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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:
SanityClause · 29/05/2014 09:06

Why is everyone saying the PIL have messed it up.

The OP's DH messed it up.

He wasn't so worried about someone paying £60K when it wasn't real money to him. Now it is real money to him, he's realising something went wrong.

Why are the PIL being blamed for the OP's DH's mistake?

SanityClause · 29/05/2014 09:06

Exactly, Please!

MonstrousPippin · 29/05/2014 09:08

I agree with PicaK. It sounds like your parents loaned 60k to SIL with DH being an unfortunate middle man.

I'm no expert and just basing this on my own viewpoint as an ordinary person.

Imagine SIL and DH took out separate mortgages for their halves of the original property. SIL wanted to leave and buy somewhere else. The parents loan DH £60k. He pays that money to SIL to buy her out of the flat and the flat is transferred to his ownership. Before she moves to a new property though, she has to pay her mortgage company. She pays off her mortgage and is left with the remainder (probably not a lot after 2 years).

Meanwhile, SIL's half of DH's property has been paid off. He can carry on paying his separate mortgage because her half is paid off. He's benefited from the £60k loan he got from his parents. 11 years ago, he could then effectively have released the equity in her half by extending his own mortgage and then immediately repaid his parents (so by now it would have been simpiler for parents to have loaned the money directly to SIL).

What actually happened was SIL was able to walk away from DH's property completely, no strings attached, leaving him with the full original mortgage. She then used that £60k to invest in another property and not the original one.

Basically, the money wasn't invested in the first property because SIL didn't use it to pay off her half of the mortgage. DH took on her debt AND gave her the 60k on top of that. It should have been one or the other.

YANBU

maddening · 29/05/2014 09:09

The mistake was the parents giving sil 60k of money - they should have only given her 50% of the equity as you dh continued to pay the full mortgage.

here you have the dh paying 120k (by clearing the mortgage ) and the parents paying 60k (ignoring the deposit) so tge sil owes her parents - not sure if they could legally claom from her though.

UptheChimney · 29/05/2014 09:13

SiL owes her parents surely?

SpringBreaker · 29/05/2014 09:15

Am I the only one who finds it hard to believe that a property would be the same value now that it was 13 years ago?

SanityClause · 29/05/2014 09:19

Why does SIL owe the parents?

The parents loaned £60K to their son. He used it to buy something worth about £10K from the SIL. That was a poor financial decision on his behalf.

He still owes his parents £60K, though.

BauerTime · 29/05/2014 09:19

What a mess! I dont envy you sorting this one out. Very serious financial error by PIL, SIL and DH all of those years ago.

Out of interest, did you spot the discrepancy in what PIL are asking for or did DH? I mean if you hadn't picked it up would he have just given them back the 60k?

It sounds like the money was given and taken in good faith with all 3 parties signed up to the terms 11 years ago and its only now that someone with more financial nous has spotted the error that its a problem.

Yes, DH does come off pretty badly from this arrangement but if he agreed to it initially then he can't really go back on it, regardless of how unfair it is.

Gingerandcocoa · 29/05/2014 09:20

Your SIL got an amazing deal out of it! Put ZERO money into a house and got 60k for it!!!!

Has anyone tried talking to her about it? Perhaps she will see the mistake your PIL / DH made and will agree to pay her PIL back. If nothing else she should be thankful she got to keep 60k for 11 years without paying interest for it.

Gingerandcocoa · 29/05/2014 09:21

Sanity but given that the recipient of the mistake was the OP's SIL, so a close relative, I'd argue that they could try to get the money back from her...

BauerTime · 29/05/2014 09:21

Unless you can all sit down and agree another way. I think that you and DH are still going to end up paying over the odds but maybe SIL is reasonable and will see that she had benefitted hugely from this and will want to assist in rectifying it.

Gingerandcocoa · 29/05/2014 09:23

OP have you spoken to the SIL about this???

mamababa · 29/05/2014 09:23

They gave her too much in the first place IMO but I think you need to think of it in this way,

After 2 years, he couldn't afford to buy her out so effectively his parents loaned him the money so that he could do so. They just gave it straight to her but in reality they loaned it to him to buy her out so he could keep the property. If the bank had lent him this money he would owe them, but would have likely been paying this back monthly. So yes he does owe them the money. The issue is over the amount as what should have happened is a proper valuation when sil was bought out but as they (all) didn't do this then yes they want their money. If the flat was now worth £200k he would be in profit but as it's just the same yes he is losing out somewhat but he has to take his share of responsibility for that and chalk it up to experience I think. He should have been paying them back some of their money over the time of the mortgage

maddening · 29/05/2014 09:23

Ps the amount the sil should have received was half the deposit (as the parents seem to have gifted this to them both) plus 50% of the equity. They would then have claim to that back now as they paod it on dh behalf.

montysma1 · 29/05/2014 09:25

The parents were acting as a bank, Royal Bank of Parent (RBP).

