Reasonable financial agreement on separation

[spursmummy]

My ex and I separated in July 2009 and have kept things amicable and worked out finances between us. DD lives with me, ex lives about an hour away. The house is in joint names. In September this year DD starts school and I will solely take on the mortgage payments and bills (ex is currently paying towards them). I can't afford to buy him out of his share of the house.

I want to suggest that with effect from September if I sell the house ex could have 2/5ths of the profit relating to 3 years' worth of him living in the house/contributing towards the mortgage (so if I sold it after 10 years of me solely paying the mortgage I would have 3/5ths of 3 years' worth plus all of 7 years' worth). I've thought of that split seeing as I maintain the house and have DD so I think I deserve to have more. I also want a level of maintenance (we earn pretty much the same and he has his own rent to pay so I'm not planning on asking for loads, enough to pay half of breakfast and after school clubs and towards clothes/food etc). Can anyone let me know if this is reasonable please. Or if I should be asking for more!

I do intend to get a divorce in due course so I also want to know if this could form part of the agreement without causing a legal problem.

Thanks.

[Resolution]

Lordy - you don't half make it complicated!

He'll have to pay you maintenance at CSA rates - 15% of net for one child, less one-seventh for every 52 nights a year she staqys over with him. As your incomes are similar you're not entitled to maintenance for yourself above this rate.

I don't understand your logic over the house. His interest in it will have to be set by reference to a percentage of the equity. You'll have to work out if the property has to be sold now, or kept on. That depends on whether you can adequately rehouse you and your daughter with what you get. If there isn't much equity in the property anyway you might be in for a good shout in getting all of it now. Talk of 'profit' in the future can only complicate things.

The court's first priority on divorce is to ensure that any children are appropriately housed.

[sneezecakesmum]

Res. I have understood from previous posts in relation to the OP query. The partner remaining in the property pays all bills and mortgage as they are deemed to be in a more favourable position than the excluded partner.

The excluded partner gets a notional 'rent' usually half the interest only section of the mortgage - not paid obviously but absorbed into the mortgage.

Any capital paid off by the partner remaining in the property is credited to them when the house is sold.

Is this correct regarding poster?

[Resolution]

The issue of occupation rent doesn't really arise here. They are married, and the court has a wide discretion within divorce, which is what is being spoken about.

What the OP doesn't mention is how much equity is in the property. That is a crucial point really. Any talk of splitting profit I take to mean any future increase in equity. Either husband retains an interest in the property or not. If he does, it will need to be for a set percentage.

Just to clarify - if they weren't married, the partner who leaves is put in no better position by continuing to contribute towards the bills than one who pays nothing (or just CSA). This includes the mortgage.

In fact, the one who pays nothing is in a better position. They have more spare cash every month (or, more often than not, it's simply the case that expenditure can actually match income), and if the party remaining in the house gets an early reality check that they can't afford to keep the house on, then they may be more amenable to a sale.

It is correct to say that any payments that reduce the capital balance of the mortgage, post separation, will be credited to whoever makes the payment, though if it is a parent paying mortgage in lieu of an equivalent amount of CSA maintenance then that won't count.

[sneezecakesmum]

Thank you.
It seems that marriage makes the situation more fluid and gives the court huge leeway in deciding what is best (esp for the child) whereas it is easier to predict the outcome in unmarried couples.

[spursmummy]

Thanks to both of you for your comments and the information you've given. When I said profit it should've been equity. There's roughly £20k of equity in the house at the moment (moving from the north west to the south east just before the credit crunch really messed up our finances!) and I'd really like to stay in the house - it's in the middle of the town DD and I live in and so handy for nursery, schools, shops, station etc.

I don't want to sell myself short and struggle but by the same token I don't want to suggest something to my ex which is unreasonable. So from what Resolution has said I think it would be better to agree a percentage of the equity if I sell the house in future - is that right?

[Resolution]

NO!!!

There's so little equity in the property that if you are having the kids you might well end up with the house. The split is based on equity today, not in 5 years time.

You say you can't afford to buy him out. If that's true, the court will just give you the house. What are the pensions worth anyway? Does he earn more than you?

[spursmummy]

Thanks Resolution. I've checked my finances over the last couple of days and there's more like £27k of equity in the house. I have a small deferred final salary pension, the last transfer value calculated a couple of years ago was around £24k. I also have a defined contribution pension with my current employer, the pot's probably worth £12-13k. Exh has tiny GPP with Standard Life from a previous job (the pot's worth £1-2K) but nothing else. He's changed jobs recently and I'm assuming he earns more than me now but I don't know for definite.

Do I have to go through the pension sharing order route? I'd rather keep it out of any final divorce settlement as I don't see why he should have any of it! I'm hoping DD won't be financially dependent on me when she's left uni but I suppose there's a good chance she will be and I honestly don't know if exH will still be on the scene to help her out.

I currently pay roughly 60% of the mortgage payments and bills, and all the childcare costs. The rest of my monthly pay goes towards food, TV and phone/mobile bills and personal credit card bill. I have no money to spare at the end of each month. Would this be considered sufficient to prove that I can't buy exH out?

Sorry to keep asking questions and thank you for your help so far, you've really helped me out.

[Resolution]

Your pensions are worth too little to worry about. The court should all but ignore them.
If your incomes are similar this is a clean break case. He should pay child maintenance at CSA rates. If you can, with that income, afford the mortgage I think you'll get the house and if you won't find a lender to lend you more than the current mortgage you shouldn't have to pay him a penny. The fact that you have a 4 year old you'll have to look after for the next 14 years is very significant.