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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To think that DH has been treated unfairly financially by his parents?

304 replies

TravellingToad · 29/05/2014 06:37

I'm struggling to get my head around something but have a feeling that it's unfair.

13 years ago DH and his sister bought a flat together. It was £120,000 and they didn't have any money. Their parents paid the deposit. DH and SIL paid the mortgage equally for 2 years. After 2 years SIL wanted to move out. DH wanted to stay but couldn't afford to buy out SIL.

The parents have SIL £60,000 on DHs behalf as her share of the flat. So that was 11 years ago. Yesterday DH sold the flat (for exact same as he paid which was £120,000)

His parents thinks he owes them £60,000 as they bought out his sister for him all those years ago. This seems unfair to me but I can't quite put my finger on why. I think it's because SIL didn't put any money into the purchase (neither of them did) but was gifted £60k after living there 2 years. DH serviced the mortgage for all that time, 13 years and has come away having to pay his parents £60k whereas SIL has that amount in her pocket. DH obviously has £60k in his pocket too from the other half of the flat but he paid into it for all those years so it's not really a bonus it's just what he put in. Sils £60k is pure profit

Can someone see clearly for me is this fair? Happy to pay it if it's fair. Their parents are extremely keen for both children to have been treated equally.

OP posts:
EddieStobbart · 30/05/2014 02:38

The DH wasn't given £60k, he was given £12k (in the end, originally he was given half this so £6k). The remaining £108,000 was borrowed from the bank and the DH has spent the last 13 years repaying this.

The sister was given £60k. It is the sister who owes the parents the bulk of the cash. The parents essentially gave the sister an advance on the final 100% ownership of the original flat forgetting that at the time the bank owned 90%. The DH then spent the next decade paying off that bank loan.

The DH owes his parents £12k plus what ever interest they would want to charge for that loan. £120k flat, parents provided £12k, DH paid off bank loan of £108k.

The sister owes £60k. If her property also cost £120k, parents provided £60k, sister has bank loan of £60k to pay.

The parents are looking at the wrong child to get the cash from. The DH only owes them £12k as that's all they gave him. If the parents want to keep things fair as stated in the OP they either need to ask for £60k back from the sister or take nothing from the DH and reduce the amount their daughter needs to repay them by £12k so down to a mere £48k.

The existence of the bank finance and the fact the parents are ignoring it is what is causing all the confusion here but the OP's DH really really needs to tell his parents that his sister owes them most of the money. If he doesn't he'll have bought a flat worth £120,000 for (£108,000 + £60,000) so £168,000, the parents will be down by their initial £12,000 stake and the sister will have had £60,000 of her property paid for mainly by her brother.

ObvioulsyChangedNameForThis · 30/05/2014 05:20

Eddie = you are speaking sense but you may lose your mind going over and over it to try to explain it to the people who can't/ won't/ don't RTFT.

Dubjackeen · 30/05/2014 06:06

Very clearly explained Eddie.
SIL did extremely well out of this. If the parents want money back from anyone, it should be her.
OP, YANBU.

FishWithABicycle · 30/05/2014 06:50

Eddie has explained it much clearer than anyone else. OP your DH should just stick to this as it is simple enough to be understood: you didn't give me £60k, you gave me £12k. You gave my sister £60k, not me - which is fine, no jealousy.

If the £12k was a loan not a gift he can pay it back (assuming DSis is going to pay back the £60k at some point).

TheSultanofPing · 30/05/2014 06:51

You haven't read the thread property parent.

Pil only paid the deposit on the flat, then for some reason gave the sister 60k.

They shouldn't have given her this money as the flat was still mortgaged...in other words owned by the bank.

The Dh has ended up more or less paying the 108k mortgage by himself and is now being asked to pay an additional 60k Shock

saintlyjimjams · 30/05/2014 06:52

Yes give parents Eddie's explanation. He will be paying twice for a portion of the flat if he pays them 60k

Bearbehind · 30/05/2014 07:04

I can't believe that some people still think the dh owes the parents £60k even after it has been repeatedly explained.

parentalunit how exactly have you reached the conclusion that the PIL gave the DH £60k- they only ever contributed £12k into the house.

Are you the PIL?

Surely there can't be anyone else who doesn't understand something that it pretty bloody obvious and has been summarised on multiple occasions on here Hmm

SanityClause · 30/05/2014 07:05

Everyone is making the assumption that the value of the property didn't change during the first two years, just because it is worth the same now as when it was first bought.

To buy the sister out, the DH needed to give half the market value of the property, less half the mortgage still outstanding. If the property had increased sharply in value in the two years (not unheard of) then maybe the £60K was reasonable to buy her out.

