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?

If she wanted her room rented out or wanted rent from you while not living there she should have said that. She was happy not to do that and happy to piss money down the drain renting elsewhere which were her personal choices.*
Only because the agreement was the op lived in the house and paid the mortgage. I'm sure that she would have addressed those issues if at any point she thought that the op would try to renege on the agreement now.

There haven't been any specific overpayments, what OP is describing is a normal capital repayment mortgage

OP stated in one of her earlier posts that she had made overpayments

Why would OP overpay the mortgage though considering that she knew that the sister owned half the house? That would be a mad thing to do.

My analogy is if you and your sister bought a car jointly for £2000 and you both took out an interest only loan of £1000 each.

You used the car. You really wanted your sister to use it but she refused and used someone else's car for free and expected you to make her interest only loan repayments.

You pay the interest on her loan as well as your own to stop the car being repossessed and then you paid off £300 of your loan.

You sell the car for £3000.
The question is would the sister expect after the loan is repaid £1500 or would she expect £1650 being her half of the car plus half of what op has paid off the loan.

I think the only way to go about it is you right off the mortgage interest as having the whole place to your self but you treat half the mortgage borrowings as sister's and your half has been repaid by £30000 and then split the rest 50/50.

Sister does appear to be someone who wants the easy life and not want to pay for anything if she thinks she can get away with it and at least one parent is allowing her to do this

You used the car. You really wanted your sister to use it but she refused and used someone else's car for free and expected you to make her interest only loan repayments.

I somehow doubt that OP really wanted her sister to move in with her and her husband. A house is not a car as you can rent a house out, something the sister could have done if OP hadn't been living there with her DH. You can argue that the sister choose not to live there but that didn't mean OP was forced to live there and that meant it couldn't be rented out.

You can’t ignore the fact that you lived there so benefitted from your mortgage payments.
You owe your sister a difference between market rent and actual mortgage payment. She owes you maintenance costs, service costs, insurance, ground rent.
The rest you divide 50/50 - she didn’t just sign the paper, she put her name on the mortgage and allowed you and your husband to live there while she had to do alternative arrangements. Her living with your parents rent free is irrelevant as you still had the flat to yourselves while she lived with them. You keep forgetting that you both bought a flat but the only one enjoying it was you.

I think the only way to go about it is you right off the mortgage interest as having the whole place to your self but you treat half the mortgage borrowings as sister's and your half has been repaid by £30000 and then split the rest 50/50.

As most posters have stated, a fairer way would be to treat half of the mortgage costs including interest and maintenance costs as the sisters but then deduct half the rent she would have received if OP hadn't lived there. There probably won't be any difference but it would be ironic if it means OP owes her sister rather than the other way around.

Oliversmumsarmy

You really wanted your sister to use it

where does the OP ever say this?

From what I can see her intention was always to live in the flat without the sister there.

Why would OP overpay the mortgage though considering that she knew that the sister owned half the house? That would be a mad thing to do.

Agreed.

@Boysnme - She's just confused, in her first post she gave figures that align with standard capital repayment sums, it's only because other posters misunderstood her points that she grasped onto the word "overpayments". That isn't what she's done at all.

She did also say

I have also made overpayments on our mortgage, which of course bring down the overall costs quite a bit.

So it’s whether the overpayments were enough to benefit you in bringing down the repayments by more that your over payment. It’s difficult to understand why you’d do this.

I suspect that she either didn't make overpayment in reality or she is so used to treating the flat as her own that she totally forgot that her sisters owns it as much as she does.

*You used the car. You really wanted your sister to use it but she refused and used someone else's car for free and expected you to make her interest only loan repayments.

I somehow doubt that OP really wanted her sister to move in with her and her husband*

In the op it says

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

Probably because the sister didn’t want to fork out for a mortgage or maintenance or council tax and preferred to stay at home rent free with probably food provided and laundry done.

Yes the sister could have rented her room out to help with the mortgage payments.

