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?

Why did you make extra mortgage repayments? Does she know you have made extra repayments? Did you usually split the repayments or did you cover them in the basis she would rent elsewhere?
How did you come to the agreement on you would live In the property and she would not?

Stoppinby, that's exactly the point. The fact that no rent was paid to the sister and the fact that the sister didn't pay the mortgage effectively cancel each other out, meaning the 50/50 split is reasonable.

The op doesn't seem to see that the sister is entitled to that spilt because she didn't pay half the mortgage.

That's why the op owing rent is being brought up.

I think you should pay half the deposit and half the equity plus the difference between what you paid on the mortgage and what she paid in rent

It seems as though you've lived in the flat as though it were yours alone. And now it's come to crunch time you're resentful.
But put yourself in your sis's shoes for a moment.
She's rented for years. She's stayed with her parents. All the while having her name on a mortgage so unable to buy a place with her DH. She let that slide because that was the deal she struck with you. Now you want to change the deal.

StoppinBy, that’s exactly what people are saying - the OP paid the full mortgage in lieu of paying rent to her sister and therefore despite not paying the mortgage, the sister is entitled to 50% of the profit as agreed at the beginning.

The OP is trying to argue the sister isn’t entitled to 50% because she didn’t pay the mortgage while conveniently ignoring the fact she also received no income by way of rent.

Get some advice from a lawyer that deals with these type of disputes.

I've read your updates. You should have charged your sister 50% of maintenance costs and shouldn't have made overpayments without protecting it with a new legal agreement which said you both get 50% of the deposit, you get back overpayments then the rest is 50/50. The fact that she lived rent free with your parents is neither here or there since I assume that you would have had that choice too. You conveniently forget that she might have wanted her 50% years ago but she didn't force a sale then.

Don't forget that she is liable for 50% of the selling costs.

If you had failed to make mortgage payments your sister would have been held equally responsible despite not living there or receiving any rental income.

It should be split 50/50. You were both equally liable for the mortgage, maintenance costs etc. You have covered your half directly. She has covered her half by effectively charging you rent but having you pay it directly to the mortgage company.

I don't understand how you possibly think it fair that your way would mean you benefitting massively from your sisters share of the property without compensating her at all.

I think that, over time, you have come to see the house you live in as your own. But it isn't, it's half hers.

I think yab a bit u.

To be completely equitable, you should work out what her share of market rental value after letting fees would have been. And compare that to the £25k that would have been her share of paying the mortgage off.

Then you each get half of the deposit amount, half of the increase in value (after selling fees). And the balance (£30k paid off on mortgage) is split according to the market rental vs mortgage split. So if the market rental would have been £60k and you've paid £50k over the years, she's entitled to £5k more of the £30k than you are. If market rental would have been £40k, you're entitled to £5k more.

That's the most equitable way that I can see. Whether that's the most fair way, given it wasn't what was agreed at the outset is a different matter. If it was my sibling, for the sake of simplicity and sticking to an agreement, I'd split all proceeds 50:50.

I think you have to see the ‘extra’ you have paid as rent from your husband for his living in the house and pay your sister what was agreed.

I realise you're past this now, but if your sister wasn't going to live in the flat or do anything at all towards it, I'm surprised your parents didn't simply give you half the money each to use for what you thought best

On balance though, and if you don't want to buy her out, I'd have to vote for 50/50

You should definitely have any overpayments back.

It was a silly situation though. Your sister should have paid half of the mortgage and insurance, but then you should have paid half of her rent in return. And of course she wasn't paying any. But surely she would've preferred to live in the flat rather than with parents?

Not sure how everyone is saying you owe your sister her half of the 'rent'? In that case the sister I also responsible for paying half of the mortgage and her half of all costs associated with the maintenance of the property.

She owes half the rent if she wants to take into account the fact that she has paid the mortgage and other costs. People are saying that the costs would probably even out so it would be easier just to go with the original agreement.

It was a stupid arrangement. This is why it is best never to mix business with family or friends. If you really want to be fair you could work out exactly what has been spent on mortgage and other costs and then take away a realistic amount (i.e. market value) for half the rent. If there is a big difference, discuss with her. If there isn't you should let it drop.

I would expect half of the deposit, plus half of the equity. I didn't pay any of the mortgage so I'm not entitled to any of it.

What do you mean that she is not entitled to any of the mortgage. It is a loan not an asset. The sister want half the value of the house because it is half hers.

Yanbu. Whilst your parents paid the deposit you have put in a further £30,000.

So if you parents paid in £50,000 and you paid in £30,000 then out of the first £80,000 back your sister should get £25000 and you get £55000 then the rest is split 50/50.

It seems your dsis could have lived in the place but chose not to. That was her choice. If she wanted complete privacy and her own place then it comes at a cost.

I think that, over time, you have come to see the house you live in as your own. But it isn't, it's half hers

I think there's probably a lot in this ...

50 50
YABU - what does your DH think ?

I don't think you are being unreasonable but these things should have been discussed at the beginning when your sister chose not to live there. The agreement was 50/50 and changing that now is incredibly problematic especially as one of your parents and your sister are taking an opposing point of view. It has become an emotive issue now so the bigger question is whether you value your relationship with your sister more than the money.

Whilst technically on the deeds it was half your sisters when you bought it as your sister chose to pay nothing towards her "half" of the property then because you have paid £30k off your half then you should get that back.

I presume your dsis wanted to have her own place and her rent might have been less than 50% of the cost of insurance, maintenance mortgage, council tax, water rates etc that needed paying out. That was her choice.

It seems your dsis could have lived in the place but chose not to. That was her choice. If she wanted complete privacy and her own place then it comes at a cost.

But you could reverse that and apply it to the OP ‘s position: she got “complete privacy” and “her own place” because of her sister’s decision.

It would be really interesting to hear the other sister’s version of the situation. I could easily imagine a reverse OP from the sister’s point of view.

I'd split it 50/50 as agreed. If you have actually enhanced the value, e.g. put in new windows or whatever, I'd take those costs out of the amount.

I don't think the OP objected to her dsis moving in. In fact I think she would have preferred it.

I take it as the property was bought for op and her sister then ops dh wasn't on the scene at the time.

That meant all the mortgage council tax maintenance and all the other expenses were on the ops shoulders whilst her dsis didn't have any responsibilities.

To be honest you should both have addressed this when she moved out/failed to move in. I'd get it all sealed and sorted now and then move on.