No more paying the mortgage

[CurtainWitcher]

My sister has been with her DP for sixteen years and they have a ten year old DD.

Her DP has refused to legally formalise their finances (marriage etc), as he believes he brought more to the table money-wise.

When they bought their house, he put roughly 70% of their deposit and she put in 30%. If it's sold, that split will be what they reach receive.

Their salaries go into a joint account and all bills, including mortgage, are paid from that.

Was I unreasonable to suggest that she stops paying the mortgage because she's paying off his share? They've lived there for thirteen years and have £50k left on the mortgage. is worth around £400k.

Was I unreasonable?

I presume she signed everything at the time, so won't have any legal comeback.

Tell her to gather together all the evidence and paperwork she has and seek independent advice from another solicitor about what should have been done and what she should have been advised at the time.

Once she's got some clarity on that, she tell her partner that she's taken legal advice, she's not happy about the fact that she wasn't given proper advice by the cousin, and that she wants to vary the agreement to reflect the fact that she's been paying 50% of the mortgage over the years and so any sale proceeds should be divided according to what has actually been put in rather than the size of the initial deposits.

If he refuses, she should look into reporting the cousin to the SRA for professional misconduct.

you should have advised her to change nothing until she seeks legal advice from a solicitor about her property rights.

@granadagirl

It's slightly unclear from your post what has actually happened.

Am I right in thinking you contributed 50% of the sale price in cash and your partner took out a mortgage for the other 50%?

Have you contributed to the mortgage at all?

Does your contract say that if you sell up you get your £80,000 back and then the rest is split, or what?

If you were paying the mortgage off jointly then it would make sense for you to get your deposit back and then get 50% of the rest of the sale proceeds.

If your partner was paying off the mortgage alone then it would make sense for the sale proceeds to be split 50:50 because you paid for half the initial purchase price with your cash deposit and he has funded the rest with his mortgage. The fact that he has been paying interest is irrelevant. Paying interest is what happens when you need to get a mortgage and can't finance your half in cash. He will also most likely have got a better interest rate based on the fact that the LTV was 50%, so he shouldn't be complaining because your cash deposit will have made his borrowing cheaper.

Get legal advise.

He may legally have rights to 70% of the house as they had a legal agreement.

HOWEVER since they have a child she might ultimately be entitled to more now if she has custody.

I certainly WOULD NOT take it at face value that just because they have this legal agreement that it is set in stone that she has no rights to the rest of the house...

HOWEVER since they have a child she might ultimately be entitled to more now if she has custody.

They aren't married, unfortunately.

I guess the fairest way would be to receive her proportion of the deposit back increased by the amount of the value increase. Same for him and then split the remainder of the sale proceeds minus the remains mortgage 50/50.

Peperethecat

Yes I paid50% deposit cash
We got mortgage together for the other 80k, BUT
Dp paid all the mortgage, I did offer to pay half the mortgage but that would of then meant I owed 75%
He didn’t want that, it had to be 50-50
So I never paid any of the mortgage payments

Deed of trust says
Tenants in common THIS DERD HEREBY ACKNOWLEDGES AND CONFIRMS
That the equity shall be held as follows
As the initial sum of 80k in favour of. Me
As to the residual equity
50.% in favour me
50% in favour dp

In that case I can see why your partner is annoyed. But it's the deed of trust you both signed that sets out who is entitled to what. You paying 50% of the mortgage wouldn't have meant you were entitled to a bigger share, because the deed of trust already established what shares you were entitled to. It would have made more sense for you to split the mortgage 50:50 because that would have been consistent with what the deed of trust says.

Are you still together?

She should have taken legal advice independently. Still should now!

peperethecat

Yes still together

I suggested paying half the mortgage before deed of trust was signed, thus saying if I paid have of the mortgage on property I would own 75% (yes?) no deed of trust signed at this time

I can’t see a solution, to stop the arguments
Anyone enlighten me???

What does your partner actually want?

Who's been paying the bills, granadagirl?
If he paid the mortgage but you paid the other living expenses (of a similar and equal amount) then effectively you've been splitting the costs 50/50. In that case it would seem reasonable that you had your 80k returned, and then spilt the proceeds 50/50.
If he has been supporting you (and your child), or at least paying his share of the bills as well of the mortgage then it would be fair to say that you both contributed 80k to the purchase price so that on the sale of the property you should both have your 80k investment returned, and the split any further proceeds 50/50.
You brought 80k to the transaction as cash. He also provided 80k but via a loan. The fact that he had to pay interest on it is irrelevant; it was the only way he could raise the money.

Sorry curtainwitcher

As mentioned dp pays mortgage, which is in both our names.

We both pay 50-50 for household bills,food

I think the deed was set up just in case say
12 mths down the line from purchasing house I would get my 80k back

As we’ve only got 2 yes left and this deed of trust stands, it’s caused a lot off arguments
Especially brought up after affair by him
Him. Not being fair
Me. Protecting my money

I don’t get why you think he’s been supporting me ?
I payed my side of the mortgage upfront

Can you explain ?

