Equity Split Question

graykev_2

I currently own a house between me and my (now) ex-partner. We got our mortgage just under 3 years ago. We have very recently seperated (not married) and we decided i should be the one to move out of the house as this is better stability for the kids. I have now moved into rented accomodation.

We have agreed that because I have moved out and now have to pay more in rent than the mortgage that when we sell the house that we will still split any equity 50/50. We jointly own the house and the mortgage comes out of our joint account. None of this will change until the house is sold.

We can't sell the house as we have recently signed up to a 4 year fixed rate with all sorts of charges if we terminate early (4k roughly).

My question is if we sell this house in 4 years time and my ex partner changes her mind about the 50/50 split, can she do this as she has been residing there whereas i havn't? Also i wouldn't have been paying into the joint account as all my money now needs to pay my rent. It will hopefully not come to this as we have remained civil with no reason not to but i would nevertheless like to protect my interests as you never know what can happen 4 years down the line.

Any help or advice would be hugely appreciated.

Current house value: 85k
Mortgage Balance: 64k

Regards,
Graykev.

Annisele

Certainly she could change her mind - people can always change their minds, even after they've agreed a contract. Ultimately, if the two of you couldn't agree, you'd end up in court. The court might well take account of any agreement you'd reached, but it'd much easier for the court to do that if there was documentary evidence of it. (Ideally I think you'd want a deed of trust, having both taken legal advice - if you got one of those it might be binding, even if your ex did change her mind).

I'd be more worried about whether she'll want to sell in four years. If you've decided keeping the house for now will give your children better stability, will that have changed in four years' time? Are your children all at least 16 or so?

Are you likely to want a mortgage of your own in the near future? You might struggle to get one if you're still named on the old property.

Can your partner afford to take on the mortgage now, in her own name? That's probably the best solution if it's possible.

graykev_2

Thank you for the response. I totally agree that minds will likely change. Or BE changed.....

A few people have advised me to get this drawn up by a solicitor and we both sign this. She is happy to do this just now. Would this be as simple as us going to see a solicitor and then getting them to draw something up, we both sign it and then obv pay them for the pleasure?

No, our kids will still be young. Currently 2 and 4. But selling in 4 years time is beneficial to us as the are looking at 20k equity each (i know this is highly dependent on the market). This would be more than enough for us to both use this as a deposit for somewhere new. I am content to rent on the basis i will get my fair share of equity when the house sells. If she doesn't want to sell i'm unsure of that to do. She can afford the outgoings no problem but may not be able to buy it herself due to a single income. If we were to sell it now we would come out breaking even at best with no property to show for it.

I'm wondering if a solicitor could incorporate something into the agreement that states that if she won't sell she has to buy me out at x amount?

This is a very complex scenario which we never expected to happen at all. I'd love be get some security whilst we are both good with eachother.

Thrugelmir

Take advice yourself. Technically she now has possession of the property which puts her in a very strong position. You need to formalise matters properly.

The fact that you have children also adds a degree of complexity. As a court has the power to decide where the children live and what happens to the family home. This because the Court represents the childrens welfare and interests in disputes between parties.

graykev_2

Thanks Thrugelmir. Will a legal document drawn up by a solicitor whilst things are civil solve this though if we are both prepared to sign it? We lay out everything that we have verbally agreed on paper, sign it and pay solicitor for legalising this?

Thrugelmir

You'll need to take independent advice. As a solicitor cannot represent both parties as it's impossible to give impartial advice to each party. So I wouldn't wish to pre-empt matters given that your ex-partner will be advised from the perspective of her circumstances and those of the children.

getmore4less

Lets cut out a couple of key bits

graykev wrote: »

We can't sell the house as we have recently signed up to a 4 year fixed rate with all sorts of charges if we terminate early (4k roughly).
Current house value: 85k
Mortgage Balance: 64k

Regards,
Graykev.

£4k does not stop you selling get that out of your head a very bad assumption.
(it might cost £4k extra to sell but that may be less than other options)

graykev wrote: »

But selling in 4 years time is beneficial to us as the are looking at 20k equity each (i know this is highly dependent on the market).

That's a lot of HPI on a £85k house.


Another potentially bad assumption.