But she didn’t

Yes the sister could have moved in instead of moving to another place nearby then paying rent to a 3rd party .

But she didn’t.

Op has maintained and paid out £50,000 in mortgage payments. £25000 being what the sister should have paid.

But she didn’t

In that of course was the paying off of the mortgage to the time of £30,000 and now the sister wants her share of that.

Nowhere has op said she objected to her sister moving in. All along her sister has refused to move in and refused to pay anything towards the mortgage and other expenses associated with the flat. Until now when she wants all the money paid in.

Yes sister owns 50% of the flat but she also has 50% of the mortgage.

A mortgage she has not paid a penny towards.

It is not ops fault she ended up living in the flat on her own but she has had to pay for the privilege whilst the sister has not taken any responsibility for the flat.

Oliversmumsarmy

Yes sister owns 50% of the flat but she also has 50% of the mortgage.

A mortgage she has not paid a penny towards.

The OP owns 50% of the flat a flat that she has that she has had 100% use of and has not paid a penny in rent towards.

If you really can't see how they cancel each other out then I despair.

You and your parents should never have gone into such a lackadaisical arrangement. Always draw up a proper agreement. What if you never sell the house? She should have been given her half of the deposit at the beginning when she chose not to live in it

The OP owns 50% of the flat a flat that she has that she has had 100% use of and has not paid a penny in rent towards

And paid 100% of all costs and maintenance associated with it.

The op was probably thinking when they bought the flat the sister was moving in and was going to be paying half the mortgage etc.

Imagine buying somewhere with a friend and after you have bought friend reneges on the deal and refuses to move in and pay anything towards the mortgage or costs.

You have budgetted for £450 per month out goings and suddenly being landed with £900 per month whilst friend wafts around at home with no outgoings and you are paying their debts which involve paying off the debt then friend wants to grab the portion that you have paid off as well.

I think ops sister is being a CF.

Parents should have insisted that sister move in or at the least pay her way but I get the impression sister can do no wrong and is allowed to do as she pleases with no consequences

Probably because the sister didn’t want to fork out for a mortgage or maintenance or council tax and preferred to stay at home rent free with probably food provided and laundry done.

She lived at home for one year. The rest of the time she rented. Where are these places you can rent and get free food and laundry services? I want to live there.

Oliversmumsarmy, that’s interesting because that’s exactly the impression I got of the OP who has spent years using her sister’s flat without paying her a penny rent (or I accept by paying her sister’s half of the mortgage in lieu of rent) and now thinks she is entitled to rip her off on the profit, ignoring what she accepts was the agreement at the time and ignoring the fact that she is therefore double counting half the mortgage payment (either she owes her sister back rent and after that is paid she can deduct the mortgage payments before splitting the rest or she doesn’t pay the back rent and the sister gets half the value on sale)

I think the OP may be in for a nasty shock if this does go to court - if she loses (which a qualified solicitor said earlier she will) she will have to pay her sister’s costs as well as her own

At home she got everything done and who is to say that parents weren’t paying for her rent or the rent was a much lower expense than the mortgage and all the expenses on the flat.

Equally maybe sister didn’t want to share and wanted her own space.

Or knew if she moved in and got roped into actually paying her debts she wouldn’t be able to suddenly go and live abroad if the job abroad didn’t cover her expenses in a foreign country and her debts here. She would have been tied down till either sister bought her out of the flat or the flat was sold.

In the example of part buying a house

If you chose to sell said house, your rental payment would be lost and you would still only receive your deposit and what you paid off the mortgage for your 50% of the house

Exactly. The other owner of the house would not be wanting 50% of your repayments.

In this case the sister didn’t charge op any rent for her room. Why would the op pay it as she could have said she wasn’t paying rent on a room she didn’t use.

But it wasn’t rent for a room, it was rent for half the the kitchen, the bathroom, the hallway, the living room etc. If the sister wanted the rent, she could have gone to court to either force the OP to rent out the property to a stranger (and split the rent 50/50) or sell the property. Instead, she trusted her sister and expected to give up short term gain (the rent) for long term benefit (half the equity).

