My ex-wife does not want our house. Do I need a Separation Agreement?

cactusMan_2

Hello,

My ex-wife and I still own a house together. We never got a Separation Agreement due to the divorce being amicable.

At the time, it was not possible to sell our house as it was in negative equity and so decided to rented it out. Due to a high fixed interest rate, we would each pay £150 on top of rent. This went well for 2 years.

Recently she told me she wants nothing to do with the house and has stopped paying her share. I am able to cover the payments myself, however I am uncomfortable with this while she still has rights to the house. She has made it very clear she is happy to hand the house over to me and that she doesn't care about any potential gains in the future. Although this all sounds well and good, the problem is the house is in negative equity still, by ~£10,000, and so I cannot to re-mortgage into my sole name.

My ex-wife is willing to sign anything that states she will make no claims to the house while both our names are on the mortgage and that she will sign anything required when I go to re-mortgage in the future. I have spoken to a solicitor who says I need a Separation Agreement. I am not very knowledgeable in these areas but this seems a little heavy handed for what I am asking. My ex-wife has also said she is not willing to pay for a solicitor, which would be required during a Separation Agreement.

Is a Separation Agreement what I need or is there another route I can take?

Thank you for any help provided,
M

Foxy-Stoat_3

It is very nice of her to sign the house over to you, which she can do.

Unfortunately she will be unable to sign her debt liability over to you as well without the agreement of the lender.

You or you both will have to bring the mortgage out of negative equity before selling or trying to apply for the mortgage in your sole name, but I think you will have to put in another chunk of money to do this.

Maybe better to get Deed of Trust but it will cost someone in solicitors fees, although this will be an agreement between you and your ex and nothing to do with the lender.

glasgowgirl80

I was in a similar situation to you, me and my husband jointly owned (and lived in) a preoperty together and then split up, the property was in negative equity. He wanted nothing to do with the property and just wanted to sign it over to me as I wanted to keep the property. We did have a separation agreement but I don't think we necessarily needed one, the problem was the mortgage lender.

I couldn't afford the mortgage on the property on my own so I had to put in about 7 grand onto to the mortgage to bring affordability in line with what they would allow. It was classed as a 'sale' in a way, in that I pretty much bought the property off my ex and myself, so we needed proper solicitors and conveyancing etc, it wasn't a case of the bank just changing the names on the mortgage. Im pretty sure I would have had to pay stamp duty too if we hadn't been under the threshold. I was very very lucky in that the bank agreed to use the initial valuation that was used for the mortgage (way back when we bought the property), which avoided the problem of negative equity but I was given the impression that this was an act of goodwill rather than the usual practice.

You will need a solicitor, but speak to your mortage lender in the first instance. Mine were very sympathetic actually and although my application went to underwriters THREE times, I got there in the end. It won't be cheap though, my legal costs were roughly what you would normally pay to buy a property and the separation agreement cost a lot too (ours had more to do with other things than the property though). Good luck!

glasgowgirl80

Oh, also - because the proprty was in negative equity my solicitor told me that technically I could have forced my ex to buy himself out of the property (as opposed to me buying him out) because he was technically walking away from a debt scott free. I didn't do this because my bank overlooked the negative equity issue anyway, but its worth remembering that the person walking away isn't necessarily doing you a favour.

andyfromotley

Hi Cactus,

your ex wants to give you £5000 pounds worth of debt! (more if you and on selling costs - i know you aren't planning on selling at the moment.

If you are happy with this thats fine, as long as you understand why is actually happening here. You need a solicitor to explore your options and the implications of this so it is an airtight arrangement.

Your first question has to be can you afford to take it on on your own? Would you get a mortgage for it? (presumably a BTL mortgage would be needed) What is the implication of the Negative equity? Speak to your current lender, and them perhaps a mortgage broker. It may just be a better option to sell the house and split the remaining debt. (oh why does she feel that she can just stop paying the additional £150 it is still her responsibility!!)