In which case, the SIL made a shrewd (in hindsight) decision to cash in on her profits after two years, while the DH decided to stay in, hoping for still more gains, which, unfortunately, have not materialised.

(I hope the sister declared the capital gain on her tax return.)

Bearbehind · 30/05/2014 07:12

sanityclause, it's a good point but the property is unlikely to have doubled in 2 years and any negotiations on reaching a buy out value would have had to involve the DH- he didn't even know how much
PIL had given the sister.

Just re-read your post parentalunit and I can only assume you've reached the conclusion you have as you've completely missed the fact that the property had a £108k mortgage on it- the parents did not by it outright and give it to their children to share.

merrymouse · 30/05/2014 07:32

Assuming the house was owned equally, to buy the sister out the DH needed to pay her their equity in the housework that time x 50%.

She would only be entitled to £60k if at the point she moved their joint equity was £120k, either because the mortgage had been paid off or the house had risen in value.

Or, another way of looking at it, he could have paid her 60k but then she would also have needed to pay off her 50% share of the mortgage loan at the same time.

merrymouse · 30/05/2014 07:34

Aargh

Their equity in the house at the time.

PiratePanda · 30/05/2014 07:36

Clearly OP needs to take this to an accountant. I can't help but think the collective muddle of MNers have muddied the waters.

magoria · 30/05/2014 07:47

H owes 12k + 1/2 any equity at time sister left.

Sister owes 60k - any equity at time she left.

PicaK · 30/05/2014 07:48

Agree that the only way the parents weren't making a terrible error is if the property abroad doubled its value in two years. Unlikely and your dh's lack of knowledge about the deal suggests not.

I don't think the waters are muddied
As long as you realise there was a mortgage involved - which PIL forgot about!

Please update OP - so want to know how they reacted when the penny dropoed.

Octopal7 · 30/05/2014 07:49

My head hurts

ComposHat · 30/05/2014 07:49

I don't think it is muddied at all panda the situation is relatively straightforward and Eddie explains it really clearly.

Who owes who what is perfectly clear. The difficult bit is resolving it all without a family bust up.

magoria · 30/05/2014 08:00

Oops missed the second 1/2 on the sisters equity

Bearbehind · 30/05/2014 08:04

I think piratepanda meant posters like parentalunit have muddied the waters by posting complete shite and confusing the issue because they haven't RTFT properly.

PiratePanda · 30/05/2014 08:23

Bear, that's exactly what I meant.

whois · 30/05/2014 08:34

I can't believe that some people still think the dh owes the parents £60k even after it has been repeatedly explained.

Because an awful lot of people are really not very clever and have zero understanding of finance and debt. Ergo how this problem started in the first place.

Who owes who what is perfectly clear. The difficult bit is resolving it all without a family bust up.

This level of money is worth falling out over though! Hopefully PILs will see sense once it's been explained to them clearly. Doubt it tho...

nauticant · 30/05/2014 08:37

But that doesn't mean that the OP needs to take this to an accountant. All she needs to do is read the thread and take advice from the posts that make sense and ignore the stupid ones.

FuckYouChrisAndThatHorse · 30/05/2014 08:41

I can still only make sense of why PILs did this if the story went like this:-

PIL: dsil, your DB can't afford to buy you out, so we will give you £60k to pay off your half of the mortgage, you may have a bit left over since you've been paying out for two years, you can keep that.

PIL: Mr TravellingToad, we have sorted things with your sister, don't worry about it.

Mr Travelling Toad assumes they have paid her the equity and not half the value of the house.

Mr Travelling Toad and dsil go to the bank to put the mortgage in his name, dsil says she needs to pay off her half, Mr TT is confused and says she doesn't, they just need to take her name off the deeds and mortgage. Dsil is pleased and agrees.

The End.

All a terrible misunderstanding, but at least one that makes sense.

Unless PIL are fully aware that the money was not paid into the flat.

ChickenFajitasAndNachos · 30/05/2014 08:55

I don't get how the brother couldn't afford to by out his sister but still managed to take over the entire 108k ish mortgage.

zoemaguire · 30/05/2014 09:05

Because the parents didn't understand that buying someone out doesn't mean giving them 50% of the value of the property that is still 90% owned by the bank! He could take on an extra mortgage of 60k but clearly not afford to just give his sister 60k outright (for no good reason!)

I agree that this thread is amazing evidence of how bad financial illiteracy can get! Why is this stuff not taught in schools?!

EhricLovesTheBhrothers · 30/05/2014 09:09

I guess because the family thought that 'buying someone out' of a property means giving them half the resale value rather than half the equity!
The sister may have 'earnt' £3k equity, ish? That's what she should have got, not £60k. It's all so bizarre.
Earlier in the thread I thought that the £60k had been invested into the property, but seemingly it was just handed over to the sister. Thickos.