Buying a friend out a mortgage

Pm00113

I've been living with a friend for 2 years. We both pay 50/50 on the mortgage and bills etc and both paid half for solicitor fees and stamp duty etc. The only difference is that I put in a deposit of 50k and he put 0 in, this is protected by a clause in the contract. The property was purchased for 200k.

Now I'm at the age in my life where I've been with my girlfriend for some time and I want to move in with her properly and have our own place. I therefore wish to end the arrangement I have with my friend.

As I see it this generates 3 options.
I buy him out.
He buys me out
We sell

The mortgage started on 150k and is now 140k so we paid in 5k equity each.

Now If we sell its pretty simple. We split the profit on the increased house valuation which is now 210k 50/50 meaning we get 10k each minus the fees we have to pay for solicitors and estate etc and come to an informal agreement on furniture. Regardless of this, the amount my friend will come out with less than 10k in the end.

Now I don't see the need to go through the drama of all that and would rather buy him out. Due to my large deposit he cannot afford to buy me out so I would have to buy him out. This would seem very straight forward. I'd give my friend 10k cash for him to release his claim on the property. He is better off with that as no solicitor or estate agent fees will be subtracted.

Howwver my friend doesn't want to move so doesn't want to sell or be bought out. But has agreed to be bought out if I provide a financial incentive.

I sort of get this. I've therefore offered him 12k as a gesture of good will.

This has been rejected and a demand of 18k has been made. My friend believes I should pay back the entire original solicitor and stamp duty fees. The total cost of living room furniture. Plus I should repay what he paid into the mortgage gross. Aka not taking off the interest.

I fear this is a sticky situation, and will probably ruin the friendship. That aside. Legally where do I stand.

Two questions...
What legally is he entitled to from a buy out?
If I want to sell or buy out and he refuses legally where do we stand?

Advice appreciated

ACG

1) There is no figure. He does not have to sell at all. As we live in the free world everything is down to supply and demand at the minute you want his share more than he wants to sell so he can hold out.

2) You would need to go to court to force the sale.

Also, if you buy him out and he agreed you would still need a solicitor involved to do a Transfer of Equity - costs will vary from around £100-400 depending on the solicitor. You would also need the agreement of the Mortgage lender.

FTR, I think your offer of £12k is pretty fair and is based on good logic. But, when he bought he incurred costs (as did you) if he sells up (either to you or someone else) there will be more costs for the sale and for him to purchase somewhere else. So from his perspective, why should he be out of pocket because you want to end the agreement?

There are 2 sides to every argument, I can see his side as much as I can yours. If you are £6k apart, can you not split the difference? If you are paying £5k over his equity can you include the furniture in that? Saves him on moving/storage costs also.

Sit down and try and work it out, maybe get someone in there to keep you both on track and focused so it does not turn in to an argument.

I feel like I should be ACG the mediator rather than ACG the Mortgage broker.