Is it right thing to do to keep the deed of trust for the next 2 years till mortgage is paid off?? Then we both have done 50-50 ?

Partner doesn’t want to do anything, it’s just a massive red flag in our relationship
And can’t be disgust, without an argument starting.

Who's been paying the bills, granadagirl?
If he paid the mortgage but you paid the other living expenses (of a similar and equal amount) then effectively you've been splitting the costs 50/50. In that case it would seem reasonable that you had your 80k returned, and then spilt the proceeds 50/50

That makes no sense. If granadagirl has bought her half of the house upfront and her dp didn't have his half and had to take out a loan (ie a mortgage) then bills, living expenses etc should be split 50/50 and then, when the house is sold it'll be 50/50

Granada girl could have kept her 80k in the bank and taken out a mortgage, but why would she, as she'd have to pay interest, her dp paying interest is neither here nor there. He pays because he didn't have a lump sum.

Financially it isn't in your interests to change anything. If the deed of trust was set up to ensure that when the property is sold you get your deposit back and the rest is split between you 50:50, it would have made more sense for you to be paying the mortgage 50:50 all along. But that isn't what you've done.

Did your partner have any legal advice at the time? Did he understand what he was signing up to? How long ago did you purchase the property and how long have you been arguing about this?

Do you think this is the main cause of the problems in your relationship, or are some of your problems unrelated?

If your priority is to appease your partner and try and get your relationship back on track then you could offer to pay half the mortgage from now on. But you are not legally obliged to, and if you think your relationship is not going to work out in the long term (you mention an affair and it sounds like there are a lot of trust issues) then you'd be better off looking out for your own financial interests and keeping things as they are. There's no need to change the deed of trust now or even after the mortgage has been paid off unless you want to.

Perhaps some relationship counselling would be the way forward.

@granadagirl Your deed of trust doesn't quite set things out as you have proceeded.
It says effectively that your initial £80k is ring fenced, which means it doesn't appreciate in value as I assume the property has. Further, the remaining equity over and above 80k is split equally.

I don't know the current value of the house but for argument's sake:
Original value £160k. You pay £80k, he takes out and pays mortgage for £80k. You literally pay 50% each (yes he pays more in interest but it's not relevant where/how he gets his funds to pay as him paying interest doesn't buy any "more house".)
If the house doesn't appreciate in value at all then you get back your ringfenced £80k AND 50% of the equity after that, another £40k = £120k.
He gets back the other 50% equity over £80k = £40k.
This sounds like the 75/25% share you offered.

In fact as the house will have appreciated and is, say, worth £500k by the time the mortgage is paid off you get:
£80k ringfenced + 50% of the further equity (£420k÷2 = £210k) = £290k.
He gets £210k despite having paid for exactly half the house.

I can see why he thinks it's a bit unfair because unless there has been negative equity, you'll always be due £80k more than him.

A fair thing would be to draw up a new deed to give you exactly 50/50. Though that doesn't really work until the mortgage is paid off.

I suppose it might have been possible to factor into the deed that 80k/50/50 would change to purely 50/50 when he had solely paid his own 80k, but that's quite fiddly and doesn't account for the imponderables in the years between (ie that you might split up before the mortgage is paid etc. Or he loses his job and you pay the mortgage for a while ... hmmm).

What @honeylulu said is true. But both you and your partner agreed to this arrangement when you signed up to it. Did your solicitor not explain how it would work? What did you both think you were signing up to?

The current arrangement is in your favour, so whilst it might be fairer to change it, you don't have to if you don't want to.

To compare it to the OP's friend's situation, you are in a similar situation to the person who will be getting 70% of the sale proceeds from the property when the mortgage has been split 50:50. In both cases an arrangement has been made which means that one person is entitled to more than they have paid in and the other person is entitled to less than they have paid in. In your case, you are the person who would be getting more than you have paid in, whereas in the OP's friend's case, she would be getting less than she has paid in.

The difference here is that this deed of trust presumably wasn't drawn up by your cousin or someone who had a conflict of interest as between you and your partner. You both should have been advised of and understood the consequences of this arrangement when you signed up to it.

@honeylulu I agree with what you have said with the the exception that the 80k is ring fenced as an amount.

It should be a percentage of the value of the property. So if it is, as the op said 50% of the value of the house, then the op gets 50% of the value of any equity back (her initial 80k or 50% of the total value) and then receives 50% of any remaining equity.

This also applys if the house price falls, so if the house price plummets to say 150k, then she gets 75k (which is her initial investment) and then a further 37.5k (her half of the equity).

Her initial investment will go up and down depending on the housing market the same as anyone with a mortgage who's out a deposit down. You can't expect to get your initial deposit back if house prices fall.

