How to split proceeds of sale

Opalescent

I bought a property with my mum. She put in £30k cash. I took out a £30k mortgage. We sold that property for £90k and bought another for the same amount. Again, I took out a £30k mortgage and the rest was made up of the proceeds of sale on the previous house. We are now selling our current property for £170k to buy separate properties. We are joint tenants. What are we each entitled to?

My mum says I should only get back the mortgage payments I have made. She has added these up and they come to £20k. She thinks she is entitled to the rest of the proceeds minus the outstanding mortgage because she put in actual money rather than a mortgage. I have not lived in the property for 4 years but have paid the mortgage throughout this time, plus have given my mum an extra £150 a month which she said she needed to cover bills (on top of paying my own rent and bills to live elsewhere).

Bennifred

It seems to me that you should get 50% of the profit each.

borkid

Opalescent wrote: »

I bought a property with my mum. She put in £30k cash. I took out a £30k mortgage. We sold that property for £90k and bought another for the same amount. Again, I took out a £30k mortgage and the rest was made up of the proceeds of sale on the previous house. We are now selling our current property for £170k to buy separate properties. We are joint tenants. What are we each entitled to?

My mum says I should only get back the mortgage payments I have made. She has added these up and they come to £20k. She thinks she is entitled to the rest of the proceeds minus the outstanding mortgage because she put in actual money rather than a mortgage. I have not lived in the property for 4 years but have paid the mortgage throughout this time, plus have given my mum an extra £150 a month which she said she needed to cover bills (on top of paying my own rent and bills to live elsewhere).

From the information you have given I would say

Mum's intial £30K - your mortgage £20K =£10K

So she has only paid £10K more than you over the years.
The increase in value happens on the house which you both contributed to but in slightly different ways.I would say ( to be fair) I would say £80k to you and £90k to your mum from the house sale.
The worst way it should be split is 3:2 in your mum's favour.
Mum £102K you £68K but if it were done this way then I would also factor in any home improvements/ basic maintance on this amount.
Regarding the bills were these for maintance of the property or her energy/ telephone bills etc? This is the tricky part and dealings with families isn't just a straight case of money especially if it meant the difference between her keeping warm of freezing in the winter.

PS Sorry I shoul;d have said take of the outstanding mortgage first.

zzzLazyDaisy

Assuming you are joint owners of the property with no Deed of Trust (whether as joint tenants or tenants in common) then the net proceeds of sale must be split 50/50. Had you wanted some other division of assets you should have recorded these intentions in a Deed of Trust at the time of purchase.

There are some cases where the courts have the power to adjust the shares in the property, the most common being in the context of divorce proceedings, however this obviously does not apply in your case.

I suggest that you take advice of your conveyancing solicitor, however, please note that if there is a dispute between the two owners as to how the net proceeds of sale should be distributed, the solicitor may take the view that there is a conflict if interests and refuse to act on behalf of both of you. In that case you would each have to instruct your own independent solicitors to deal with the sale of the property and the dispute concerning the distribution of the net proceeds of sale.

I really would not advise going down that route as the only winners in that case are the lawyers!

BitterAndTwisted

Add the £150 a month you gave her for four years onto the 50% of property value. And threaten to charge her rent for the use of half of the property she didn't own.

Anyone in their right mind would accept that taking on and paying a mortgage is equivalent to the cash put down, even if it was more expensive.

Your Mum's either financially illiterate, deluded, greedy or a ruthless user.

Opalescent

zzzLazyDaisy wrote: »

Assuming you are joint owners of the property with no Deed of Trust (whether as joint tenants or tenants in common) then the net proceeds of sale must be split 50/50. Had you wanted some other division of assets you should have recorded these intentions in a Deed of Trust at the time of purchase.

There are some cases where the courts have the power to adjust the shares in the property, the most common being in the context of divorce proceedings, however this obviously does not apply in your case.

I suggest that you take advice of your conveyancing solicitor, however, please note that if there is a dispute between the two owners as to how the net proceeds of sale should be distributed, the solicitor may take the view that there is a conflict if interests and refuse to act on behalf of both of you. In that case you would each have to instruct your own independent solicitors to deal with the sale of the property and the dispute concerning the distribution of the net proceeds of sale.

