapped

monty-doggy wrote: »

In my opinion if they are that bothered about small percentages after the initial 50k is ring fenced, they shouldn't be buying together at all.

Yes, after all, only 50% of marriages fail, and even more non-married relationships.

(I'm probably so cynical because I have watched my own sister make a career out of fleecing men who own property!)

little_miss_muppet_face

Strapped wrote: »

Then she has been robbed.

Well not really, as long as she got her £50k back she would be happy,
Then a share of the profit if any.. Depends if you feel you need every penny back, she like I would just be happy getting back what was put in then the equity paid off split.. Each to their own I guess..

Strapped

little_miss_muppet_face wrote: »

Well not really, as long as she got her £50k back she would be happy,
Then a share of the profit if any.. Depends if you feel you need every penny back, she like I would just be happy getting back what was put in then the equity paid off split.. Each to their own I guess..

Would she be happy if house prices had doubled in the meantime? So her £50k investment remained static when her house would've been worth £100k? Meaning she can no longer afford to buy the same size of house as she previously owned?

Still, each to their own.

Strapped

I feel like a lone voice in the wilderness lol. No wonder divorce lawyers are kept so happy.