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

[TravellingToad]

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.

I don't think the PILs are thinking of equity or house prices or anything. I think they are thinking they gave DH £120k and SIL £60k therefore DH owes them £60k.

SIL was def overpaid by the parents and should repay them some of the money.

When your husband bought her out all those years ago he owed her the value of her share of the house (which he was taking over from her) say £60k less whatever was her half of the mortgage (which he was also taking over from her). Assuming 10% deposit and during the first two years virtually no capital would have been paid off so her share of mortgage would have been approx £52k- £53k so to buy per out parents should have paid £7k to £8k not £60k!!!

So based on this your husband owes the parents about £7k and the SIL owes them about £53k.

Plus the original deposit of £6k which should be split 50:50 so in total DH owes them approx £10k.

Also think about it another way. DH has been paying a £120k mortgage for years, if SIL put the £60k against the same size house than she has been paying half as much on a £60k mortgage for years. Def her that should repay the money!!

The whole situation is unfair- sounds like it was a genuine error 11years ago, but the question is who should suffer as a result. Who agreed £60k for sil, did dh agree it and his parents just provide the cash, or did they do it and present it as a fait accompli?

but who suffers now? Sil definitely benefitted but doubt she will want to give it back now, or to pay her share of mortgage payments to keep it.

pils essentially lost £60k, which could have been invested elsewhere, do they actually need the money or would it be inherited later anyway?

Dh got on the ladder, now owns house, less sil equity share, should he have to lose this "debt" that pils paid on his behalf.

the issues are firstly fault for the original mistake, and secondly current financial situation. Given it is family, there has to be some consideration of who this would negatively impact the worst. Obviously if it had been an external arrangement, and someone overpaid or underpaid for something long ago they would have to chalk it up to experience, ot is only because it's family that the fair solution may be more complicated, taking into account who can afford to lose it and whether it will be inherited anyway. Maybe you could make arrangements for the inequity to ve rectified in their will but sorted out now in the most compassionate way (eg acknowledge this was wrong many years ago, but pay up now, with sil getting £50k less from their estate?)

To answer sanityclause the house is by necessity in our name. Mil is 60. Assuming she lives to 90 (her mother is 88 and still in her own home) then 30 years of rent even at current rate with no inflation or rent rise would be £180,000 and that's at a generous rent. Thereby paying them back many times over. But we aren't looking to get out of paying them the £60 if that's fair. I only mentioned the house as I people were saying we were entitled and essentially screwing over the PIL. Or trying to. So you can almost forget the house now!

Look at it this way.

As far as the parents were concerned, they loaned the DH £60K. He then gave all that money to his sister to purchase her half of the flat, even though the equity she owned in the flat was far far less than that. She got a cracking deal. But the DH still owes back the money he borrowed.

The parents are out of pocket to the tune of £60K, and why should they suffer because the DH paid his sister over the odds?

To answer katiekaye PIL were much richer than DH at the time who had just left uni. I only married DH in 2009 so I wasn't on the scene. The wealth comes from my business. Which is now obviously half DHs as we are married and he actually runs it as we have two under 2 and we decided I'd be the better sahp out of the two of us.

PIL did not scrimp to give DH the money it came out of cash savings that were in their bank.

Gosh this is so sad. The PILs and your DH made a really big error 9 years ago. What were they all thinking?

Because really your DH gave his DSis 60k that HE borrowed from his parents.

DH is going to speak to mil and suggest that we don't pay the £60k. PIL have one state pension, one head teachers pension and £100k from the sale of their old house in the bank.

Only outgoings are bills. Financially they are comfy. Bearing in mind the rent they are saving by living in out house this sounds fair? If mil isn't happy we will reconsider.

The other option is we pay them the £60k back and then they pay us rent. This would be a fab deal for us we would make a lot of money out of it! But that's not our first choice, as we aren't looking to gain from them

woah, woah, I am more astounded that you built up a hugely successful business and have let your dh run it, when he and his parents don't seem to be able to get their heads around financial concepts.

I don't think the PILs are thinking of equity or house prices or anything. I think they are thinking they gave DH £120k and SIL £60k therefore DH owes them £60k.
But they didn't, they gave DH 6k, the bank lent him (and SIL) the rest and he paid most of it back himself!

and you have married into a family that are willing to take great chunks of money from you when you have very teeny children. Do make sure you and your children are protected.