I went through this with my them dp as he had an inheritance he wanted to ring fence. I initially agreed with him in that we'd ring fence the amount, however our solicitor advised us against that due to the housing market being unstable. If the price dropped, I could have paid a mortgage for years and come away with nothing if the price dropped more than his initial deposit

Yes I agree. My calculations above are on the basis of assuming no negative equity.

I'm not saying a% share is not the right thing to do as the value of the deposit may appreciate or depreciate as you say. But my point is that ringfencing the actual amount is what has happened here (according to what Granada girl says about her deed of trust) so that's what I used in my illustrations.

Disclaimer : I'm a solicitor though not a property/ trusts one. I find this stuff fascinating though and I've spent far too much time on it today!

@copycopypaste But you can do any of these things. You can ring fence the initial amount, you can ring fence it as a percentage of the purchase price or eventual sale value (which will usually be to the person's advantage since prices tend to go up rather than down), or if as in @granadagirl's case it is 50% of the purchase price you can just say it's owned 50:50 if the other person pays the whole of the mortgage.

There isn't a set way of doing it. Anything can be agreed. So if you're at the point of purchase and looking to the future, you have to think about what you want to happen in terms of who is paying for what and who is getting what, and have an agreement drawn up which reflects that. If you're in the present, looking back at something you did in the past, it's what was actually written in the agreement you both signed that counts. The agreement @granadagirl has doesn't seem very fair on her partner, but that's what he signed up to.

It was explained to us both at the time off signing, that my 80k was ring fenced
In the invent off!!!!! After my 80k it was then pay remaining mortgage off, then 50-50 if anything over.

We both understood that, he even asked
Should I not pay half mortgage
It was then explained to him
That then at the end of mortgage I would have paid 75% off the 160k purchase price
He did not want that
Hence, he paying mortgage
I also knew I was responsible for the mortgage in the event of job lose etc, as my name is on it also.

It only came to arguments after his affair, as he must off realised what was written down.
We are still together, and fine apart from this
Ring fenced 80k which pisses him off

I wish it had never been written in a way(but it had to because off the amount of capital I put i, and it was a new relationship)
as it’s caused a lot of arguing in the later years
There is a trust issue between us
Me. Looking after myself and son in event off (Past affair, but I can’t hold him to ransom 5 years on )
He. He thinks I’ve done him over

I will suggest we get rid once the mortgage is paid off in 2 years
But in the background, there’s that niggle
Will he do it again once it’s been changed over to 50-50

It was then explained to him
That then at the end of mortgage I would have paid 75% off the 160k purchase price
He did not want that

But if he was objecting to you having a bigger share in the property, why did he then sign an agreement giving you a bigger share in the property?

What has actually happened is that you haven't paid half the mortgage but you still have a bigger share in the property because that is what the agreement that he signed says.

He doesn't sound very bright.

But I would also be tempted to see it as karma for him having had an affair.

After my 80k it was then pay remaining mortgage off, then 50-50 if anything over.

This perhaps made sense at the time, given that if you'd sold the property two years later there still would have been most of the mortgage left to pay and you'd both have been liable to pay it off because your name was on it as well.

The situation is a bit different now because the mortgage is nearly paid off and he has paid all of that, so it no longer makes a huge amount of sense.

But what he should have done was accept your offer to pay half the mortgage right from the beginning, because that was what would have made the most sense given the agreement you were signing up to.

He got the whole thing arse upwards. He misunderstood and thought that you would be entitled to a bigger share of the property if you were paying for half the mortgage, whereas in reality you were entitled to a bigger share of the property because that's what it said in your agreement, and so it made perfect sense for you to pay half the mortgage to reflect that.

If the agreement had said you would each be entitled to a share of the property proportionate to what you had put in then it would have made sense for him to say he didn't want you to contribute to the mortgage so it would stay 50:50. But that's not what the agreement said.

I will suggest we get rid once the mortgage is paid off in 2 years
But in the background, there’s that niggle
Will he do it again once it’s been changed over to 50-50

Are you sure you want to do this? It doesn't sound like you really trust him.

Going back to the ops question...

@CurtainWitcher

Can she even prove that she had no legal advice, no discussions at all with the solicitor at the time? The solicitor should have made sure she understood (although since he was working in favour for the dp then that was not going to happen), but she did also have a responsibility to understand what she was signing. The fact that she knows the numbers and is only now questioning it is kind of saying to me she knew the deal, but the relationship is now going downhill and she wants to know what she can get.

She needs proof she didn't know, and guidance from a solicitor who wasn't involved in it, no one from the same office either. But judging from what you've said, I think she's only going to get 30% overall, so roughly £120,000 from the sale. Bit of a drop from £200,000.

She needs to see a solicitor. I'd say only his deposit is protected. He doesn't own 70% of the house. Presumably she didn't sign such an agreement. Is the house in joint names.