Puzzler for you! How do we split the proceeds

beme

Hi all


This has puzzled me for months but I am hoping one of you will be able to help me out re this.


Me and my ex own a property. His mum paid the deposit of £30,000 and me and my ex partner shared a mortgage of £90,000. The house value was £120,000. The fact that his mum paid the deposit was not documented anywhere and the house is owned jointly by me and my ex however I would like to know how much we all own in reality and what amount is fair for me to keep.


After a year or so of having the mortgage my ex needed some extra money so took a further £10,000 against the house. This was all spent by him as he was no longer working. Luckily for him his mum continued to pay (and still does to this day) his half of the mortgage. I have from day one paid my half of the mortgage.


We have now accepted an offer on the property of £110,000. There is therefore a loss of £10,000 here. As the house is owned 50/50 the solicitor will pay the proceeds 50/50 to me and my ex I need to know how much of this I should keep and how much I should pay to his mum.


The current mortgage balance is £85,000. So we will have £25,000 less fees.


Deservedly this money should be split between me and his mum as we are the ones who have made the repayments but the property is not owned this way.


One final point is I have not lived at the address for 2 years however have kept up with paying m half of the mortgage.


Messy one I know. Any thoughts and opinions are welcome. I am really stuck on what to do that is fair when I get my half once the sale is complete.

ecgirl07

In those circs I would ensure his mother got the 25k and id take nothing. Id view as me making 0 on the house as it has decreased in value but do everything to ensure the deposit was repaid.

ecoelle

I would say his mum paid in 25% of value so should get back 25% of the sale value minus 25% of the selling fees. She would have known when she lent you the money that the value of the house could go down as well as up. My calculations are that she would get pretty much all the 25k.

G_M

beme wrote: »

Me and my ex own a property. His mum paid the deposit of £30,000 and me and my ex partner shared a mortgage of £90,000. The house value was £120,000. The fact that his mum paid the deposit was not documented anywhere and the house is owned jointly by me and my ex however I would like to know how much we all own in reality and what amount is fair for me to keep.that's 2 questions!
1) you and ex own the property.
If you own as tenants in common, you own whatever % each you agreed at the time.
If you own as joint tenants, you each jointly own 100%.

2) what is fair? What was agreed? Did mum loan or gift the money? To both of you? To her son? Was there an assumption it was dependant on you staying together? How do you think she feels about things now?

After a year or so of having the mortgage my ex needed some extra money so took a further £10,000 against the house. This was all spent by him as he was no longer working. Luckily for him his mum continued to pay (and still does to this day) his half of the mortgage. I have from day one paid my half of the mortgage.


We have now accepted an offer on the property of £110,000. There is therefore a loss of £20,000 here.(120 + 10K) As the house is owned 50/50 the solicitor will pay the proceeds 50/50 to me and my ex I need to know how much of this I should keep and how much I should pay to his mum.
On the face of it, I think mum should get back her £30,000
That leaves £80K
The mortage lender requires £85K which you and your ex should find between you (+ estate agents fees etc?)
As your ex had another £10K, he should find the bulk of it.

But see my comments/questions higher up.....

The current mortgage balance is £85,000. So we will have £25,000 less fees.

One final point is I have not lived at the address for 2 years however have kept up with paying m half of the mortgage.
So maybe you should have been claiming something monthly from your ex all this time....

Your ex needs to find some ££££

getmore4less

Depends how you want to treat the £30K deposit and extra £10k.

IF you paid 1/2 the mortgage after the extra £10k was withdrawn then that will need factoring.

The easy way to factor the £10k is that you withdrew £5k each and you lent you ex your £5k interest only

Ignoring the £10k to start with and assuming the ex and his mum are a unit.

Using the equitable method(which is a fair way to split profit/loss)
The equity split is £30k, £45k, £45k so your share is 45/120

so you are due 45/120 of the £110k(or whatever is left after fees) less 1/2 the outstanding mortgage £42500

Your share of the loss is £1250, and as your ex owes you £5k you walk away with £3750.

Now you could factor the rent due on your share of the place while you were not living there and there is the interest in the 5k loan you gave him(if you paid the 1/2 mortgage on that) you could think about increasing the amount you keep.

Remember the purchase needs to include all costs and the net proceeds after sell are what is left to share my guess is the 120 and 110 will be rounded numbers.

Also this does not factor any other things like disproportionate house maintenance/improvement costs.

moneyistooshorttomention

Whew! Good luck in working that one out. The only thing that is clear is that his mum gets back her £30,000 deposit in full and then you work out who owns what after that is sorted out. His mum ought to, by rights, receive interest on the loan she gave your ex, but that is something that is up to your ex to sort out one way or another with her.

So you and your ex own whats left of the house after paying mum back and that is the starting point.

I don't think I would be going into whether it was your ex or his mother that paid his share of the mortgage. I would just treat them as being one person and let them sort that aspect out between themselves.

Probably just easiest to say:
- Take out mothers £30,000 and pay her back
- Then divide up the remaining equity (or, in this case, debt) 50/50 between yourself and your ex.

If the house wont provide enough to repay Mum her £30,000 then that is where the headache lies, ie because she will still be due to have this money back. Sounds like there will be somewhere between £20,000-£22,000 available to repay this £30,000 to mum. Therefore a shortfall of up to £10,000. I would say that, with your ex being the one who took that further £10,000 out of the house so to say then its his responsibility to make up that shortfall to Mum. He's the one who made the house pay his "living costs" for that period of time.

getmore4less

The starting point is was the £30k a gift a loan or buying equity.

if a gift or a loan was this to the ex or to both of them.

The general case of get your deposit back is an interest free loan in disguise and is not an equitable way to deal with property.

Ozzuk

I'd say from your comments the person most likely to lose out is the mum - you have no money in the house. Assuming (and we can only say this is the morally correct thing unless some contract was put in place) you are committed to paying back the mother then from your figures you own half of zero profit, ie, zero - and anything you take away you'll be taking away directly from the mother. I can't quite see where you think you have half the profit when the house is at a loss.

After fees its looks like closer to 20k left, I'd hand that over and let the son worry about the shortfall - you'd have done all you can at that point and can walk away with a clear conscience.

Of course, you could also see half her money (not profit) as yours, which IMO is wrong. Its only a nasty situation if you make it one.

Mattygroves2

The legal position is probably going to be that the mother is due nothing as there doesn't seem to be any documentation so her deposit is deemed a gift. If the OP and boyfriend then own as TIC without a legal agreement for an unequal split of ownership or as Joint Tenants then she is entitled to half the equity in the property so probably half of £20k after fees.

A very good example of why it's important to formally document unequal deposits and contributions.

The moral position though is that the mother should get her deposit back or as much of it as possible.

Ozzuk

Just to add something else into the mix...no mention of being married or if this is a short marriage, in which case it would be reasonable to expect you get out what you put in, so either way the OP would not be entitled to any of the deposit money.

dodger1

The house is worth less now than the purchase price, in my view his mum should get whatever is left after fees etc.