Really need some impartial advice on money row with sister!

[Cornberry]

I am in desperate need of an impartial opinion on a sensitive issue.

My parents gave my sister and I a substantial deposit to buy a flat a few years ago. Since that time I have lived in the flat and my sister has lived elsewhere in rented accommodation and now she lives abroad - she had the option to live in the flat too but chose not to. In that time I have taken care of the flat and obviously I (and later on my husband) have paid all the bills and the mortgage etc. We agreed at the outset that my sister and I should split the proceeds 50-50 when it came time to sell.

Now that is time to sell and looking at the figures I realise that our mortgage has come down £30,000 which obviously I have paid since I have been living here. And when we split the money left over after repaying it my sister will get half which seems fair enough because that is what we agreed. However I realise that to bring down our mortgage by £30,000 I have paid in over 50,000 because of the interest. So now it occurs to me that if we split everything 50-50 my sister will get back 15 K, which is half of the money repaid on the mortgage but I will also get in 15 K having paid in 50. This strikes me as unfair. She hasn’t paid anything at all into the flat, which was the agreement and that’s fine, but it seems to me that she should receive a proportion of the increase in value on the property but I am unsure why after I have paid over 50 K into the mortgage to bring it down 30k that she should get 15,000 of it having paid nothing and I should get in 15,000 of it having paid in 50,000. Does that make sense?

Interestingly, my parents do not agree. One of them thinks my sister should get half as agreed and the other one thinks that the point about the interest is a relevant one. I would dearly like to have some opinions from people who are unbiased because I honestly don’t think it’s possible for any of us to be completely impartial on this. I suggested to my sister that she should indeed receive her half of the increase in value but not the repayments, bearing in mind she has never put a cent, and if we split it with her we will she will get more out of the money we paid in than we will.

One issue seems to be one of “changing the goalposts” and my sister has accused me of going back on our agreement to get more money. But the problem is that I was very clueless going into this and I am certain that we had known the considerations at the outset we would have made a different agreement.

Am I being unreasonable?

**Should say even if there was not

The flat would have increased in value with or without your mortgage payments - if someone else had been paying them. She could’ve invested in something else but together you chose that. It wouldn’t be worth going if you didn’t see any of the profit. You definitely need to share that.

If you keep all the money you paid into the mortgage then you have lived there rent-free. You will just have invested money in building equity each money and you will recoup this if you sell and don't split it 50/50 with your sister.

You would have been paying 'rent' if you either actually paid her half the market raye each month and she had used this to pay her half of the mortgage. The sums would have cancelled each other out and no money would have needed to actually change hands but you would ultimately be splitting the house equity 50:50.

If you keep all the equity then you won't have given her a penny for the years you have lived in a house she owned half of and she did not have the benefit of living in.

If the roles were reversed and she had lived there all that time and hadn't given you anything would you still be as unable to see the unfairness of her trying to keep all the equity to herself.

You’re double counting the money you paid in over the years.
EITHER it was an investment in the property to give you more entitlement to the profit.
OR it was rent you paid to live same as your sister paid where she was living.

You cannot say “I paid fair rent” then also say “the money I paid gives me more entitlement to the profit”. One or the other.

You cannot say “I paid fair rent” then also say “the money I paid gives me more entitlement to the profit”. One or the other.

I think a PP said upthread that the OP has come to think of it as "her" flat. I think that's a very accurate & perceptive interpretation of the tone & undertone of the OP's posts.

I pay slightly less than what a tenant would pay.

This is the really crucial point. You pay slightly less. So your sister has lost out financially over the entire deal, not you. She's obviously netting that off against you looking after the flat. You're then coming after her for £15k as well! If people are giving you a different view in real life then they are not thinking it through, or just trying to shut you up. You need to understand this because you are trying to cause a family feud that will never end by holding onto the idea that you were somehow hard done by. Does pulling this one line out help you get it yet?

Why come ask AIBU....be told you are being unreasonable with detailed explanation of why, and then just keep stubbornly saying you and your dad don't think you're being unreasonable. You're trying to pull a fast one on your sister and only willing to understand posters who agree with you!

If you pay slightly less than a tenant would pay, you have benefited from paying below market rent. She would have benefited more from you renting the flat out, paying the mortgage from rental income, using the excess to subsidize your own rental accommodation and now splitting sale proceeds 50:50.

So 50:50 now is an excellent deal for you!

Someone made a good point to me. If you buy a company with a silent partner who does nothing at all but invest half, while you run it and do all the work, should you split it 50/50? I think not, but then it depends on the original agreement as many people have commented.

If a limited company, the person running the business would get wages. That would be the equivalent of you being able to live in the property.

The profit would be split 50/50 as would the value of the business including any increase in value. That is the equivalent of the value of the house.

That argument supports a 50/50 split too.

fieau um, no, people keep asking me questions.

Other people, I didn’t say not to split the equity, just the mortgage repayments.

Anyway the thing that isn’t really coming across is that it’s not about the 15 grand. It’s about what is right in principle. People keep saying on the one hand I should pay her rent, and on the other that I should stick to our original agreement. Well our original agreement was that I would live here, pay the mortgage and we would each retrieve our deposits and split any increase in value. None of us were clever enough, or perhaps venal enough to consider the mortgage payments aspect. And I am not being venal now. I came to ask a question and I accept the answers. I don’t think you can begrudge me wanting to explain myself when I am being called a grabby, greedy CF.

Money IS emotional. And money plus family relationships is often an incendiary combination. I run a small business with my brother and it is incredibly fraught because it is a microcosm of all the fault lines in our brother/sister relationship. I am aware that it has potential to create a rift at any time.

