Separation & Negative Equity

sunsout · 15 August 2018 at 11:35AM

Hi all,

This is my first post and I wish it were a more upbeat one so apologies in advance.

My partner has told me she wants to separate after 15 years. We aren't married and we have lived together for 11 years in a house that I bought with the mortgage in my name and I put the deposit down out of my own money. I purchased the house brand new for 120k right before the financial collapse. Since then I have been in negative equity with the most recent valuation putting it at around 60k!!!! The mortgage outstanding is circa 90k leaving a 30k shortfall. During the time we have lived together my partner has contributed every month to the running costs of the home.

My partner has said she wants the house to be sold so she can get her half of the proceeds to start again. By proceeds she means 50% of the sale value. So, assuming we got 60k for it she is expecting to have 30k lump sum from it. However, I'm not sure where that would leave me because then I would have no home, and the remaining balance of the negative equity (60k if I paid my share of the proceeds off the remaining balance) with the mortgage being in my name only and therefore I wouldn't be able to get a new mortgage to buy somewhere else - I also have a loan as I've recently bought a car which is 15k to be repaid over the next 4 years so I have little room for manoeuvre. As far as my ex-partner is concerned she sees the remaining debt as not her concern and she just wants what she is entitled to which is half of the sale proceeds.

My position is that if my ex-partner forces a sale then surely the proceeds from the sale must go towards the outstanding mortgage balance in the first instance (leaving a 30k deficit in my name). I don't know where I stand then given my partner isn't on the mortgage in terms of her making a contribution to the negative equity.

I have tried to explain this i.e. essentially selling up means there's still debt but no asset. I am happy in the house and would rather stay there but I'm not sure how that will work in terms of my partner as she wants something to start again with.

Any advice here greatly appreciated. My ideal scenario would be that I remain in the property and my partner has a fair deal too based on circumstances. She wants to go back to her hometown and rent as opposed to buy. I thought about offering her some kind of sum given the chances that selling up just leaves us with a debt at the end but I have no idea what to offer her (nor how I will finance it) but having an idea of options would at least allow me to start planning.

As may be apparent, I am quite stressed about this. I'm worried about not having a place to live or the prospect of having to go bankrupt over this and don't know where to start with sorting this out.

unforeseen · 15 August 2018 at 11:41AM

If you sell the house then the lender has first call and so your partner will get nothing

sunsout · 15 August 2018 at 11:49AM

Thank you for your reply. Can my partner force a sale given the house is in my name only & given there is no financial justification for doing so in terms of her onward ability to get a new place (her name not on the mortgage etc). Given no financial incentive to force a sale I'm not sure why she is pushing this, I'm wondering whether she doesn't believe me that neither of us will have anything but she must have looked for herself which makes me think this is largely about trying to inconvenience me as much as possible (it's fair to say the separation is not amicable).

Assuming on that basis she agrees that selling is unwise, she would need something to start again. Is there a correct means of calculating what kind of payment that would be that I would be obliged to make?

TrickyDicky101 · 15 August 2018 at 11:51AM

You owe her nothing. I wouldn't offer her anything. All you have is debt which I'm sure she would be welcome to - but I am also sure she won't want!

Mortgage_Adviser · 15 August 2018 at 11:55AM

You are not married, she has merely contributed in paying you the rent. Even if there was any equity she would struggle to prove any entitlement to it.

You do not corrently own any equity just 30k debt.

If I was you I would tell her that I am in the process of investigating the option of selling the house and making her to pay 15k so half of the negative equity.

sunsout · 15 August 2018 at 11:59AM

Presumably with the mortgage being in my name she has no responsibility as far as the negative equity goes? Or am I incorrect in that assumption? I'm keen to be as open/honest/reasonable as possible. She is evidently unhappy given she has ended the relationship and seems to want to inconvenience me and I am trying to keep the stress levels down whilst we sort this out in a way that is fair to us both.

It sounds like the best option would be simply for her to move out and move on and I shoulder the debt given I want to remain in the property & any payment I might make to her would essentially be seen as a gift rather than something she is legally entitled to. I don't want her to struggle setting herself up again.

Niv · 15 August 2018 at 12:36PM

There is no equity so I do not understand what money she thinks she is going to get - Have you explained what negative equity is to her? It sounds like she does not currently understand it.

She cant force a sale in any case.

Does she have a job? If so, do not giver her a penny 'to set herself up' you have negative equity to sort out. If you want to be reasonable let her move out in her own time (within reason) and maybe leave a few bits in a box for a set time too - i.e. to make the transition easier.

At the end of the day, she ended the relationship, I don't see why you should be more out of pocket than you already will be with your negative equity.

This all assumes there are no kids involved.

BoGoF · 15 August 2018 at 12:41PM

You are being far too polite. Tell her half of nothing is nothing.

Were there are any expensive items she has contributed towards?

sunsout · 15 August 2018 at 12:55PM

Thanks again for the replies. To answer the questions from the last few responses:

There are no children involved. Just the two of us. She works full-time as do I.

As much as she seems to be unhappy I don't want her to struggle setting herself up. I've already said she can leave whatever she likes in the house when she moves out until such a time as she gets sorted if I were to be able to remain in the house (she may temporarily move back in with her parents who wouldn't have room for her stuff).

I guess from my side it does seem unfair she walks away with nothing so I was thinking of suggesting I offer her a small payment for a deposit/few months rent to start her off really just as a goodwill gesture. I know that probably sounds daft to most people but I guess the entire thing hasn't sunk in yet.

I have explained what negative equity is many times over the years and I think it, in part, has contributed to things. We initially shared the same outlook when we got together. Neither of us wanted to pursue the typical family life nor did we want a big house or any of the large debt that goes with it.

We bought off-plan in an area that was to be massively regenerated with all kinds of infrastructure etc. This all get shelved following the crash and the circa 80% of unsold stock was sold to the local housing association who then rent them out largely to people on benefits, single parents, lots of people with substance abuse issues so combined with the regeneration getting shelved this is what has severely impacted on the prices and I think she feels like it's my fault she has been "trapped" even though up until fairly recently we shared the same wants/desires for our lives. Neither of us wanted children or to spend money on an expensive & (at least to us) meaningless wedding.

However, as the years have rolled by and her friends have married, had families and moved into "nice areas" with big houses she has changed her position & now wants all of those things whereas I am still the same as I ever was. Maybe I'm abnormal for not wanting those things but I honestly never have and I have always been open about that from day one with everyone in my life, family friends, my now-ex. I just wanted someone to share life's adventures with and had dreams of retiring early and doing lots of travelling together.

sunsout · 15 August 2018 at 1:01PM

BoGoF wrote: »

You are being far too polite. Tell her half of nothing is nothing.

Were there are any expensive items she has contributed towards?

Not really. Everything in the house over the years I have bought and paid for. Any work that has needed doing etc I have paid for. She did buy a couples of sets of drawers for the spare room but that's it. Any time anything has gone wrong in the house, boiler breakdown, broken door locks, leaks etc I have always been the one to organise and pay for repairs.

Mortgage_Adviser · 15 August 2018 at 1:17PM

When she moves ouut and rents privately she will have a set rental payment every month and her landlords would fix or replace anything that breaks down in the house.

You also pay monthly payment to the mortgage company but have to pay for any maintenance.

You and her work full time.

Her situation after the separation will be more favourable.

If some one should pay another anything it should be her.

She is dumping you and demanding the money from you that you do not have.

If I was you I would give her a week to get out and tell her if she does not all her belongings would be thrown away on the street and locks changed.

She is not a tenant of yours, not even a lodger so has not right to be in the property.

Separation & Negative Equity

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