Break up, joint ownership, cohabitation agreements signed

Bass_9 · 7 July 2018 at 6:43AM

I'm coming at this from a different angle, but it seems a shame you're in this situation so soon after buying, and after 10 years together. I understand there will probably be good reasons for splitting up, and I don't want to sound like a therapist, but you also say it isn't official. Are you sure you're both on the same page? Is there not a way you can work this out together?

Apologies for not providing any financial advice, but I guess it would be ideal if you could happily stay together and avoid all this... For once I'm being an optimist.

getmore4less · 7 July 2018 at 7:23AM

trying to get my head round the numbers to get an estimate of where you both are

I will cut out the non financial stuff

Nominada wrote: »

It was a 270k house. We put down 152k.
Most of of it was my fianc!’s money,
I paid about 1/3 and he paid 2/3 of the deposit.

(you £51k, him £101k mortgage £118k who paid the fees?)

We both agreed we would each pay half in the end.
(how were you planning to do this?)

Mortgage payments
we pay half each.
(thats another £59k worth of equity each)

He purchased all new appliances at his preference (though it shows up in the paperwork that I paid half on card, it was from his money).

We repainted the walls. We installed hardwood. He paid most of the costs, again.
(how much has been invested in the property what shares)

Fast track to now. We have a cohabitation agreement signed where either one of us can end things at any time and we choose to sell the house or not (to each other or to someone else). Profits are split 50/50 after deductions —
(what are the list of allowable deductions? did the agreement cover further investments like the floors? and what happens if you are at a loss)

I have 11.5k in savings.
I also borrowed 11.5k from our ‘cash’ which then technically I owe him...

If you consider that, I have no savings.

What's the place worth now?

there are some numbers missing but based on the short time frame I think we can work on the basis that everything is as the same cuurent value.

IE everything paid out buys the same bit of equity as if you paid it out to buy the place.

Total costs of purchase is £270k + fees + investments(costs of improvements/maintenance).

basing on an equitable basis

if you paid none of the extras your share is just the £51k+£59k £110k of £270+... that will be something under 40%. if you did pay some then you adjust for that.

you get back that % of the property less 1/2 the mortgage less the £11.5k loan.

NOTE there are sunk costs when buying/selling that you don't get back so every purchase is in negative equity based on total costs to buy/sell.

now the agreement may adjust exactly how you deal with the profit/loss which may mean you take 50% of the hit if there is a loss.

THE key to moving forwards and clean break is the OH getting a mortgage for the amount needed to get you off the deeds and loan.

Nominada · 7 July 2018 at 12:33PM

Ah -- yeah, sadly, we fell under the spell that things would get better once we bought our own place. But instead the problems between us just became more obvious. There's been a few big catalysts that brought me here -- but I have tried to work things out. Even after he cheated on me a few years ago I tried to work it out. I'm at that point where I realize I have one life, so I should live it happily and not force myself to try and be happy. Thank you though xoxo

Nominada · 7 July 2018 at 1:49PM

Fees and whatnot: We split the fees in half, for all the things

Exception is for the renovations (floors/paint) and the appliances. He chose to replace appliances even though it wasn't required. In total we paid about £2.3k for appliances and £9.2k for renovations. So £11.5k altogether. I paid for about £3k of that.

When we bought the house we looked at it from an individual perspective like, ok so can you afford half of this and I can afford half of this? This however was not written in the cohabitation, it was just an understanding... or misunderstanding. Needless to say it's moot now we've signed the cohabitation agreement and defined the point we split the sale equally.

So if there's £118k mortgage remaining, we are allowed to pay 20% lump sum every year... so £94.4 if we max that out in year 1. That minus any other monthly payments. He might be able to swing that, actually. We would get dinged the fee of remortgaging, which could be a massive amount, I don't know. My broker has yet to get back to me and I don't see it specified in the contract. But perhaps it is worth the cost of a clean break.

About a clean break: we are both in the same business and go to the same events (20+ a year)... so we WILL see each other and our circle of friends remains the same so... a clean break might be impossible. An amicable, responsible break... ideal.