When the son needed to buy out the sister at a cost of 60k he did not have the money to do so. In effect he was loaned the 60k to buy out the sister by RBP (who were doing a marvelous interest free deal at the time).

This meant that son owed RBP the 60k that they lent him and which he chose to use to buy out the sister giving him full ownership of the flat.

The sister then had 60k but no ownership of the flat. The sister did not in effect recieve 60k from RBP, she recieved it from the brother using his loan from RBP.

When the flat is sold, the RBP is entitled from the proceeds of the sale, to the reypayment of the interest free loan it made.

The sister at this point doesnt owe anybody anything. Her share in the flat was bought from her long ago by the son using the interest free loan from the parents.

The parents didnt give the sister 60k, they gave the brother 60k and he chose to use it to buy out the sister.

In effect the son has had an interest free loan of 60k from the parents to help him own a house. The fact that no profit was made is nobodys fault.

Thats just leaving the deposit money out of it which we might assume was a gift. If not a gift then he also needs to repay RBP for the 6k interest free loan that he recieved for the deposit. (As does the sister)

SanityClause · 29/05/2014 09:25

Well, that's down to the SIL, surely, Ginger.

Perhaps the DH could now go to her and point out the mistake made so many years ago, and see if she will pay him back the approx £50K she was paid.

But why should the parents have to get the money back off the SIL? Surely the issue is between the brother and sister?

MonstrousPippin · 29/05/2014 09:26

Ginger is right. OP has said the PIL are keen to be perfectly fair to both DH and SIL. Perhaps all of this needs to be discussed and some sort of settlement agreed on and an agreement to never dabble in such things in the future without getting it all in writing and verified by someone who knows what they're on about!

Gingerandcocoa · 29/05/2014 09:28

Sanity I do kind of agree that the DH is the one who owes the money to the parents rather than the sister. He's the one who was given the money to buy the sister out. He should have spotted the mistake.

But hopefully the SIL will agree to at least give back some of the money - OR, if she can't release equity from her flat, then the "extra' money which she was given 11 years ago could be considered a gift from her parents, and taken out of her inheritance or something. Who knows!

SanityClause · 29/05/2014 09:33

Well, I too hope they can sort it out amicably between them.

I just feel a bit annoyed with people effectively saying, "nah, nothing to do with the DH, the PIL need to get the money off the SIL."

The PIL helped out their son, and people want him to tell them, "no you did it wrong, go and sort it out yourselves, now."

EhricLovesTheBhrothers · 29/05/2014 09:34

Hang on, how does sil have £60k in her pocket if pils invested it in flat? All they did was buy her share and a bit more. Meaning DH should repay them. What did sil gain from this? I'm unclear.

Ohnonotagen · 29/05/2014 09:36

Montysma> you are forgetting that fact tho at the point he bought her out that SIL share wasn't worth £60k as she also 'owned' half of the mortgage, so at the time she was bought out she sold half of the asset and also transferred her full liability to her brother

Original poster
TravellingToad · 29/05/2014 09:37

DH didnt know it was 60k at the time he just got told "we've sorted it with Sarah", no figures until much later.

I think we are past the point of sorting it fairly, now we just want to sort it that everyones happy

OP posts:
maddening · 29/05/2014 09:37

Ps I guess morally whoever came up with the sums and drove the sil ttransaction should shoulder it and ask for the sil to do the right thing and pay back the overpayment - if she was financially able to pay it or make payments over a period then she would be unreasonable (even if not legally obliged) to not pay it back considering it was a mistake that she benefited from from her family.

So imo it should be up to the person who made the mistake and is between them and sil.

Longtalljosie · 29/05/2014 09:39

No, hang on. Your SIL needs to give your PIL most of the money back.

If your PIL wanted to buy your sister out they should have given your DH / the mortgage company £60k. That would have meant he only had a mortgage on the remaining £60k, and when it was sold, the money would have been released, and he could have paid them back plus any equity.

Did they give your SIL the money in the expectation she would use it to buy your DH out? But she didn't - she kept it.

Original poster
TravellingToad · 29/05/2014 09:40

As I said we are going to float the idea past MIL that we dont pay them anything, for reasons said upthread

OP posts:
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