Equity from house to DIL

cgphillips8

Hi All,

My son and DIL are splitting up, thankfully it is amicable and currently they are still living in the same house.
Instead of selling their house and taking an equal share of the equity the DIL suggested my son stay in the house (which is very happy to do) and take sole ownership of the mortgage through a conveyance. He has contacted the mortgage provider and they have agreed to his request.
The DIL would like to move out of the house now and commence the process by using the equity money as a deposit on a new place before the conveyance is completed.
My question is if they create a letter/document signed and dated by both of them stating that the DIL will receive a certain amount of money for her share of the house if they had sold it, is this document legal or does it need to be witnessed by an official?
Since I am giving my son the money to give to the DIL I do not want her to come back later asking for more money and saying the document is not legal.

Thanks
Carl.

doodling

Hi,

As you say "daughter in law" then I assume they are married.

The only definitve document in that case will be the consent order detailing the asset split endorsed by the court as part of the divorce.  Without that, either party can reopen the agreement any time they like.

There is no value in having any other document.

cgphillips8

Hi,

Since they are not proceeding with divorce at the moment just the house situation and having their own places can an asset split be created before the divorce?
The only major subject is the equity they woul have got if they had sold the house. There are no children involved and both have their own jobs with their own pensions. Other itens within the house are minor considerstions.

Rgds
Carl.

DE_612183

If they are not selling - where is the equity money coming from?

If this is not a divorce financial split - then even if there is an agreement at the point of divorce a financial settlement needs to be made which usually starts off at 50/50 - so even though the house is owned 100% by your son it would still form consideration for the split.

Is there any reason why they are not getting divorced?

cgphillips8

Current house value is approx £290k, outstanding mortgage is £190k so if they sold there would be £100k equity and therfore a 50/50 split. This is amount I will give my son.
I am sure a divorce will follow but at moment they are working on how to go their seperate ways 

AskAsk

if you are giving money to your son to buy out his wife then that money may be lost when it comes to the divorce and she gets half of the joint assets.

until the financial order is agreed by the court through the divorce process, she will continue to have claim on joint assets and vice versa.  any legal agreement, including a legal separation agreement, can be voided through the financial order process.

also without a divorce in place, your DIL will have to pay additional stamp duty when she buys another property as she would still be considered to be connected to your son and so she would be considered to have another property.

doodling

Hi,

There is nothing stopping your son and DIL separating their finances, him buying her out of the house, etc. BUT any agreements they make are not final until they are endorsed by a court.

Until that happens, both your son and DIL can change their minds about what the financial settlement should look like.  In reality, a court is extremely unlikely to order your son to return the house to joint ownership or transfer it to your DIL but it could certainly change (increase or decrease) the sum of money he is paying her to buy her out if it felt that it was unfair.

The only way to definitively settle the finances is a consent order as part of a divorce.

cgphillips8

Is this also the same if there is a conveyance of equity done by a solicitor and my son is the sole name on the property and mortgage?

AskAsk

cgphillips8 said:

Is this also the same if there is a conveyance of equity done by a solicitor and my son is the sole name on the property and mortgage?

yes, until the financial order is issued by the court, they are still considered married for assets irrespective of what actions are taken.

the reason i know is that i am in this particular process at the moment.

doodling

Hi,

cgphillips8 said:

Is this also the same if there is a conveyance of equity done by a solicitor and my son is the sole name on the property and mortgage?

Yes.

The same applies if your son wins the lottery or gets a big inheritance in a couple of years time - if a consent order hasn't been issued by a court as part of a divorce then your DIL can ask for half of the money and the starting point for a court will be that she is entitled to it.

If the intention is that these two people are permanently separating then it is best to get a divorce sorted as soon as possible, putting it off just creates more opportunities for issues to arise.

WYSPECIAL

If you want to protect your money then you need to lend it to your son and get it clearly drawn up as a repayable loan.

If you are gifting it  to him then you have to accept it is no longer yours and forms part of the matrimonial pot which your daughter in law has a claim to.