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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:
PorridgeBrain · 29/05/2014 07:08

When I said DH owes half of what they paid in over the 2 years I meant the part that paid off the mortgage, not the interest part. Also SIL owes the rest

KatieKaye · 29/05/2014 07:09

Parents enabled DH to keep house. Factoring 10% deposit! they should get 60% of £120.
Their taking over SILs 1/2 share effectively gave DH £60k at that time, and allowed him to keep living there.
What SIL did after she sold her 1/2 share to her parents is irrelevant. If she made good property investment and DHs was bad, then it's not her fault.
Sounds like exceptionally generous parents and a whole lot of entitlement! Oh and jealousy towards SIL. Should have sold the flat and let DH sort himself out, given the end result. Very ungrateful.
Give them their £60k and thAnk them profusely.

WillieWaggledagger · 29/05/2014 07:10

but tumble given that the mortgage is paid off, the h will have paid out a lot more than £60k in that time

he has had to invest more of his own money to receive that £60k. she received it outright and used it to buy another place. in terms of what she paid out to receive that £60k it was just the mortgage for 2 years (as deposit was paid)

tumbletumble · 29/05/2014 07:11

Hmm I suppose during that period SIL has benefited from lower mortgage payments as well as any capital appreciation on her property. So in that respect the gift has been worth more to her than to DH.

So actually I agree SIL has received more than DH. That's up to their parents though!

tumbletumble · 29/05/2014 07:12

Cross post Willie - yes, I agree with you.

WillieWaggledagger · 29/05/2014 07:12

however, i do think fairness and what he should do aren't necessarily the same thing. a lot of grief could come of not handing over the £60k and i would be inclined to do so

EhricLovesTheBhrothers · 29/05/2014 07:13

Your pils are pretty thick. They thought that they needed to give your SIL £60k as half the value of the flat, whereas in fact they should have done a far more complicated calculation which is beyond me, and which involves giving her half the equity she had accrued in the time she had paid the mortgage, ie, not much.
They paid the deposit so no buying out there. I suppose your DH owes them for his share of the deposit but that's about it. Your SIL ended up with probably £50k+ more than she should have got. She has leveraged that into owning property which is great, but if pils want it back they need to ask her for it.

tumbletumble · 29/05/2014 07:13

I agree with Willie (again!). He should just pay the 60,000 as the parents have been very generous to both and he will look mean if he says no.

whoneedssleepanyway · 29/05/2014 07:15

The mistake was giving 60k to the sister if they had sold it then for 120k they would have first cleared mortgage and then split the equity so say it was 90k mortgage she should have cleared 45k so would only have got 15k. DH has basically paid off her share of the mortgage...really SIL owes DH for whatever her half of mortgage was at time they sold.

tumbletumble · 29/05/2014 07:15

Yes I agree with Ehric too. The original error was made 11 years ago when they gave SIL too much.

whoneedssleepanyway · 29/05/2014 07:16

Time they sold her half to the parets

EhricLovesTheBhrothers · 29/05/2014 07:16

What does SIL think about it all?

PickledPorcupine · 29/05/2014 07:17

I've tried to put it into speculative numbers and I don't think it's fair at all!

So let's say...
PIL paid a £12000 deposit. (I'm classing this as a gift so they wouldn't be entitled to it back)
DH and SIL paid off £8000 of the capital in the time they lived there together.
SIL then sells her half to your DH.
DH pays off all the remaining capital of £80000.
Based on these figures she should have be entitled to £10000 as that is what she personally owned (half the original deposit + half the capital she paid). If his parents loaned him this to buy her out then he would owe them £10000 (it's not his fault they ridiculously over paid her).

EhricLovesTheBhrothers · 29/05/2014 07:17

I don't think he should hand over £60k to keep them happy!