I hope you keep a close eye on the books of your business though as he doesn't seem very financially astute.

Do the PILs want the money or do they just want things to be fair? In which case you can explain the math (ie SIL got c£50k for no reason) and that your DH would need to inherit 50k more to equal things out.

They paid 10% deposit which was £12,000. So they gave DH that amount.

They gave dsis £60,000 which she then invested in a house. This may or may not have appreciated in value.

So they have invested £72,000 in total.

DH owes 12 and dsis owes 60. Or something proportionate.

oranges DH doesn't work in the accounts department :) He's a hugely successful marketing manager and has grown the company immensely, happily.

SIL wasn't entitled to £60k at the time. She was entitled to 50% of the deposit, plus 50% of the current equity ( it a lot after only 2 years).

The parents totally fucked this up and obviously don't understand basic economics.

^ what bedraggledmum says.

The sister got 60k but the brother only got the 12k (ie the10% deposit) and paid the whole mortgage except for the 2 years sister shared the flat.

Sister owes parents 60k
Brother owes parents 12k (ie the 10% deposit)

The parents made a mistake as they did not take into account the outstanding mortgage at the time and should not have given the sister £60k.

Sister has benefited from lower mortgage payments over the years and parents have lost interest on 60k over this time. BUT that is not mean the brother should pay 60k on top of the mortgage payments he has paid already. It should be the sister who pays as she has benefited from larger deposit for her property purchase and also would have been paying lower monthly mortgage as a result.

Or even more simply:
Brother got 12k (10% deposit) and paid whole mortgage less the 2 years sister stayed in flat.
2 years later, sister got 60k to use as deposit and is paying her own mortgage.
Why should brother pay parents the 60k? That is down to sister.

Tbh, £60k is worth falling out over... Suggest you stand your ground and explain the amount they SHOULD hsve given SIL.

Ohnonotagen sets it out well. DH owes PIL £10k and the rest was a gift from PIL to SIL. Idiots.

^ what bedraggledmum says.

The sister got 60k but the brother only got the 12k (ie the10% deposit) and paid the whole mortgage except for the 2 years sister shared the flat.

Sister owes parents 60k
Brother owes parents 12k (ie the 10% deposit)

The parents made a mistake as they did not take into account the outstanding mortgage at the time and should not have given the sister £60k.

Sister has benefited from lower mortgage payments over the years and parents have lost interest on 60k over this time. BUT that is not mean the brother should pay 60k on top of the mortgage payments he has paid already. It should be the sister who pays as she has benefited from larger deposit for her property purchase and also would have been paying lower monthly mortgage as a result.

Or even more simply:
Brother got 12k (10% deposit) and paid whole mortgage less the 2 years sister stayed in flat.
2 years later, sister got 60k to use as deposit and is paying her own mortgage.
Why should brother pay parents the 60k? That is down to sister.

So in all your parents spent £180k on your DH and his sister ? Just trying to be clear about this.
£120k which remains in the flat and then £60k for her to buy her own flat ?

No they did not spend 180k as they only paid 12k deposit for flat. They did not pay the rest of mortgage on flat, that was paid by the brother.

The pils have royally cocked up here. Sil never had £60k of equity so they should never have given her that much. Did none of you honestly realise this?

Do you know any financial bods or even just someone with a basic grasp of how money works who can explain it to them?

Sorry posted too soon.
The parents paid 12k deposit for flat and
60k to sister
so total parents paid is 72k

Good luck in sorting this out!

Ah yes sorry I see. So have I missed how much the deposit was ? Basically it sounds as though the PIL effectively took over SIL'S share of the deposit, but didn't participate in the mortgage, and the £60k gift is an entirely separate transaction which has no financial relation to the flat ownership.
So DH should keep all except the deposit plus SILS mortgage contributions (to the equity) and then to be fair he has missed out on the £60k gift th st his sister received ....

I think your DH does owe his parents the 60K.

Here's why:

11 years ago they gave SIL 60k on his behalf. Yes it was a stupid amount and way, way above what she should have been given. But he knew that's how much they were giving on his behalf and he went along with it. If he thought this was too much he should have said at the time. He accepted the terms of the arrangement and is now wanting to move the goal posts 11 years on.