Handing over 40% share in equity in lieu of child care payments

Jagraf

Ozzuk wrote: »

Something else to add to the mix, these payments are for child support. Ie, the money goes to benefit the child.

(I'm not a parent so maybe getting this wrong!!!)

Having more equity in the house isn't likely to increase the cash flow of your ex so you may want to consider if the children will still get everything they need with the reduced income. You may find you have to put your hand in your pocket more for instance for clothes, trips etc...

This is actually really important. If the money is on the house, who is paying for the children?

MartinW6

Jagraf wrote: »

This is actually really important. If the money is on the house, who is paying for the children?

As my ex-wife and I have discussed, we wouldn't put anything in place until they're in a position to afford to lose the £400 a month. That's dependent on her partner's salary and career progression. We've both agreed that there's no point doing it until that point. I'm in no rush - but all parties want the same thing (getting rid of my stake in the house), so it's really a question of timing things.


Having said that, and based on the advice so far, it seems that stopping the child maintenance in lieu of future equity is a non-starter as it leaves me too open. HOWEVER, I did have another idea last night...


I will continue to pay monthly child maintenance. However, my ex-wife and her partner will pay some/all of that back a few days later. Without going into details, the amount they pay (call it 'Equity pay-off') would reduce my % of the equity over time. Ideally, we can reach an agreement whereby by the time child maintenance ends, they'll have paid off whatever 'equity' figure it is we agree upon (I'm willing to be flexible). It keeps me safe, and both sides will have an audit trail via bank statements showing 'Child Maintenance' or 'Equity Pay-Off'.


I'm guessing that if the above is feasible, my ex-wife and I would need to draw up a letter explaining that I would forgo my 40% share of the equity for whatever flat figure is agreed upon - under the assumption the figure is paid off within the time period agreed. If the figure isn't paid off, we'd revert to the 40%, minus the amount paid up to that point. That gives them an incentive to pay it off, but if they fall on hard times, they have the flexibility to stop the equity payments.


Would that work?

susancs

I think there are too many variables in what you are proposing. For example if your ex-wife does not pay the mortgage you are still liable as on it I persume, If they did not bother to insure the house or maintain it and it fell down onto another property or a passer by, you would still be liable. I can understand you and ex-wife wanting to seperate finaces, but you really need them to sell up or buy you out for this to happen.

The mortage repayments of £70K would be about £280, so rather than doing as you orginally sugguested it would make sense for them to get a mortgage to buy you out. Making an assumption based on your being divorced for 4 years, that your youngest is probably 5, then you could have 13 years child support left which you say is approx £39K, this would mean you pay approx. £216 a month. If they want to buy you out they can choose to use the £216 towards the mortgage and they would need to pay the extra £64 (£16 a week). That way you get the 70k due to you and they get the house in their sole names. You would still be supporting your children as the money is putting a roof over their heads dueing the time they are not wiht you.

MartinW6

Unfortunately, it's not a question of getting a mortgage for £70k. They'd need a mortgage for £185k (there's a mortgage on the house for £115k). Based on the mortgage calculators I've seen online, they'd end up paying around £750 a month. There are several problems here...


1) Her partner doesn't earn enough to secure a mortgage for £185k.


2) There's a chance that her partner's salary won't increase at the same rate as my 40% interest as house prices increase, meaning there's little chance of them being able to buy me out in the future.


3) They're currently on an interest-only mortgage, and are only paying around £260. They don't have to re-mortgage until 2021 (which, at that point, I'm guessing they'll be forced onto a repayment mortgage).


Overall, it's a little frustrating for all of us. The house is worth - conservatively - £300k+ and the mortgage is relatively low. I just want to find a solution where I can get a portion of the equity (and I'd settle for less than I'm due) and they get full ownership of the house.

TBagpuss

Why not compromise/ How much mortgage can they get? Could they buy you out of portion of your 40%? That way, you'd get dome equity, they don't get the house outright immediately but they increase their share.

If you wanted, you could accept a little less than you are entitled to to reflect the fact you're getting it early.

MartinW6

TBagpuss wrote: »

Why not compromise/ How much mortgage can they get? Could they buy you out of portion of your 40%? That way, you'd get dome equity, they don't get the house outright immediately but they increase their share.

If you wanted, you could accept a little less than you are entitled to to reflect the fact you're getting it early.

Realistically, they'll never be able to fully buy me out for the full 40%. Her partner's wages won't keep pace with house price increases, and the gap will only get increase as time goes by.


For example, if house prices increase by £10k a year, that means her partner would have to get a 4k pay rise a year to just keep pace with my 40% share in the equity (yes, I know I'm over-simplifying, but you get the point).


So, as you say, realistically I'm going to have to accept a smaller percentage at some stage. To be honest, I'm happy to do that. The kids are more important than me anyway.


I was just hoping there'd be some way to get the equity in small, affordable monthly sums which could be tracked and be used to reduce the % of ownership I was due. Unfortunately, there doesn't seem to be a viable way to do that.

HoneyNutLoop

There is nothing, and I mean nothing, that you can put in place that will waive her statutory right to apply for maintenance long term. As others have said, if you get a consent order, after it has been in place for one year she can submit an application to CMS. You will then have paid her a lump sum of £70,000 and will also have to make ongoing payments.

Seek proper legal advice before making decisions of this magnitude.

MartinW6

HoneyNutLoop wrote: »

There is nothing, and I mean nothing, that you can put in place that will waive her statutory right to apply for maintenance long term. As others have said, if you get a consent order, after it has been in place for one year she can submit an application to CMS. You will then have paid her a lump sum of £70,000 and will also have to make ongoing payments.

Seek proper legal advice before making decisions of this magnitude.

Yep, I've discounted the idea of not paying child maintenance.


As I mentioned above, I think my only option is to take a % of my 40%, when they're in a position to re-mortgage beyond the current 115k mortgage. Still, there's no rush - but judging from the replies in this thread, there aren't any obvious alternatives.

gizmo111

Why don't they just save the £400 until they reach the point that they can remortgage a smaller sum and pay you off?

rpc

MartinW6 wrote: »

Realistically, they'll never be able to fully buy me out for the full 40%.

But they could buy you out enough to get you off the mortgage and deeds and you could agree to a second charge being applied to cover any shortfall. You would come behind the lender, but ahead of your ex. They wouldn't be able to sell up or remortgage without your agreement.

That way you will eventually get your share but you also have a way to sort things out in the short term.

I also wonder if you could use a charge on the house to cover you for any risk of future child maintenance but that is probably too complex and might not work anyway.