Declaration of trust in negative equity sale

Clive85

I have searched the internet high and low for help with this question and to no avail, so hopefully I can find some help on here:
Me and my ex have recently split and after lots of back and forth arguing she is now adamant she wants to sell.
We have a tenants in common mortgage with a declaration of trust. She put £40k as a deposit and I put £0, which is declared, no problem.
The declaration states the mortgage is paid first, minus sale costs and fees,
She receives £40k,
The remaining proceeds of sale are split 50/50.
Our mortgage has £132k remaining. She has a sale price of £170k in her mind, despite my opinion of £180k.
If we sold at £170k, pay the £132k mortgage and estimated £2500 sale price fees that only leaves £35.5k left.
Does that mean she gets £35.5 and that is the end, or is there some way that I am going to have to give her £2250 to compensate her for half of the loss, or even worse the full £4500 to ensure her initial £40k is protected? Please help!

ACG

I would expect it to get written off.
Presumably there is nowhere in the contract it accounts for what happens if there is not enough to pay the £40k?

This is not quite the same, but there were some mortgage lenders who offered mortgages of 0.5% below the bank of england base rate. When interest rates were at 0.25% there were some people expecting to get paid by the Mortgage lender (I used to work for one of those banks).

The bank basically said, their contract does not say they will pay the customer interest and so no payment from the bank is due.

But rather than take the word off randomers from the internet (I include myself in that) have you had the conversation with your ex? It sounds like she either wants a quick sale to draw a line under the relationship and start afresh even if it means a loss OR at £180k there would be a slightl profit for you both and maybe she would rather see you with nothing even if means her losing £4k...

Clive85

There are no comments in the declaration explaining what happens with a loss. My thoughts are as your own, I believe it will be written off.
Conversation is impossible as she is very bitter about the whole thing. Whatever I say she will not listen to. You could be right in that she would rather the loss than see me with any cash, or possibly she is of the opinion I will be paying her the difference etc.
She has not paid much attention to any of the details of this from the beginning tbh, and I believe she is thinking emotionally, as opposed to financially or rationally.
I offered her to buy me out at £4k, which I think is a fair offer and much cheaper and faster in the long run. She has been mortgage approved for that as well, but again I think emotional thinking is taking over.
She says she wants a quick get out and for me, buying my share would be the fastest way. Other than that she has to get a court order to make me sell and I have read mediation is recommended by the court before you can get a hearing etc. That way will take months and cost a lot more in my opinion.

AdrianC

Can you post the EXACT wording (redacting names and addresses) of the declaration?

It sounds like whoever drew this up didn't expect there to be <£40k left after clearing all the disbursements. In the absence of any other wording, including anything saying that you're liable for any shortfall, then she's out of luck. She'll get what there is...

If you actually were in -ve equity (you aren't, you just don't have more than £40k of equity), then the same would apply to the mortgage lender - they'd get what was there. They could then pursue you both for any remainder, but it'd be outside the scope of the DoT.


Forcing this to go legal won't help anybody or anything, except a nice little payday for the solicitors - some of which will come out of your pocket.

Clive85

Ok so exact wording is:
The first owner and the second owner declare that they hold the property on trust for themselves as tenants in common to sell the same with the power to postpone the sale and to hold the proceeds of sale (after deducting therefrom the costs of sale) and
(a) to discharge the mortgage
(b) as to the balance of the net proceeds of sale:
The first owner shall receive £40,000.
The remaining balance of the net sale proceeds shall be split equally between the parties.

mrschaucer

I read that as saying she should receive £40K of the balance of the net proceeds of sale. If the balance doesn't reach 40K, tough.

Clive85

That’s how I read it. I’m glad to see it seems to be the common consensus.
She did not show much interest in the details of the mortgage or the declaration etc at the time and now I guess this is the consequence.
Luckily for her I am not I’ll willed and I will try and explain this to her. Hopefully she reads this post!
Thanks everyone.

AdrianC

Clive85 wrote: »

(b) as to the balance of the net proceeds of sale:
The first owner shall receive £40,000.
The remaining balance of the net sale proceeds shall be split equally between the parties.

Very clear.
It clearly states it only relates to the BALANCE of the NET PROCEEDS. No other monies.

silvercar

I offered her to buy me out at £4k, which I think is a fair offer and much cheaper and faster in the long run. She has been mortgage approved for that as well, but again I think emotional thinking is taking over.

Given a sale would lead to no equity for you, why is £4k a fair offer?

Tom99

silvercar wrote: »

Given a sale would lead to no equity for you, why is £4k a fair offer?

Sounds about £5k adrift. OP should be offering £1k to get out.
If you go to court to force a sale would you not also be forced to pay 50% of the sale costs?

anselld

I would agree the wording is weak, but the intent is clearly to protect the £40k and distribute any gain equally and by extension any loss. Hence I would expect OP to contribute £2250.

Apart from anything else why should OP walk away unscathed from a neg equity sale? What if the loss was £40k would the OP still expect to walk away?

Also OP, you do not say if you are/were married, in which case the DOT may well prove irrelevant.

Surely the best approach would be to at least test the market at £180k or even £175k to avoid the issue arising.