I really would not advise going down that route as the only winners in that case are the lawyers!

My mum has already told the solicitors to split it £20k to me and the rest to her and they have agreed. Is she legally allowed to do this? Should the solicitors not have agreed to it then? We are joint tenants with no deed of trust.

I want to leave my mum enough to buy a house because she won't get a mortgage at her age, so was thinking I could take £40k and she would have over £110k once the mortgage, selling costs etc came off but she thinks I am trying to rob her!

zzzLazyDaisy

Opalescent wrote: »

My mum has already told the solicitors to split it £20k to me and the rest to her and they have agreed. Is she legally allowed to do this? Should the solicitors not have agreed to it then? We are joint tenants with no deed of trust.

It is the solicitor's job to comply with the client's instructions.

This is the situation I was concerned about. You now have two joint owners giving different instructions to the same solicitor. Clearly they can't do what you both want, and they also cannot give separate advice to each of you as your wishes/interests conflict with each other (hence the term 'conflict of interests').

I suggest that you do not draw the solicitors into a debate about how you and your mum should split the net equity. Instead I suggest that you insist that the solicitor complies with the law and distributes the net proceeds 50/50. You can then come to a private agreement with your mum, about how much, if any, of your share you are willing to give her.

This is a letter that you might wish to send to the solicitor, but do be aware that if they refuse to act on the grounds of conflict of interest, you may have to instruct your own independent solicitor to write to them.

Dear Sirs

Sale of [insert address of property]
Joint owners: Opalescent & Mrs Opalescent-Mum

I refer to the current sale of the above property, which is jointly owned by myself and my mother, Mrs Opalescent-Mum, as joint tenants.

I understand from Mrs Opalescent-Mum that she has given you instructions in relation to the distribution of the net proceeds of sale, namely to remit the sum of £20,000 to myself and to remit the balance of the net proceeds of sale to her. I wish to make it absolutely clear that I do not consent to my mother's proposal. Accordingly I should be grateful if you would please confirm, by return, that you will distribute the net proceeds of sale on a 50/50 basis, in accordance with our respective legal titles to the property.

Yours etc

G_M

Have you factored in any Capital Gains Tax liability, since you have notlived there?

How old is your mum? Without wishing to be indelicate, should you also be considering any future Inheritance Tax liability?

cte1111

How much is outstanding on the mortgage? It seems that you should each receive half of the proceeds of the sale of the house. You would pay any remaining mortgage back out of your half.

Obviously we've only got your side of the story, but I can't understand why your Mum would think any different. You jointly purchased the house, putting in half each. The fact that your half was via a mortgage doesn't make any difference. It sounds like you've paid your share of the upkeep too via the £150 a month, unless there is other improvements that your Mum paid for?

zzzLazyDaisy

cte1111 wrote: »

How much is outstanding on the mortgage? It seems that you should each receive half of the proceeds of the sale of the house. You would pay any remaining mortgage back out of your half.

The mortgage is always paid off before the net proceeds of sale are calculated/distributed (unless there is a deed of trust saying otherwise, which isn't the case here)

ValHaller

Opalescent wrote: »

I bought a property with my mum. She put in £30k cash. I took out a £30k mortgage. We sold that property for £90k and bought another for the same amount. Again, I took out a £30k mortgage and the rest was made up of the proceeds of sale on the previous house. We are now selling our current property for £170k to buy separate properties. We are joint tenants. What are we each entitled to?

Purchase of First House:
Bought for £60k
Mother puts in £30k cash
OP puts in £30k from mortgage and pays mortgage in full

Shares - Mother 50%, OP 50%

Sale of First House:
Sold for £90k
Mortgage of £30k cleared
Ownership of Equity - Mother £45k, OP £15k

Purchase of Second House:
Bought for £90k
Mother puts in £45k cash
OP puts in £45k made up of £15k cash plus £30k from mortgage and pays mortgage in full

Shares - Mother 50%, OP 50%

Sale of Second House:
Sold for £170k
Mortgage of £30k cleared
Ownership of Equity - Mother £85k, OP £55k
She is being greedy.

In your position, I might let her have the use of £110k, but after this, I would have a charge on her house for the £25k of that which is yours.