Effectively the sister did make the mortgage repayments by letting the OP pay the rent she owed for the sister’s half of the flat directly to the mortgage company.

Do I think this was somewhat foolish of the sister - yes I do, trusting family to stick to a financial agreement without an iron clad written contract often ends in tears plus it means she now can’t get a first time buyer mortgage, has to pay capital gains on her share of the proceeds from the sale of the flat and hasn’t had use of what was effectively her money for years in order for her sister to benefit by way of sole occupancy of the flat and now try and benefit further by double counting half the mortgage payments.

It may well be that the sister is reasonably financially numerate or even took legal advice and consciously made these calculations which would explain why she is unhappy about the OP moving the goalposts now.

In any event, I don’t think it matters - the OP made an agreement at the beginning as to how the sale proceeds would be split and shouldn’t be looking to try and change things now.

Oliversmumsarmy

Imagine that you bought a place 50/50 with a friend and got the use of the whole place the friend expects his share in rent which equates to half the mortgage.

As for the maintenance costs, I suspect that all furniture in the property is owned by the OP and her DH (including white goods) and if you want to start on about building maintenance that is why the OP would be paying more than half the mortgage to her sister.

Either way the only fair way of splitting this is 50/50.

OliversMummy where the OP's sister was living is immaterial.

So many people seeing this emotionally and making moral judgements, instead of looking at the legal & financial agreement and principles.

Let me set this out for the hard of thinking:

1. OP and her sister own half the flat each.
2. OP says in her 1st post that it was agreed that She hasn’t paid anything at all into the flat, which was the agreement
3. The OP paid the whole mortgage, instead of just her half.
4. The sister didn't pay her half of the mortgage.

However ...

1. The OP didn't pay her sister her half of a market rent, which the sister is actually entitled to claim, if she [the sister] wasn't able to live there (particularly after the OP moved her husband in).
2. The OP admits that the total mortgage payment per month was less than the market rent per month.
3. Therefore, the OP needs to understand (together with some financially illiterate posters on this thread) that she and her sister are near as dammit quits.
4. The OP's mortgage payments are the equivalent of her sister's rental income foregone

It's so obvious & simple ...

The apparent 'profit' the OP has made in getting a flat to herself at cheaper than market rent goes in ground & lease charges etc, so I'd say both sisters are even in either expenditure (mortgage etc) or market rent foregone.

The OP has confused things further by saying:
However I realise that to bring down our mortgage by £30,000 I have paid in over 50,000 because of the interest
Demonstrating that she's pretty clueless about the basic conditions of a standard owner-occupied mortgage: that your repayments cover capital and interest. And that interest is always payable on a commercial/retail loan such as a mortgage from a bank. And that is part of the mortgage. How can anyone not know this sort of stuff? Beyond me

Maybe they should work out how much market rent would have been for the house and then the Op pays half that to her sister.
In this area you'd pay well over double for rent than you would on the mortgage-when we bought the house we were renting it was 1/3 the cost.

YABU. This is family. Your sister. Life really is too short and precious to be potentially falling out about money. If you love her just give her half and be happy that you have done the right thing and be happy for her.

Blimey there's some projection going on here about the op's flighty sister wafting around being waited on and jaunting off overseas.

The comparisons to shared ownership scheme are valid. In 50% shared ownership, OP would have been paying 50% mortgage + 50% rent, ground rent, service charge. On sale, OP would get 50% of sale proceeds (after paying off what was left on the 50% mortgage) and the shared ownership company would get the other 50%.

OP paid 100% mortgage rather than 50% but paid no rent! Most of us are saying that between siblings, in the absence of a proper agreement take the extra 50% mortgage will equate roughly to the 50% rent she should have paid. So call it quits and split the proceeds after repaying mortgage to the lender and agent fees 50:50.