Help needed - relationship break up and sale of house

adamwilliams50

Hi,

I wonder if someone can help.
I bought a house with my girlfriend about 12 months ago, however we have since decided to split.

We purchased the house for £167k, £145k of which was mortgaged and £22k from a deposit which was my money (not ours).

The mortgage payments+ bills have all been paid 50:50 and I have a legal agreement which states that in the event of a relationship breakdown I will receive the first 14% of equity in the house given my deposit - the remainder will be split 50:50.

I am still living in the house and would like to take the house + mortgage on board (so transfer of equity) which I am currently investigating with my mortgage lender.

I have also just had 3 valuations on the property, and on average it looks as if the house is now worth less - some £9k less

If I was to take the mortgage on board (and keep the property), given that there is no equity in the house (-ve equity) should my girlfriend have to give me half of the potential loss (£4500)? or is this my risk for deciding to take the property on board?
Also, for a transfer of equity, do we both need to have separate solicitors to avoid conflict of interest?

any advice would be greatly appreciated.

many thanks

mountainofdebt

Unless I am reading your post wrong, you are saying that the valuations show that your property would be put on the market at £158,000 (using the average valuation figure) so assuming that the mortagaged amount is £145,000 (for sake of argument) then there is £13,000 equity in the house.

So using your agreement, you have claim on the first 14% of this figure i.e. £1,820.

It sounds as if problem (from your point of view) is that the agreement was written only assuming that property prices would rise and not fall

Gorgeous_George

The sums should work like this.

14% of £9K is £1,260. This is yours to pay. The remaining £7,740 should be split 50:50 with each of you paying £3,870.

Of course, you won't know what the house is worth unless you sell.

Is there a tie-in period for your mortgage? If so, she ought to pay
1. half of the exit penalty
2. half of the solicitor's fees and
3. half of the Estate Agent's fees

That could add up to about £14K for her to find to get out of her commitment.

GG

PasturesNew

Gorgeous_George wrote: »

The sums should work like this.

14% of £9K is £1,260. This is yours to pay. The remaining £7,740 should be split 50:50 with each of you paying £3,870.

Of course, you won't know what the house is worth unless you sell.

Is there a tie-in period for your mortgage? If so, she ought to pay
1. half of the exit penalty
2. half of the solicitor's fees and
3. half of the Estate Agent's fees

That could add up to about £14K for her to find to get out of her commitment.

GG

WIthout checking, this looks spot on.

Oh dear...

mountainofdebt

I think the crucial piece of information is what definition of equity does the agreement use?

epz_2

sounds like you set up the contract so you would have benifited had houses gone up, as it has gone down then tough break, her share is worth less but so is you 22k share.

otoh a 5.3% drop aint going to put you in propper negative equity which would have made the breakup really nasty

rdpro

adamwilliams50 wrote: »

for a transfer of equity, do we both need to have separate solicitors to avoid conflict of interest?

Yes, you do - although you can get 1 sol'r to deal with the entire transfer by acting for either of you, a second isn't really needed ( just done 2 sep ToE within 2 months myself)

Rikki

You paid the deposit and you both paid the mortgage equally.

The house is now worth £9,000 less.

In my way of thinking. You should consider the mortgage like rent and the loss is from the capital investment ie: your deposit.

If you were to sell the house, you would pay off the mortgage but you would not recoup the full deposit you paid.

So you take over the mortgage an unfortunately there is no equity for your ex, but I don't think you should expect her to give you £4500. Investments go up and down.

Probably haven't explained it very well.

space_rider

I had to use seperate solicitor too. Didn`t cost me much but that was 9 years ago.

Little_Chicken

Rikki wrote: »

You paid the deposit and you both paid the mortgage equally.

The house is now worth £9,000 less.

In my way of thinking. You should consider the mortgage like rent and the loss is from the capital investment ie: your deposit.

If you were to sell the house, you would pay off the mortgage but you would not recoup the full deposit you paid.

So you take over the mortgage an unfortunately there is no equity for your ex, but I don't think you should expect her to give you £4500. Investments go up and down.

Probably haven't explained it very well.

I agree. Most posters are being very harsh here. I don't think you can expect your ex to pay £14k out as I pressume at some point you were both in this for the long haul. And in the longterm the property price is likely to rise. You probably wouldn't feel too good about yourself if you make your ex pay through the nose to 'get out'.:A

real1314

well, taking the view of her paying you off, as GG says, she's looking at £14k possibly, however, she could equally argue that she could buy YOU out.

In that event, she'd need to take on the mortgage, then pay out your deposit of £22k, but less the %age loss (£167k - 9k = 95%), so your £22k is now £20,900, then you'd have to pay YOUR share of the potential costs,which if we're going with GG's estimates amount to around £8k (you've got the larger share of equity and hence costs). So you'd have to knock that off, leaving her to pay you £13k (roughly) to take over the property/mortgage.

So, she could pay you £14k for you to keep it, or you would have to pay her £13k for her to keep it. Split the difference and ask for £500.00 if you're staying or offer her £500.00 for her to take it on?

Or am I looking at it too simply????


Might as well not bother really if you are going to stay. Call it quits.