Declaration of trust in negative equity sale

Clive85

Thanks for replies everyone.
So the £170k sale price is a figure she wants to sell for, and I believe she feels happy with that because she thinks I will be out of pocket and paying her any losses etc. If she knew the actual details then she would be agreeing with my £180k sale price.
She does not want to listen to a word I say, as she somehow thinks I’m trying to screw her over.
We don’t have proper figures yet because we have not been able to agree which route she wants to take.
I am happy that any sale fees will come out of the sale price, as declared in the DOT. So technically I will not lose anything here. The £4K figure comes from my estimated value of £180k minus mortgage of £132k minus her deposit of £40k leaves £8k which split is £4K equity.
So if she wants to buy my half all I’m asking for is that equity difference. I will pay solicitors fees, which won’t be much for transfer of equity.
Also I agreed to move out in a very short space of time so £4K seems reasonable as a small form of compensation for resolving the situation in the easiest and cheapest way.
It’s either £4K to me and she gets the house or £5k+ And we go through court and months of arguing. Seems like a simple choice to me if she is in such a desperate need to get out quickly etc

Clive85

The mortgage is standard, not interest only. We had to pay £175k for the house, so after 12 months, we’ve paid about £3k off the balance, hence £132k left.

AdrianC

Clive85 wrote: »

So the £170k sale price is a figure she wants to sell for, and I believe she feels happy with that because she thinks I will be out of pocket and paying her any losses etc. If she knew the actual details then she would be agreeing with my £180k sale price.

What have agents given as a likely price?

She does not want to listen to a word I say, as she somehow thinks I’m trying to screw her over.

At £180k leaving £44k equity, she walks away with £42k. That's £2k more than if you have to dip into your pocket to make £40k up. Is she really being so petty that she'd rather lose out on £2k so you lose out as well?

The £4K figure comes from my estimated value of £180k minus mortgage of £132k minus her deposit of £40k leaves £8k which split is £4K equity.

Which is lovely, but is your £180k as big a guess as her £170k?

So if she wants to buy my half all I’m asking for is that equity difference. I will pay solicitors fees, which won’t be much for transfer of equity.
Also I agreed to move out in a very short space of time so £4K seems reasonable as a small form of compensation for resolving the situation in the easiest and cheapest way.
It’s either £4K to me and she gets the house or £5k+ And we go through court and months of arguing. Seems like a simple choice to me if she is in such a desperate need to get out quickly etc

Sounds to me as if you're being just as bloody-minded as she is.


Get three agents around the place to give estimates. Average them out. If the two of you can agree on that (is there a friend you both trust who can act as a neutral referee and go-between?), then there's your answer.

Thrugelmir

Clive85 wrote: »

Also I agreed to move out in a very short space of time so £4K seems reasonable as a small form of compensation for resolving the situation in the easiest and cheapest way.

Move out once the deal is concluded. Once you leave she can call the shots. Effectively leave you in limbo.

Thrugelmir

Clive85 wrote: »

The mortgage is standard, not interest only. We had to pay £175k for the house, so after 12 months, we’ve paid about £3k off the balance, hence £132k left.

Why has the house value fallen then. Did you contribute to the purchase costs etc.

maisie_cat

I actually think that the expectation when the house was purchased would be that both parties would share the equity/negative equity equally. The sale proceeds less the cost/mortgage then the £40k then the -balance split.
Decades ago i owned with my sister and I got my deposit back and we shared the negative as frankly we'd both have shared if the property had increased.

anselld

AdrianC wrote: »

The balance of the net proceeds, at that point, is definitely currently positive - it's just less than £40k.
The balance of the net proceeds cannot ever be -ve, because that would mean the solicitor has paid out more than is available.


In the OP's example...
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
Proceeds of sale = £170k
(after deducting therefrom the costs of sale)
Costs of sale = ~£4k <wet finger in air>
Balance = £166k
and
(a) to discharge the mortgage
Mortgage = £132k
Balance = £34k
(b) as to the balance of the net proceeds of sale:
The first owner shall receive £40,000.
Not possible. First Owner receives £34k.
Balance = £0
The remaining balance of the net sale proceeds shall be split equally between the parties.
No remaining balance to split.

If there genuinely was -ve equity
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
Proceeds of sale = £125k
(after deducting therefrom the costs of sale)
Costs of sale = ~£4k <wet finger in air>
Balance = £121k
and
(a) to discharge the mortgage
Mortgage = £132k
Not possible. Lender receives £121k.
Lender still owed £11k. (Lender can pursue borrowers jointly and severally under terms of loan contract, outside of declaration of trust)
Balance = £0
(b) as to the balance of the net proceeds of sale:
The first owner shall receive £40,000.
Not possible. First Owner receives £0.
Balance = £0
The remaining balance of the net sale proceeds shall be split equally between the parties.
No remaining balance to split.

If only banks had the same approach to negative balances.

Exodi

To be honest, I think you're the one being petty. There's no reason at all why she should have to absorb the full shortfall from her deposit whilst you walk away scot free? And to boot, you're 'asking her' (but from how you've worded it, you're essentially blackmailing her) to contribute you four grand for your troubles? No wonder she'd rather sell the house and lose money so you get nothing (assuming she doesn't take you to court of course). You've jointly paid the mortgage for one year, you had no initial investment in the property, could you not just do the decent thing and voluntarily remove yourself from the mortgage?

Clive85 wrote: »

It’s either £4K to me and she gets the house or £5k+ And we go through court and months of arguing. Seems like a simple choice to me if she is in such a desperate need to get out quickly etc

Seems there's only one person being spiteful...

Clive85

Ok so maybe there is pettiness on both sides. I just wanted to know the facts. I do not want to go through court and I do not want her to lose any money, I just want a way that we both feel is fair.
I just wanted to know what would be the outcome of court in this case, in case she was adamant that’s what she wanted.
I have spoken to her and we have agreed a lower figure now so all being well this will work out for us both.
There are other factors involved such as I have contributed to everything else 50/50, I have spent hours on home improvements, we purchased the garage from next door 50/50, so I have put in a few thousand since the original purchase. It was me that maintained the house and all of the bills etc.
Like I said before, I am not a bad person and I will do my best to make this work in a civil and fair way.
Thanks again to everyone for your responses

Thrugelmir

Clive85 wrote: »

I just wanted to know what would be the outcome of court in this case, in case she was adamant that’s what she wanted.

Would be pointless. The costs involved would outweigh any benefits, if any.