Longtalljosie · 29/05/2014 07:18

You need the mortgage statement for the point she moved out. What would be half the deposit plus all her contributions to the mortgage until she left be? If that's still not enough, there are websites which estimate the value of a house over a timeframe. So if the value of housing had grown by say 5% over the two years, you could estimate what the equity in the house was then and give her half of that as well - again, not much.

larrygrylls · 29/05/2014 07:21

I was going to do the same as pickled porcupine. She is spot on. Effectively, his sister's parents gifted her 60k and him 12k. He then paid off the majority of 108k and should be entitled to keep it all minus two years worth of half the repayments.

KatieKaye · 29/05/2014 07:21

If the property had trebled in value, what then? Would DH be giving the excess over £60k to his parents and/or SIL?

stolemyusername · 29/05/2014 07:22

Let me get this straight in my head.

Dh & sis purchase flat with a deposit of £10,000 provided by pils.

Sis then moves out to purchase own home and pils gift her £60,000.

Did pils pay half of DH mortgage over the last 11 years?

If they didn't, then they are only entitled to half of the deposit back plus half of what ever equity was in the flat when sis moved out as apart from the 2 years sis was living there he has paid the full £120,000 himself.

WillieWaggledagger · 29/05/2014 07:23

what would they have done if the value of the flat had gone down in that time and it had eventually sold for £100k? still demanded the £60K? they were daft handing over half the value of a mortgaged flat, unless the difference between half the equity at that time and the £60k was a gift

hmm i'm increasingly thinking he should start by offering the deposit back and see what happens (though even then, sil's share of the deposit didn't get knocked off the £60k did it?)

BrokenStar · 29/05/2014 07:23

Seems to me that all your DH owes his DP's if half the deposit as that is what they gave him. He would only be owe them 60k if they'd paid that into the flat. For some bizarre reason they gave the SIL 60k cash.
She is owe them 60k and half the deposit as far as I can see. She wouldn't have be due anything after 2 years living in the flat as it hadn't increased in value.

CharityCase · 29/05/2014 07:24

PIL logic is completely flawed, because, as others have said, they shouldn't have given SIL 60k at the time. She was owed nothing like that. She should have been given half of any difference between valuation and market value at the time.

CateBlanket · 29/05/2014 07:24

No, no, no.

PIL didn't give OP's DH £60k when SIL wanted out, the muppets gave the £60k to SIL despite (I assume) there being little equity (if any) in the flat.

So SIL had taken out a joint mortgage for £120k (let's leave the deposit out for simplicity's sake). Had the flat been sold at original purchase price then the sale proceeds would have gone to bank to pay back loan and SIL would have got nothing (as would OP's DH).

However, PIL's gave SIL £60k and DH took over the £120k mortgage which he has been servicing ever since. PIL's are only entitled to their deposit back (plus interest due). If they had put £60k into house to reduce mortgage loan when SIL left it would have been different story but they didn't and I'm confused as to why they thought SIL was due that windfall.

Confused

Have I got that right, OP?

Original poster
TravellingToad · 29/05/2014 07:26

Christ. Confusing. Will let DH sort it out!
Thank you so much for all replies I will talk about it with DH and PIL.

They aren't doing too badly by the way because we recently bought them a house near ours and are letting them live rent free in it because they wanted to move near us but couldn't afford too! So we have given them waaaay more than this £60k in doing that hence me being slightly miffed at the moment. Anyway that's a whole different story.

OP posts:
WillieWaggledagger · 29/05/2014 07:26

the key thing is, how much equity was there after those two years

Sk8r · 29/05/2014 07:26

Flat was worth £120,000 when purchased and is worth £120,000 13 years later, so let's say for simplicity it was still worth £120,000 11 years ago.

Parents gave each child £6,000 (£12,000 deposit)
Sale price £120,000
less outstanding mortgage on day sister moved out
less £12,000
divide by 2
= X
is what sister should have received sister was given too much

Today your dh owes to the parents £6,000 (his share of the deposit I see it as a temporary loan not a gift) plus X (what sister should have been given. The remainder is his.

That is the fair way.