Divorce, house, equity...

maxmycardagain

Married couple
Husband leaves
Says he may go bankrupt 

Only joint financial is the house, bought using wifes right to buy discount, now with £150,000 of equity

2 under 16s in the house with mum

Question is, can wife buy the husbands share of equity at a discount? 

She can afford the mortgage alone

Thanks

EssexHebridean

How is the house held? Joint tenants, or tenants in common? 

Also - I wonder if this might be better suited to being on the house buying etc board where they may have more knowledge around the RTB rules. 

maxmycardagain

It's a joint mortgage 
11 years in
The equity obviously helped by her 30% discount

EssexHebridean

Not the mortgage - the actual title to the house. Did you elect to be registered as Joint tenants or tenants in common? It makes a difference to the ownership and so could be relevant to your question which is why I ask. 

Joint tenants is most common for married couples - it essentially means that you both own the whole property 100% - so in the event of something happening to one of you, the entire property is automatic owned by the other already. That doesn’t mean that in the event of a split either party can claim the whole property, but it may make a difference to how the council views the RTB discount situation. 

Tenants in common means you each own a share of the property with the shares totalling 100% - often with a couple this will be a straight “equal shares” but unequal shares happens where one party has perhaps put more in at the start and wants to protect that. In the situation we have here where the one party had a RTB discount qualification that could have been a reason for a TiC selection being made, for example. 

fatbelly

She can buy the husband's Beneficial interest at a price acceptable to the trustee in bankruptcy. 

He must have humungous debts to be giving away £75k and endangering the house where wife + 2 kids live. Not sure that would ever be the best option.

Brie

Will see about moving this to the house buying forum suggested.

Hoenir

Seek professional advice from a Family Law Solicitor. This extends out into a much bigger set of issues. 

maxmycardagain

update...

seems he doesnt want to pay all the mortgage (instead of supporting the kids), but fancies his share of the equity, he has £20,000 worth of debts
the ex-wife can manage it all without him but says she doesnt think he will sign "out" of the mortgage, the lenders have said they are agreeable to the wife being the sole borrower

Herzlos

maxmycardagain said:

Only joint financial is the house, bought using wifes right to buy discount, now with £150,000 of equity
...
Question is, can wife buy the husbands share of equity at a discount?

On the RTB discount, wife presumably was entitled to it due to tenancy, but the discount applied to the couple at the time of the sale, so I don't think there'd be any inherent right for the wife to buy out husband at a discount.

However, wife could buy out husband for a figure agreed between them. How were the deposit and payments distributed between the couple?

Assuming the costs were split 50:50, it'd be fair for husband to get 50% of equity in a buy out, after legal fees etc. But he might settle for less to speed things up / get his name off the house quicker / etc, especially if the value of the house is up for debate or even decreasing.

From wifes perspective, there's a risk that if he goes bankrupt whilst still owing on the house, the creditor may try and force a sale or the linked credit rating will be hurt. So it's likely prudent to make some offer to buy them out and settle it quickly.

From husbands perspective, selling his share of the house to avoid bankrupcy may mean it's prodent for him to take a lower offer in the interests of speeding it up.

But you'd need to figure out what the wife can add to the mortgage safely, and agree on what the house is actually worth.

If wife can only add £35k to the mortgage, then she may not be able to pay any more to buy husband out. Of course, potentially some arrangement could be reached involving a chunk of cash + some reduction in child obligations for a while or something.

TLDR; wife and husband need to agree amongst them what she needs to pay him for him to sign his share of house to her.