Joint mortgage, renting a room

Tessa37

oldbikebloke said:

Tessa37 said:
You are missing the point! She would have to take me to the court! 

I am not, that is exactly the point I made: a court would have to decide.
The rest of your comments are hard to understand due to your poor English and anyway you have made it clear you have no interest in anyone's opinion but your own so it is pointless responding to your comments regarding the "unfairness" you think is going to happen.

That's corrert, I did not ask everyone for their opinion. Everyone can think something ... 

I asked for advice of someone who was/ is in the same situation and that's not you... It was mistake to ask everyone.

You shouldn't get involved if you don't understand my English; as you are really missing the point. The court will not happened with written agreement. 

Your words:

"so you will end up taking your sister to court..."

No, I will not end up taking my sister to the court because our equity is already written...

It would have to be her; taking me to the court to get more money out of the sale.

If you read the post of the person who actually was in the situation: Mrcmrs he/she paid full mortgage but he/she couldn't get more money out of the sale... Unless paying for legal action
 (costly legal action).

If we set up written agreement now: it will be fair for both of us. 

Aranyani

And this is exactly why you shouldn't buy a home with a friend or sibling. 

[Deleted User]

oldbikebloke said:

Lover_of_Lycra said:
Which law says that the person who paid more of the mortgage is entitled to a greater equity share? 

google it lazy
you know as well as I do that in the event of a split the court will look at who paid what and a non contributor impacts any award 
the point has been made several times that is a matter for resolution in court, a position OP would be unwise to get to even if the result of this thread is going to be a family rift whatever its outcome.

It doesn't matter if I use Google or another search engine that there is no law that says one joint owner will be entitled to a larger share of the equity as set out by the joint tenancy or tenants in common split unless there is an accompanying deed of trust or perhaps in the event of divorce when a court can award equity based in need or in lieu of a share of pensions and/or other assets.  Neither situation applies to the OP because she isn't divorcing her sister and there is no deed of trust.  

If you have links to cases where a court has disregarded the joint tenancy or tenants in common split then I would be interested to see them.

md258

I actually agree with the OP that her sister should pay the whole mortgage. My reasoning is:
. Property is owned 50-50 so they are each equally entitled to it.
. The 2 sisters had an agreement that Tessa moves out and gets someone else to move in to cover her share of the costs.
. Sister has now changed her mind and wants to live alone. She can't expect OP to pay for a property that OP can't use.

But...
You need to talk to your sister and agree a way forward. Right now, the sister is holding all of the cards as she's blocking the sale but still expecting the OP to pay for her property. 

If the sister was to pay for the whole property  (effectively paying her for half and then renting the OPs half), then the sister has an incentive to sell, buy out the OP or get a lodger in to help cover the costs. The lodger would be the sister's lodger (not OP's tenant), so the rent a room tax relief would apply and as they are a lodger they can be kicked out with very little notice if/when you sell. As the OP isn't receiving any rent from the property, there is no income tax to pay. Whatever you do though, make sure you both agree, understand and write it down.

Comms69

md258 said:

I actually agree with the OP that her sister should pay the whole mortgage. My reasoning is:
. Property is owned 50-50 so they are each equally entitled to it.
. The 2 sisters had an agreement that Tessa moves out and gets someone else to move in to cover her share of the costs.
. Sister has now changed her mind and wants to live alone. She can't expect OP to pay for a property that OP can't use.

But...
You need to talk to your sister and agree a way forward. Right now, the sister is holding all of the cards as she's blocking the sale but still expecting the OP to pay for her property. 

If the sister was to pay for the whole property  (effectively paying her for half and then renting the OPs half), then the sister has an incentive to sell, buy out the OP or get a lodger in to help cover the costs. The lodger would be the sister's lodger (not OP's tenant), so the rent a room tax relief would apply and as they are a lodger they can be kicked out with very little notice if/when you sell. As the OP isn't receiving any rent from the property, there is no income tax to pay. Whatever you do though, make sure you both agree, understand and write it down.

Morally no-one disagrees. we're talking legally...

Tessa37

We agreed to rent the room out before we purchased the flat and our mortgage provider- a lender didn't have a problem with that... if one of us stays in our property.

I didn't ask our solicitor what is going to happen if one of refuses it. 

We did rent out our room in the past due to my sister's traveling. Yes, anything can happen if you rent the room out... However that's something what we discussed before we purchased the flat and I didn't have a problem with that to take that risk.
( Lodger contract).

Luckily we live in a nice area in London and it wasn't a problem to check references and to pick a nice person. 