For your situation, it is always going to be difficult to a acknowledge that your arithmetic is wrong, which it is. Lots of posters have explained it in all sorts of different ways but you really don’t want to see it. That’s because you have your hopes pinned on a figure for which you are not eligible. No-one likes to look mean or grasping. Thing is, OP, you’ve come up with a big figure to your advantage and you don’t want to let it go. It never was right and it’s not yours. It was hypothetical. Let it go.

At the end of the day, your sums are wrong and you will have to retreat. It may not be a nice feeling, but you have lost nothing! If you keep to the agreement, you will have done well and so will your sister. Win-win.

It’s not easy to admit you were wrong, and sometimes it feels more comfortable to complain about people being are right all along than admit you made a mistake. See: Brexit.

Sell the flat, enjoy your profit, buy a new property with your DH and enjoy it being 100% yours.

I think the sad thing is, regardless of where you go from here, either you will upset your sister or she you. Both of you cant get the outcome you want so essentially one loses or feels they do.

The original agreement stands so 50/50

I get the feeling that the OP may have thought that the flat was soley hers from day one.

A few years ago I looked in to part ownership of properties under some government scheme, I would own X% of the property, be responsible for the maintenance on the property yet pay rent on the Y% of the property that I didn't own. If I chose to move out and sell I would get X% and the company would get y%.

Seems to me that that is exactly the case here.
Anything other than 50/50 is ripping your sister off.

None of us were clever enough, or perhaps venal enough to consider the mortgage payments aspect.

Maybe you really are just not numerate enough to understand: you paid the mortgage instead of paying rent.

Well our original agreement was that I would live here, pay the mortgage and we would each retrieve our deposits and split any increase in value

Yet in your 1st post, you say that:

she had the option to live in the flat too but chose not to

Make up your mind, OP.

I'm feeling increasingly sorry for your sister ...

so when you paid And I didn’t live rent free. I pay slightly less than what a tenant would pay. I am unclear why many people seem to think I have got free board...? where did that money go? towards the mortgage? if you remove the (paid) mortgage, then you have been living free - so technically (apart from the overpayments) half of what you have paid (slightly less as you say) is money your sister should have had...

does it make mroe sense now?

@Cornberry I'm with you here.

The mortgage is made up of repayment capital and interest. The interest you paid you shouldn't be reimbursed for as it is cancelled out by the occupation rent your sister is owed.

However, the capital repayment you should be reimbursed for.

Those saying you should have been paying rent, well she should have been

...her share of the mortgage interest payments so they cancel each other out.

Can anyone do a diagram?

it’s not about the 15 grand. It’s about what is right in principle.

Oh come on OP, you're hoping to benefit. Maybe start thinking along the lines of it’s not about the 15 grand. It’s about what will keep family relations peaceful. You made a deal, stick with it, suck it up, move on. You're very lucky to be given a property in the first place, so count your blessings and don't fall out with your sister/family over this.

It's a very simple calculation.

Market rent during the period occupied minus actual mortgage payment is what is owed to your sister.

Add up maintenance costs which is insurance, ground rent but exclude council tax because that's normally covered by the tenant. Take 50%. That is what your sister owes you. You can't charge your sister for 'taking care of the place'.

Proceeds from sale of flat should be after fees are paid for solicitor and agent. From that amount adjust for the rent not paid to your sister. That money is hers. Minus overpayments you made against the mortgage. That money is yours. The remaining amount is split 50/50.

I was short changed by £10k by my sister. I will never forget what she did and I will never have anything to do with her again. She acted like she was an angel and told everyone in our family I had been ripping her off. It was the opposite. I've never corrected her. She needs help but I won't give it until she stands up to her abusive DH.

Also the point about us not paying rent I don’t understand. We pay the mortgage which is equivalent of paying rent.

Imagine it like this;

Rental value of flat = £1k per month.
Mortgage = £1k per month.

(Plucking figures from thin air.)

You should have paid sister half of the going rate of renting the property. So £500 per month. You didn't.

But! She should have paid half the mortgage. £500 per month. She didn't.

Instead of paying her the £500 for renting her half of the flat, only for her to pay it straight back to the bank, you paid the full £1k directly to the bank.

You lived in a property worth £1k per month. You paid £1k per month.

If I'm reading this right...
She lived rent free with parents
You paid the mortgage.
It is fair for you to deduct your mortgage repayments and then split the profit - if you'd lived rent free you'd not have made mortgage payments. I'd she'd been paying equally monthly costs as you then I'd say split profits without deduction. Compare monthly costs - and def deduct mortgage overpayment amount!
Simple.

Argh, OP, you're not getting it and until you do you're always going to feel aggrieved. Okay. Imagine neither of you had lived in the flat. You would have split the mortgage 50/50 and ALSO split the income from the rent 50/50. This would have covered the mortgage with a small profit. So your sister would have owned 50% of the flat AND been taking home her half of the small profit each month.

Your sister hasn't been paying the mortgage but she also hasn't been receiving the rental income. You have been paying the mortgage but you haven't been giving her the rental income which is rightfully hers. Instead you've cut out the middle man and given it directly to the mortgage company. That means you both own an equal share in the property.

The only anomalies are a) the overpayments you've made and b) the profit she would have made. They probably cancel each other out but you could sit down and work it out precisely if you wanted to.

Figure out what the rental income would have been in total. Half it. Then take away half of what you've paid off the mortgage. Whatever's remaining is what you owe your sister on top of her 50% share. If it's a minus figure, she owes you. But either way she gets 50% of the total value.