The cohabitation agreement specifies that if we sell the house to a third party, then the sale proceeds minus financial encumbrance and fees/commissions shall be divided equally. If one of us intends to sell, we write that to the other party and they have first right of refusal and then 3 months or else it goes up on the market. And if there is an offer of 90% or higher than our asking price, we have to accept it unless we both agree not to. We each have right of first refusal to purchase the property from the other before selling to a third party. I paid for the cohabitation agreement but any legal fees thereafter will also be split half.

The cohabitation specifications are upheld whether we are together or not together, so legally, in writing... I can break up with him now, and let him live in the house, then choose to tell him I want to sell after the three years are up and he will be forced to sell or evaluate then. It's written that we have to agree to cooperate with all matters in the cohabitation agreement, so if one party wants to sell then the other party does have to cooperate (and if first right of refusal is exercised, there is a time limit of three months for affairs to be put in order or else the house is put on the market). Perhaps it is better to just pay the mortgage payments till then? There's nothing saying I -have- to pay 50% utilities and such... that can be up to whoever lives in the house. But is it financially a sink hole if I pay my share of the mortgage for the remaining 2.5 years?

So to sum up
Total house cost (not including furniture)

My current contributions: £51k (deposit) + £3k (renovations) + £1.7k(misc expenses), + £1.7k (current mortgage/tax contributions) = £57.4k

His current contributions: £101k (deposit) + £8k (renovations) + £1.7k (current mortgage/tax contributions) = £110.7k

If we didn't make lump payments to the mortgage and I paid every month from now till the mortgage is renegotiated (another 2.5 years), I would be paying £3.5k in mortgage/interest... £2.8k in property taxes... and £700 in property insurance. And that's rounding up to give myself room for error. Total of £7k

I estimate the house would be appraised at around £280k-£290k, as we did make some nice improvements.We purchased it for £270k.

Thrugelmir · 7 July 2018 at 1:59PM

Nominada wrote: »

I paid for the cohabitation agreement but any legal fees thereafter will also be split half.

Did you partner seek independent advice on the documents drawn up.

Nominada · 7 July 2018 at 2:02PM

Yes, there were two lawyers involved and he did seek independent legal advice as per the contract.

Bass_9 · 7 July 2018 at 3:06PM

Nominada wrote: »

Ah -- yeah, sadly, we fell under the spell that things would get better once we bought our own place. But instead the problems between us just became more obvious. There's been a few big catalysts that brought me here -- but I have tried to work things out. Even after he cheated on me a few years ago I tried to work it out. I'm at that point where I realize I have one life, so I should live it happily and not force myself to try and be happy. Thank you though xoxo

Sorry to hear that but glad you've got a positive focus for the future, as you say much better leaving now than trying to force yourself to be happy. For what it's worth best of luck OP, hope you can get the financial side sorted out amicably without too much pain.

x

Nominada · 7 July 2018 at 3:56PM

Update: I looked at the contract, it's a 3 year fixed mortgage, so if we sold the house we would ONLY be penalized 3 months worth of interest... or the interest rate deferential. Waiting to hear back about which. Estimates put the penalty at about 1.2k

Thrugelmir · 7 July 2018 at 6:18PM

Nominada wrote: »

Estimates put the penalty at about 1.2k

By the time the sale of the property is complete. More of the mortgage will have been repaid. There's selling costs to be considered, however £600 each is a small sum. When put in context of moving on with your lives.

Nominada · 7 July 2018 at 6:40PM

Thrugelmir wrote: »

By the time the sale of the property is complete. More of the mortgage will have been repaid. There's selling costs to be considered, however £600 each is a small sum. When put in context of moving on with your lives.

That's a fair assessment, yeah.

Thank you for the perspective! Now I suppose I should try to get through the terrible part about feeling terrible about ruining our home situation. Selling the house right away would put me at the economic advantage, but he will be able to make up for it in no time. It sounds cold but it might be best that way.

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Break up, joint ownership, cohabitation agreements signed

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