Negotiating buy-out with ex - she didn't contribute to bills or mortgage

housefun

Hi All,

My ex (not married) and I have a house together (joint tenants), and I want to remain living in it and 'buy her out'. I have discussed with my mortgage provider and they have agreed in principle that I can keep going with the same mortgage in my sole name.

We paid equal shares of the deposit (20K of 40K), and she contributed 5K to an improvement: new kitchen installation.

She did not pay ANYTHING towards the mortgage or bills during the 2 years we lived together. She quit her job for stress soon after we moved. I paid the mortgage on my own, and actually put in some hefty overpayments (including a 10K inheritance I received).

We've had the house re-valued. It's gone up by 10% (20K increase).

My offer to her was her sum amount of money put into the house (20K + 5K = 25K), appreciated by the increase in value (10% = 25K + 2.5K = 27.5K). In my eyes a 2.5K return is not bad for 2 years living rent and bill free!

She is asking for the money she put into the house, plus half of the increase in value, if we sold today - 25K + 10K = 30K.

This seems unfair to me - I would be removing her liability from the mortgage, giving her half the whole cash profit (when there would be 1000s in early repayment charge, estate agent fees, etc), AND she never paid mortgage or living costs.

...but my concern is that she holds all the cards - if she isn't happy with my offer she can force a sale, and then she will (I think?) get half of sale price minus remaining mortgage, which will leave me losing much more money, given that I was the only one paying into the mortgage, AND have made massive overpayments

Do I just have to accept this, or any offer she gives me? The only card I think I hold is that I would be removing her liability from the mortgage, and also that if she did try to force the sale that would be a large (?) legal cost for her (but also for me, as I would need to buy a new house).

Any suggestions gratefully received!

FTBlalala

So just to confirm you want to give her £27.5k and she wants £35k? (£25k + 1/2 the price increase £10k?)

I would try discuss with her your reasons and meet in the middle at say £32k (swayed more to her side to hopefully sweeten the pot) and call it square.... If not....

Unfair.... yes but I would take the £7.5k hit for not putting a Deed of Trust (I think its called this but basically the form you fill in to say who gets what if there's a breakdown in the relationship) assuming you don't have one of these and go on living in the house you like, lesson learnt.

Worse case scenario you will lose a LOT more in all sorts of legal fees if she forces a sale and you have to move anyway..... £7.5k seems pennies to this in the long run.

Edgar1985

yes it`s unfair

housefun

FTBlalala wrote: »

So just to confirm you want to give her £27.5k and she wants £35k? (£25k + 1/2 the price increase £10k?)

yes

I would try discuss with her your reasons and meet in the middle at say £32k (swayed more to her side to hopefully sweeten the pot) and call it square.... If not....

Unfair.... yes but I would take the £7.5k hit for not putting a Deed of Trust (I think its called this but basically the form you fill in to say who gets what if there's a breakdown in the relationship) assuming you don't have one of these and go on living in the house you like, lesson learnt.

Worse case scenario you will lose a LOT more in all sorts of legal fees if she forces a sale and you have to move anyway..... £7.5k seems pennies to this in the long run.

Thanks - it's especially irritating as we had a conversation at the start where we agreed that joint tenancy was appropriate at the start since we put in equal deposits, but we would review it later on if I was paying the majority of the mortgage, which was likely as I was on a bigger salary (when she was employed, anyway!).

Of course, she denies all knowledge of the conversation, now...

I really wish our mortgage advisor/conveyancer would have told us about a Deed of Trust. It seems like they should be mandatory.

Exodi

I feel for you, I really do. Be wary, as you're probably aware, that she does indeed hold all the cards. Negotiate a compromise and try to minimize how aware of this fact she is. I hope it works out, more people need to be made of aware of Tenants in Common/DoT agreements.

housefun

pen_name wrote: »

PS. She's really greedy and ungrateful to be supported for 2 years... be happy it's (almost) over.

Right! I've actually been negotiating through her parents (who's money it all was, in fairness), and so far haven't laid on the sob story because I'd like to think I'm above that, but they know that I covered her financials (as I'm sure they're doing, now). I always got on with them so I was hoping they'd be reasonable.

The reason we broke up was because she cheated on me, also!

Exodi

housefun wrote: »

Right! I've actually been negotiating through her parents (who's money it all was, in fairness), and so far haven't laid on the sob story because I'd like to think I'm above that, but they know that I covered her financials (as I'm sure they're doing, now). I always got on with them so I was hoping they'd be reasonable.

The reason we broke up was because she cheated on me, also!

Christ, in rare times like these I wish I believed in Heaven & Hell so I would know people like this would get their comeuppance.

RunningKatie

Whilst she appears to hold a lot of cards, you are in a very complicated legal situation.
You are joint tenants and you split the purchase 50-50 so that is the initial presumption, you also both contributed to the renovation assuming £5k was 50%


Here's where it gets tricky, you made all the mortgage payments, so in the case of her forcing a sale you can make her aware she would not receive 50% of the property value, if you can evidence this and she has no evidence of her paying anything then you are in a good legal position but it would cost thousands for a solicitor and there is the potential that this argument would go to court, again costing thousands.

You maybe need to make her aware that there is case law under constructive trusts that mean mortgage payments give you a greater percentage of ownership of the property, however for the costs involved I would be looking to negotiate with her.
The mortgage contributions will only help you if you are forced to sell as you will then be entitled to more than 50% but if you want to stay away from that then you probably need to hand over the £35k or at least something close to that figure that you can both agree on.




She is entitled to her deposit money and the money she put in for the renovations, if the rise in property price is partly down to the renovations (likely) then she is entitled to a 50-50 split of the profit. Unfortunately, it does seem a bit unfair but it depends on whether you want to keep the property and accept that the £35k is a lesson learned with regard to joint ownership of co-habiting couples.

Thrugelmir

Unless it's legally defined. The basis of the financial split is down to negotiation. Whether it's fair or not has no bearing. Relationships aren't just a question of who paid for what unfortunately.

Ultimately you still have the house. Your ex doesn't. There's more to life than money. Compromise a little and move on with your life. Be worth every penny.

housefun

pen_name wrote: »

OP, for the sake of the argument let's say your property is now valued at 220K and mortgage outstanding is 140K.

Your equity is 80K.

Give her back 25K (her deposit plus reno).
Your "take back" is 30K (deposit plus overpayment) plus 2 years worth of mortgage repayments, let's say that's 15K just for the sake of the argument. So your share of equity is already at 45K.

There's 10K left of equity, to split between the 2 of you. She should take 36% of this (as her total contribution was 25K, yours was 45K, so hers was 36% of £70K).

This is a very simplistic calculation not looking at interest portion of the repayments and maintenance costs, not looking at costs of sale, utility bills that you paid for her... etc.

Thanks - I've just done this calculation using the real figures (I've rounded the previous values to make for simpler calculations above), and it's about 1K more than my previous real-figures offer. That's an improvement for them, so is worth trying.

Is this a similar calculation that would be used in the event of divvying up a force sale through the courts?

sammyjammy

housefun wrote: »

Thanks - I've just done this calculation using the real figures (I've rounded the previous values to make for simpler calculations above), and it's about 1K more than my previous real-figures offer. That's an improvement for them, so is worth trying.

Is this a similar calculation that would be used in the event of divvying up a force sale through the courts?

No, they will look at the individual facts, if you go this way you won't have to worry about profits and deposits, it will probably bankrupt you.

I would suggest if you can't come to an agreement just stop discussions leaving the offer on the table, no doubt in the circumstances she will become somewhat desperate for the money. Hope she is paying her parents back!