How to legally share proceeds of house sale?

izboo

Hi,

This question relates to Scotland. My partner and I have lived in our house since 2003. We are not married and the house and mortgage are in my sole name. I lost my job earlier this year and she has been paying the mortgage since then from her salary/savings (up until then I paid the mortgage). We are now looking to sell the house and I would like to repay the contributions she has made to the mortgage from the realised equity but do not want this to be classified legally as a 'gift'.

Is there any mechanism for giving legal recognition to any such payment as being either her share of entitled interest in the property or even as repayment of money lent with the intention of being repaid. We do not have any written agreements regarding sharing or saying that she was lending me money to pay for the mortgage but we do have our bank statements showing the money being transferred.

Any thoughts would be appreciated.

Izboo

Bluebirdman_of_Alcathays

What are you trying to achieve? Is this for tax purposes?

izboo

It's complicated but the general gist is that I now have no income and my credit score has now been affected whereas she has a steady income and a perfect credit score. Our intention is to sell my house and for her to buy a smaller house solely in her name but for me to live there too. The payments she has made for my mortgage have eroded the savings that she had available for a mortgage deposit so she needs that money back. We do not want to have to declare this as a gift deposit as this may cause issues with lending criteria (as I will be living in the house but do not want any declared interest in it).


Izboo

Guest101

Well if you gift the money you wont have any declared interest in it.


(credit score is meaningless number) but obviously a lack of income affects your credit worth

Mojisola

izboo wrote: »

We are now looking to sell the house and I would like to repay the contributions she has made to the mortgage from the realised equity but do not want this to be classified legally as a 'gift'.

So repay it as the loan that she gave you to keep up with the mortgage payments.

agrinnall

You may not want to identify it as a gift but she will need to account for the sudden appearance of a sum of money in her account somehow. You may be able to state that is it repayment of funds invested in the sold property by your partner but her lender may still see that as you having an interest in the new property.

izboo

Guest101 wrote: »

Well if you gift the money you wont have any declared interest in it.

Unfortunately many lenders require 'gifters' to declare that they will not live in the property - which I cannot do as I will be living there. What I am trying to achieve is a legal recognition that the money was my partner's in the first place and that I am simply returning it.


Izboo

davidmcn

I presume you'll have a record of her making the mortgage payments in the first place? That's as good evidence as you're going to get about it being a loan.

Guest101

izboo wrote: »

Unfortunately many lenders require 'gifters' to declare that they will not live in the property - which I cannot do as I will be living there. What I am trying to achieve is a legal recognition that the money was my partner's in the first place and that I am simply returning it.


Izboo

Many gift declarations simply say the giftgiver will have no interest in the property.


You should check to see if your lender requires you to not live there.


(out of curiosity why not apply jointly) - if something were to happen to your partner you would lose the home completely.

izboo

Guest101 wrote: »

(out of curiosity why not apply jointly) - if something were to happen to your partner you would lose the home completely.

Primarily because I now have a poor credit score and several debts while she does not (which was the reverse of the situation when we purchased the present house). For that reason (and others) we have always tried to avoid being financially linked but we both have wills leaving our estates to the other person.


Izboo

izboo

davidmcn wrote: »

I presume you'll have a record of her making the mortgage payments in the first place? That's as good evidence as you're going to get about it being a loan.

The mortgage payments are by DD from my account but our bank statements show the money leaving her account (under reference 'mortgage') and entering mine and the mortgage subsequently being paid monthly by DD. Initially it was a lump sum to cover several months until I got a new job but it has been topped up subsequently as I have been unable to find suitable work - which has led to difficulty meeting unsecured debt repayments (hence my poor credit rating) and has resulted in our decision to downsize.


We have made some unfortunate decisions. Ideally we should have re-mortgaged and added my partner to the deeds of my house once her credit rating had recovered and it was our intention to do so once the deal that I was locked into had finished but we just never got around to it... and then I lost my job. My salary was double hers so re-mortgaging jointly would not have been an issue but we cannot do it on her salary alone.
In effect she has used her savings to increase my equity and we are simply looking for some way of legally recognising this.

Izboo