Sister demands half the profit from the sale of the house after not paying for 16 years.

[TheBorgPrincess]

Usual disclaimer- all names have been changed for privacy.

I (41F) bought a house with my younger sister Claudia (34F) 17 years ago (2006). Both our names went on the Mortgage at my parent’s behest. To make Claudia ‘Feel grown up’ and perhaps she would be inclined ‘to take the bills seriously’. As was earning more money than her at the time, we agreed that I would pay two thirds of all bills and Claudia would pay the remainder. (Somewhere in all the paperwork, I do remember ticking a box that said Tenants in common and not tenants in Law. Which I believe recognises an uneven split in ownership?)
Anyway, after 9 months of living together and after a silly argument about the washing up. Claudia packed up her things and left to go back home and live with our parents. I really don’t think she could afford her share of the bills and didn’t like spending her money on living essentials. Claudia promptly handed her key over to our dad and nothing was discussed or agreed. Our relationship was slightly fractured after this, but we remained cordial at family gatherings.
I really struggled to afford the bills on my own at first, but by taking a second job and knuckling down at work I earned a promotion and was soon comfortably able to afford everything with a decent quality of life.
Skip to 10 years later and Claudia is in a relationship with Matt. Matt ‘Flips houses’ for profit. Selling some and renting out others. He’s made a successful business out of this. Out of the blue I receive a scathing text message from Claudia demanding I remortgage immediately to take her name off the mortgage. From what I understand Matt had maxed out the amount of properties he could get with just his name and wanted to start using Claudia’s. She states that she doesn’t want to be bought out, just her name taking off the mortgage. She’ll even help pay for the legal fees. I get to own 100% of the house, she gets to build a property empire with Matt. Win-Win! Off I trot to a Mortgage advisor and explain the situation and there’s a few options- I just need to get the house valued. I pay my fee. Alas, the house is in negative equity! The mortgage advisor completely vanishes in the ether, doesn’t return my calls. I get a nasty text message from Claudia (GOD! I wish I’d kept these!) that she’s going to get a solicitor involved and force me to sell the house at a loss. I was absolutely heartbroken at the thought of being forced to give up my cute little house and my home of over a decade. I really didn’t what to do. My Parents aren't much help- they just shrug their shoulders. A few months later Claudia and Matt split up- all goes quiet, and I breathe a sigh of relief.
Fast forward another 5 years. I get offered a fantastic job opportunity BUT it involves a relocation ASAP! The company I work for offers to pay for a full relocation package- the whole she-bang plus they’ll pay for rent on a house for 6 months close to where I need to be so I have chance to sell my house.
No takers. The Estate agent recommend renting it out. It’s in a great location if you commute and it’s close to a lot of amenities, the area has had a bit of gentrification. It’s barely on the rental market for 24hrs before It’s snapped up. I rent it out for just enough to cover the mortgage and the landlord insurance, hoping it’s an investment for further down the line.
So, to be clear I try to sell the house – Claudia is aware but is not interested. I rent the house out- Claudia is aware but not interested and makes no comment on the situation.
4 years ago, the tenants stop paying rent (Just scumbags, but that’s a whole other story). After a lengthy year long battle which nearly broke me mentally and financially-They tried every trick in the book. I secure a successful eviction order and after the bailiffs have kicked them out, I am left with a completely trashed house. It was disgusting. Claudia is aware of this and makes no comment. My parents after seeing me struggle financially help me with the costs of a quick whitewash, several tip runs and a professional deep clean so I can get it back on the market to sell.

For the past year I had to pay both the mortgage and my own household bills. There’s just my wage, as a single person in a Cost-of-Living Crisis. I’ve blown all my savings, maxed out my credit card and had to take a loan out to make ends meet. I was hoping that the proceeds of the sale would allow me to pay everything off, get me a new car and a modest deposit on another house.

In what feels like the only good news of 2023. I have a buyer for the house. I didn’t quite get what I wanted, but I can’t afford to go on like this any longer. I want rid and quick.

Claudia is now asking about how much her share of the profit is, and how much is left on the mortgage. To be quite clear she hasn’t paid a penny towards the upkeep or mortgage of that house for over 16 YEARS! I am shocked but not surprised by the sheer audacity. Somebody has whispered in her ear that as her name is still on the mortgage she’s entitled to HALF of the profits from the sale! I have also found out that she’s taken out a large loan (for a boob job) stating that she is a property owner. My parents don’t want to get involved. They don’t want to come between sisters! My Mother hints that I should take pity on her as she’s now a single mother of two, while my dad thinks I should get legal advice and try to fight her in court.

Is there anything I can do? Or is it more fool me for not remortgaging sooner? She’s set foot in the house twice in the 16 years since she left, and apart from when she was in a relationship with Matt hasn’t said anything and was quite happy to let me keep her credit score nice and high as I’ve never missed a payment. I’m worried that if she doesn’t get her own way she’ll refuse to sign for the sale of the house.

Laughing at the idea of lawyering up. You can argue away £30k before you step foot in a court.

