Tenancy in common splitting up

resilie

Hi!

Asking for a friend who is separating from her partner (after finding out that he has cheated on her for months - so this isn't pretty) and I want to help her with some of the practicalities.

background: they purchased a property together 2 years ago is tenants in common with an agreed 30/70 split. He put down all of the deposit but they have been paying the mortgage and all bills 50/50. She contributed the majority towards furnishings and appliances (they bought a lot of expensive furniture so this is close to 20k) but on the flip side some of the mortgage downpayment was used to pay outstanding debt on her side.
Current options are: put the house up for sale and split profit 30/70 or for his parents to buy her out (he can't afford the mortgage on his own). She doesn't want to stay in the house and ideally wants to get this sorted asap.

With regards to the 30/70 split- does one take the valuation price or sales price and pay her 30% of the actual value of the house or 30% of the value minus 30% of the outstanding mortgage and sales costs?
Given that she has been paying 50% of the mortgage does that entitle her to more than 30%?
If his parents buy her out which valuation should be considered: independent, from an estate agent, current mortgage lender? How can she make sure it is fair?
Does the fact that her ex put down the deposit and that debt was paid off with the mortgage come into play at all?

I know lots of questions but I am trying to take some of the burden off her. Have advised her to get a solicitor but I would be really grateful for some advise on here too to help guide discussion etc.

Thanks for your help

AnotherJoe

resilie wrote: »

Hi!

Asking for a friend who is separating from her partner (after finding out that he has cheated on her for months - so this isn't pretty) and I want to help her with some of the practicalities.

background: they purchased a property together 2 years ago is tenants in common with an agreed 30/70 split. (my emphasis) He put down all of the deposit but they have been paying the mortgage and all bills 50/50. She contributed the majority towards furnishings and appliances (they bought a lot of expensive furniture so this is close to 20k) but on the flip side some of the mortgage downpayment was used to pay outstanding debt on her side.
Current options are: put the house up for sale and split profit 30/70 or for his parents to buy her out (he can't afford the mortgage on his own). She doesn't want to stay in the house and ideally wants to get this sorted asap.

With regards to the 30/70 split- does one take the valuation price or sales price and pay her 30% of the actual value of the house or 30% of the value minus 30% of the outstanding mortgage and sales costs? I would say split the costs of selling 30/70 as well, whats left afterwards is profit, others might split it 50/50. If you are selling you cannot take the valuation price, thats just a guideline. It might sell at more or less than an estate agents valuation. The profit is what you have after actually selling and costs, not from a valuation!

Given that she has been paying 50% of the mortgage does that entitle her to more than 30%?
??? I thought you said they had "an agreed 30/70 split" ??? What does "agreed" mean if you start trying to change it?

If his parents buy her out which valuation should be considered: independent, from an estate agent, current mortgage lender? How can she make sure it is fair? Pay for a professional RICS surveyor which you both agree on. Or each pay for your own and then average them.
Does the fact that her ex put down the deposit and that debt was paid off with the mortgage come into play at all? No! Isn't that what the "agreed" 30/70 split" is for? Didn't that take all of the paying off her debts, all his deposit, etc etc into account to come up with that split? Mess with that at severe legal issues and cost.

I know lots of questions but I am trying to take some of the burden off her. Have advised her to get a solicitor but I would be really grateful for some advise on here too to help guide discussion etc.

Thanks for your help

Getting her own solicitor is the key advice.

resilie

Thank you!
So from what you've said it appears the 30/70 split agreed in the tenancy in common is legally binding (good!). I know the sale prize is what they would have to base the actual split on but I was referring to the different kind of valuations in case his parents want to buy her out and they don't actually sell. I'm just worried that they will come out with a low valuation to base their buy out on and dismiss her estate agent valuation (which have been quite good).
I'm still not entirely clear about what happens to the outstanding mortgage- say if the house was worth 100k, parents agree to buy her out with 30k but there is a 50k mortgage oustanding- do you deduct 15k from her 30 in those circumstances?

pinkshoes

resilie wrote: »

I'm still not entirely clear about what happens to the outstanding mortgage- say if the house was worth 100k, parents agree to buy her out with 30k but there is a 50k mortgage oustanding- do you deduct 15k from her 30 in those circumstances?

If the house is worth £100k, and the mortgage is £50k, then that means there is £50k equity, so she would get 30% of £50k, which is £15k.

If you are more specific with the figures it might help:

1. What did they pay for the house?
2. How big was the deposit and who paid it?
3. How much was spent on furniture and who paid it?
4. How much is he house now worth?
5. What mortgage is remaining?

Thrugelmir

resilie wrote: »

I'm just worried that they will come out with a low valuation to base their buy out on and dismiss her estate agent valuation (which have been quite good).

Better that an independent party or parties conduct the valuation. Tale the average of 3 EA valuations for example. The sooner the matter is agreed the quicker everything can proceed forward. Little point in extending the stress for all concerned.

AnotherJoe

resilie wrote: »

Thank you!
So from what you've said it appears the 30/70 split agreed in the tenancy in common is legally binding (good!). I know the sale prize is what they would have to base the actual split on but I was referring to the different kind of valuations in case his parents want to buy her out and they don't actually sell. I'm just worried that they will come out with a low valuation to base their buy out on and dismiss her estate agent valuation (which have been quite good).

This is why you'd get a RICS surveyor. They should be neutral but as I said you can always agree you'd each get a valuation (from such a surveyor) and average them. The "cheap" way of doing it would be to get free estate agency valuations (which I see they've started on) but they have their own agendas and can be very different. Of course if they 5 agencies round and they all say (say) soemwhere between £950£105k they might agree to average them for an easy life.

resilie wrote: »

I'm still not entirely clear about what happens to the outstanding mortgage- say if the house was worth 100k, parents agree to buy her out with 30k but there is a 50k mortgage oustanding- do you deduct 15k from her 30 in those circumstances?

Pretty much.

Note, the parents cannot simply take over her mortgage. The mortgage company needs to agree and the ex needs to be able to afford a new mortgage unless the parents become "sleeping partners" put a lump sum deposit in etc etc thats not something your friend needs to worry about really.

All your friend needs to work out is, suppose they sold the house as a couple. So they'd get £100k sale proceeeds, pay off £50k mortgage, leaving £50k equity (I'm ignoring costs) of which she owns 30%,as you say she should get £15k. So thats what she wants, whether parents help son with new mortgage or house is sold, she doesn't need to care.

booksurr

it rather depends on key bits of info you do not seem to know

TiC 30/70 is meaningless without knowing the context of what that relates to :
- equity after mortgage but before deposit?
- equity after mortgage and deposit?
- sales proceeds before deposit?
- sales proceeds before deposit but after mortgage settled?

if they did not get a Declaration of Trust as a legal document to define who gets what when they split, then nothing you have said clears up who gets what

AnotherJoe

Most of the altrnatives you put are IMO straw men, for example how could it be equity after mortgage but before deposit, when it took into account clearing debts and deposit (according to the OP). Of course, if it is equity after mortgage but before deposit it will clearly state that in the conditions, since otherwise there's no reason to believe it's any other tha a straightforward split of the equity.