Splitting Equity

BoltonBird_2

Hi,
I bought a house with my now ex-husband in 2007 just before the recession hit.
We split up due to a violent episode and the house was left in negative equity. I applied and was granted a divorce but as the property was in negative equity was told debt was not discussed in the divorce it was just 50/50.
I continued to pay the mortgage on my own until June 2016 after which I rented the house out. My ex husband paid nothing at any point and as the house was in negative equity I wasn’t in a position to sell with my sole income. The rental income was £200 less than the mortgage.
He now wants money for his share, how do I work this out without involving the courts?
Thanks

tacpot12

I would suggest that the starting point is that his should be half the value of the house now, less half the mortgage still owed, less something to reflect the money you paid after the divorce that he did not.

e.g.
House is worth £100K now
Mortgage is £90K now
His equity is £10K less what you paid yourself. If you paid £8000 in mortgage payments, you would owe him £2000.

I would suggest that you do not include the rent that was paid on the house, but regard this as having bought equity in the property equally for you both. This might sound unfair, but the strict legal situation (as I understand it), is that in the absence of a court order, your ex is still entitled to half the equity in the house even though you paid for it! Allowing him to benefit from the rent is a negotiating point to allow you to keep all the equity that you have personally paid for.

I don't think a court would calculate an answer using the above method, it is just a pragmatic way that allows you to come up with a number based on other number you already have or can get.

I would expect that if you can find a way to give your ex a small amount of cash in exchange for freeing him from the obligation to pay the mortgage, he will jump at the opportunity. See if the above approach works from your point of view - you might have to get a personal loan to pay him the balance, and I would do this in preference to extending your mortgage.

BoltonBird_2

Thanks for the reply I really appreciate the input.

So based on what you have said I understand parts one and two but I’m struggling with the last one.

House value 135k (67.5k for 50%)
Mortgage 113k (56k for 50%)
So difference around 11k but I’ve contributed £700pm for 8yrs in full and 60% of that whilst renting it out. I.e I’ve put in circa 80k versus 9.5k equity via rent for him therefore offsetting anything?

Or am I missing something?

Thanks

BoltonBird_2

Or is it that I’ve contributed 88% vs 12% and the split works that way? What would a court likely do?
Thanks

System

Take how much you paid for it and deduct that from what it is worth now. From the total deduct what you paid as an individual, then split the result 50/50. Regardless of rent or whatnot, if he was on the mortgage he was carrying the risk too so that needs to be reflected in his share of the rise in a value.

System

BoltonBird wrote: »

The rental income was £200 less than the mortgage.
He now wants money for his share, how do I work this out without involving the courts?
Thanks

Sounds to me like you were renting when you should not have been? No bank in the country would allow you to turn a personal mortgage to a renter with a deficit of £200.

BoltonBird_2

NRAM don’t do BTL mortgages and as my ex wouldn’t consent to let they just said sort it when you can and left it at that.

BoltonBird_2

We paid 130k I paid all of the mortgage it’s now worth 140k due to it falling in negative equity. At £700pm I have paid in circa 90k. There isn’t any left once I take my individual contribution into account.

System

BoltonBird wrote: »

NRAM don’t do BTL mortgages and as my ex wouldn’t consent to let they just said sort it when you can and left it at that.

That’s extremely lucky. Most won’t consent to let without a decent yield and certainly won’t if one of the owners don’t agree. Are you sure they said “do it” sort later or “you can do it later when you sort it out”. Chances are you might not be insured.

BoltonBird_2

I think as they are government owned their priority is to clear or move on mortgages so just want rid of me. They haven’t agreed they just haven’t persued the breach. Good point on insurance but as I’m a mortgage prisoner at the moment I don’t have much choice. The mortgage is still residential without consent to let with a marriage dipute marker on file.

System

Chances are if your tenants burn the place down, you’ll have nothing to show for it.