Cheeky cow.

She doesn’t necessarily need to go to court. She needs to go and see a solicitor and then send a few letters to her sister.

YABU to put so much inconsequential detail in the OP. We didn't need to know about Matt or the boob job or most of the other points over the years. And YABU to come to AIBU for legal advice. Ask your solicitor.
I don't understand how you have managed to sell the house without the solicitor speaking to your DSIS if she is on the mortgage and the deeds.Or how you managed to find a buyer with an equally incompetent solicitor. That's quite the feat.

It sounds like you might have had a big financial loss when the tenants were not paying so maybe you can deduct that from the profit to reduce the amount your sister is owed at least.

You need to find the paperwork pertaining to tenants in common (or whatever it was that you agreed), and then get very good legal advice. Morally she shouldn't get anything, but legally she is highly likely to be entitled to a % of the equity deal don't know what's been agreed when she was 19.

OP is co-owner, she does not need to pay rent FFS. The sister was liable for her share of the mortgage payments and still is. She certainly wasn't entitled to any rent.

A few letters about what? The fact her sister owns half the house?

It might not be ‘fair’, but she has lived in her sisters share of the house for free, that’s now being sold and she’ll owe her sister half.

She should be entitled to her share of the profits. She has not paid any of the costs throughout her ownership but equally has not had the benefit of occupying it or of receiving the rent from the tenants (it was your decision was to rent it out so you must bear the reponsibility of the unfortunate problematic tenancy).

She did at one point make some effort to get her name removed from the mortgage but it was actually for your benefit she didn't go ahead with this. That was incredibly lucky for you and if she'd gone ahead with that there would be no profit that you're in the fortunate position of having now.

She should however be splitting the costs of the sale - estate agents, solicitor etc - arguably even some of the renovation costs to get it to a saleable condition. She (and yourself, for the period you rented it out potentially) may also be liable for capital gains tax if the profits are over the personal threshold and if she/ you meets the other criteria.

See a solicitor, cos she currently has a full claim unless you can prove otherwise about lack of contribution, but the default position will be that she is entitled to her share.

You must see a solicitor. As joint owners you and your sister are both liable for income tax/tax returns on rent and for Capital Gains Tax on sale proceeds.

Well that’s how these things work in divorce. Have a look.

Getting advise is not paying a solicitor to take the case to court...

A few letters to clearly state and prove who has paid the costs including the mortgage during the timeframe. If her sister stopped paying her share of the costs, legally she cannot claim from the profits as she did not contribute “50%” as was expected. The letters need to ask for proof of her contributions. Of which there aren’t any. Then OP can ask for a backdated payment of her sisters 50% of the costs. Which I doubt she’ll be willing to pay, in order to claim her share of the profit from sale.

Work out what you have each paid in Inc deposit and payments into mortgage (not utilities) and upkeep etc and go from there imo

I dont understand why you cant jointly see a solicitor and have them tell you where you both stand. If then she decides to dispute it she can take the legal action. Why do you have to be the one to do it?

Nobody cares about her boob job or your career. Just the facts are required what was signed what was paid etc etc. To an experienced solicitor it should be very clear of the legal entitlement which is the bottom line. Moral obligations are irrelevant.

Lovely what you’re doing there, but this has no basis.

legally she cannot claim from the profits as she did not contribute “50%” as was expected

Thats just not true. Morally maybe not, but legally, sister owns part of that house. Just saying ‘legally’ doesn’t make it the law. Where as Deeds are a real legal document.

This isn't a divorce.

Hopefully, once the OP gets legal advice, she'll actually be able to send her sister a bill.

I don’t think this is correct - they are tenants in common and sister hasn’t paid anything for 16 years.

It’s absolutely correct. The OP has occupied her sisters share of the house rent free.

You don’t pay Capital Gains Tax when you sell your home if you have one home and you've lived in it as your main home for all the time you've owned it.

She’s paying the mortgage !!

Yes, instead of rent to her sister.

It may all seem outrageous, but this in on the OP, she knew it wasn’t ‘her’ house.

Sister is saving up for a boob job remember? Maybe that’s her target bra size 🤣

I was in a similar situation with an ex. He had contributed £20k for the deposit but then not paid a penny for three years as he couldn’t be bothered working. I covered all the bills and mortgage in that time. We had a letter of our intentions to split the property 70/30 and for the mortgage and bills to be paid 70/30 (I would pay more as I put in more of the deposit and earned more). A solicitor had drafted it but it wasn’t binding. When we split he demanded I sell and he get his 30%. By this time the property has already increased in value. I tallied up everything he owed me for mortgage and bills, which at that time amounted to over £20k. I’d also paid for renovations. When I put this to him he stepped down his demands to getting his deposit back, which I reluctantly paid, because it’s really hard to tell which way these things will go in court. (I had legal advice too). I would suggest you go back hard with your sister and then try to reach some accommodation (and not bother with solicitors if possible, as it’s really expensive - I was lucky a friend dealt with it for me).