I didn't find anything on not to rent the room out for short let or only until 2022. We were in touch with spare room this Summer. Of course Covid is complicating everything but I moved out 2 months ago and if my sister thinks she is entitled to get money back from the sale or expect me to carry on paying same money I just simply don't agree on this. Specially, if we don't know when we sell, we might not even make much profit on it in the future. The room was advertised for short let only with possibility of on going contract because the flat is for sale... Also, longer stay during lockdown. However, my sister knows it's not easy to sell our property for the price which she wants to hold... Although, currently not paying stamp duty could help us to attract potential buyers.

Initially I put in more deposit and I was contributing a great proportion of my income to the monthly household budget. 

This is something what we should think about when we were first deciding to buy with each other and to write it down, as it could save a lot of problems further down the track in the scenario like this. The agreement was done on trust only.

So when I asked about my rights renting out my room even if my sister didn't agree on it... If we individualy share different proportion of our flat and I am still happy to keep covering additional cost. It would be push for her to either accept a lodger or come to fair agreement; set up through solicitor because things unfortunately are not that simple. Refering to the link which I posted earlier, people are taking each other to the courts because of that ( if one starts to pay full mortgage) and I want to avoid this and surely I want to be fair towards my sister as well.

I don't mean to be harsh to enyone who is reacting to my post but it is stressful situation and I was hoping to hear from someone who was in the position like me. Rather than discussing other things around it or be called greedy etc. 

Tessa37

md258 said:

I actually agree with the OP that her sister should pay the whole mortgage. My reasoning is:
. Property is owned 50-50 so they are each equally entitled to it.
. The 2 sisters had an agreement that Tessa moves out and gets someone else to move in to cover her share of the costs.
. Sister has now changed her mind and wants to live alone. She can't expect OP to pay for a property that OP can't use.

But...
You need to talk to your sister and agree a way forward. Right now, the sister is holding all of the cards as she's blocking the sale but still expecting the OP to pay for her property. 

If the sister was to pay for the whole property  (effectively paying her for half and then renting the OPs half), then the sister has an incentive to sell, buy out the OP or get a lodger in to help cover the costs. The lodger would be the sister's lodger (not OP's tenant), so the rent a room tax relief would apply and as they are a lodger they can be kicked out with very little notice if/when you sell. As the OP isn't receiving any rent from the property, there is no income tax to pay. Whatever you do though, make sure you both agree, understand and write it down.

That's true... Unfortunately for her it's simple: I either pay or she will get money back from the further sale. Unless I get legal advice how to go forward that's what I am left with...

Comms69

How much do you think she will get extra? the amount is marginal, you're talking at best a few thousand. 

getmore4less

Comms69 said:

Lover_of_Lycra said:

oldbikebloke said:

Tessa37 said:
I am willing to drop the price but not my sister. 

My sister agreed to rent out the room but changed her mind when I already made my commitments somewhere else. 
She is happy to pay full mortgage to bank, but she would like to get money back out from the sale. That's where the problem with equity comes from... 
.....
I've already moved out and I sign the contract somewhere else. Selling would be ideal option but it might not happened soon... If our verbal agreement  (about renting out the empty room) what happens if one of us move out was done in writing through solicitors in declaration of trust we wouldn't be in this situation. 

that is fair, she WILL have paid more off the loan than you will if you do not pay towards the mortgage and she therefore pays your bit on top of her bit.
Why do you have such a problem with that?

Yes you are correct that the law says where someone contributes towards a mortgage and the other person does not, then the person making the contribution is, in the yes of the law, "buying" more of the equity as it is their money which is paying off the loan and therefore increasing the equity.

It appears it is your greed which is making you blind. If you think you should still get 50% of the money from the sale, but you have not paid the mortgage, then you are mistaken. That said, such disputes can only be settled in court, so you will end up taking your sister to court, which is why people posting on here are telling you to find a better solution - unless of course you have no wish to ever speak to your sister again? I assume your parents are dead so they can't intervene?

Which law says that the person who paid more of the mortgage is entitled to a greater equity share? 

I've asked this too, so far no-one has linked anything beyond an opinion of what 'may' happen

IN the absence of a written agreement the courts effectively impose one based on the fact of the situation.

The OP says the agreement was if one moved out the other would cover the costs, through taking in a lodger.
proving and re agreeing that may or may not be a problem but the sister has already said that they are happy to pick up the tab which supports the original agreement.

On the basis of those facts 50:50 would still be the default.

if they disagree and OP cannot support that option then an equitable option would need to be constructed

A typical option here is OP retains the equitable share at the point they stop paying and continue to have that appreciate/reduce.

sis would also have a similar  share and effectively buyout the share covered by the mortgage and  get the gains/losses from that.