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.

I especially like the bit about the house being in negative equity in 2016, 10-11 years after purchase. Or was it 2017? 2015? 9 years? Who knows. You wrote it from the heart, though.

I'll quite miss this one, when it gets deleted "for privacy reasons"

Similar situation happened with SIL and her DB. They bought a flat when he was a student and she’d got her first job, parents were guarantors for mortgage. SIL has paid most but not all of mortgage and costs (service charges etc), the spare room has been let and DB has sometimes lived there but SIL has paid for most things in the flat including redecorating, new bathroom etc. Flat will eventually be sold and the DB was demanding half the profit. He’s now married and has a good deal through his DW re property (not going into it here as outing). Finally he’s agreed to take what he’s not paid for off the proceeds of sale which is fair.

OP in your case get a solicitor involved. The law may not be fair in your case.

You need to see a solicitor about this to get proper advice. Make a list of her share of the mortgage and all repairs etc. This might be relevant in court as it would seem very unfair if you weren't allowed to deduct her share of the costs from the sale.

Also, if it was rented out, then the rent should have been split in the same ratio as the ownership, and you should have both declared this to HMRC.

Make a separate summary of the rental income and expenses .

Morally the house sale money is yours, but legally is a different matter. you either own the house in 1/3 + 2/3 or 50/50 depending on how it was registered.

When it sells, the solicitor should only release the money to whatever is on paper signed by both of you, so you wouldn't get anything until you sort it all out.

1. Get a Lawyer
2. Document all your costs to date that she has not contributed to
3. Get the place sold

Personally I would say OK you can have whatever % the lawyer advises less the costs you still owe me. I guarantee it doesn't work out much. Going forward

1. learn from this and don't get involved again

Court fees would not be £40k, but solicitor's fees could rack up. But it shouldn't go that far. On the information OP has posted, it is quite clear that a judge would decide that OP's sister is entitled to half the proceeds.

The whole house, no. But, on the information posted, a judge would award her 50% of the proceeds of any sale.

You need to optionally split the money that is left after mortgage and all fees have been paid

But then you need to have returned the monies your dsis “borrowed off you” when you paid her share of the mortgage, house insurance and even things like electric and gas metre standing charges + the compound interest on those monthly payments you made on her behalf for the past 16 years

If your sister had been paying each month then the money you paid on her behalf could have been put into a savings or investment account and been earning interest all this time

Even without interest, if sister failed to pay you her monthly payments that were due whether she was living at the property or not then depending on the amount
£200 per month non payment for 16 years is £38,400
£300 per month for 16 years is £57,600

and that is before compound interest has been added.

I think you need to gather every payment you made on her behalf each month for 16 years and the interest rates each month you could have got if you had put that amount into a savings account.
There are compound interest rate calculators on line if you have all the information

It’s a pity that when you were in negative equity you didn’t offer to take your sister off the mortgage and deeds completely.

Find a mediator. Some are solicitors, some aren't - there's a good one locally to me that's also a JP and I know this is the sort of thing that they're best choice to resolve. Absolutely the wrong thing to do would be to involve your parents, wash that idea out of your head right now. You need someone impartial and professional.

You do need to make very certain early on whether or not you're tenants in common or in law. It makes a huge difference, and you can't base decisions on "I think I remember".

The opening post was probably good to get off your chest, but 90% of it wasn't relevant and highlights the emotional involvement that needs to be detached. At the heart of the problem is an accounting puzzle, who paid for what, when, and how to account for the interest, etc. It's not an unusual or unique situation. It will take time to work through, but there are professionals that do this sort of thing day in day out.

By the way, I think your sister is about to get a very sharp lesson in the power of compound interest.

Notionally not optionally split

I wouldn't regard this difficult situation in moral terms. It is a consequence of a crazy legal situation that sounds like it should never have been set up in the first place, and which should certainly have been brought to an end when the sister moved out of the house after nine months.

Who paid the deposit on the house? Was it the parents? In that case you could argue that the sister may be morally entitled to her share of the equivalent value of the deposit in today's house prices.

Other than that, it is simply a question of the legal entitlements that the sister's part ownership of the house generates. I don't think that the OP should feel aggrieved if her sister insists on these. The obvious solution to that grievance would have been sorting out the ownership of the house 16 years ago.

I doubt that the OP is reading this, but again, you can’t sell the house without engaging a solicitor so just get advice from an actual solicitor, not Reddit and Mumsnet.

I live the fact ghat your parents pressure started this but now it's nasty they don't want to know!
Telling OP she should have sorted this before, shouldn't have ignored etc is REALLY helpful?! She bloody knows this!

Speak with your solicitor, do what you need to. If your sister won't sell then surely she has to give mortgage payments? I'll though i wouldn't want to, I'd just want the mess over and done with even if I lost out on some profits.

Tell your sister to go get fucked!!!
PERIOD!!!!!!
She "Can't Understand Normal Thinking"

lawyer up, offer what is in your opinion a fair assessment of the legal minimum she's entitled to to keep it out of court. But also discuss with the lawyer a counter suit / possible adjustments

e.g. say 'profit' on the sale of the house = sale price now - original price

and the lawyer says she's entitled to a third of this profit, could you take that third and subtract 1/3rd of the mortgage payments and the property maintenance she didn't pay for what sounds like well over a decade.

Set it all out in excruciating detail. See if you actually 'owe' her anything.

If it comes out as a very low value or negative value still give her a copy of it but offer her 1/2 the deposit your parents paid originally plus interest as a good faith out of court settlement.

But good luck selling the house if you tell her that.

You need professional advice.

Get a lawyer. It will actually save you money in this case. A direct access barrister specialising in property might be cheapest if you think your sister will dig her heels in and go to court.

To all those saying "deduct the mortgage and other costs", you're missing a fundamental point that the OP lived in the house for many years, so had "enjoyment" of the house which her sister didn't. I'd be adding back the open market rent of the house which the OP "enjoyed", i.e. effectively renting the sister's share of the house from her. These things are never as straight forward as you think from the outset - that's why the advice from an earlier poster to engage a mediator is the best advice on this thread. Someone impartial needs to sit down with both sisters separately to explore the facts, their points of view, etc., and provide an alternative point of view to try to knock some sense into both sisters which hopefully can lead to an amicable settlement and avoid potentially months, if not years, of solicitors arguing with eachother and costing probably thousands, if not tens of thousands of pounds. It's good to talk! Don't involve solicitors until you've agreed a settlement then just instruct them to do the contracts etc.

Why the hell would a 17yr or even 18yr old take on a house purchase?

How could they even afford half a mortgage at that age?

Your parents sound like a right pair of chumps trying to oust the kid out of the house to toughen her up.

I feel sorry for Claudia actually.
She sounds like nobody wanted her around.

I think you wanted to buy a house being 7 years older and you persuaded Claudia and your parents it'd be a good idea.

Did your parents pay the deposit by any chance? I'd put at least a fiver on that.

@Seaweed42

Why the hell would a 17yr or even 18yr old take on a house purchase?

Because their dippy brain dead parents forced them into it!

The same dippy brain dead parents who refuse to get involved in the aftermath of the almost inevitable disaster it's become.

All OP needs is a solicitor. A solicitor will advise her that, unless she has evidence of an agreement between her and her sister that she would own more than 50% of the house, her sister is entitled to 50% of the proceeds of sale. At best, if OP has paid off any of the capital on the mortgage or paid for improvements to the property, she may be able to claim a slightly larger percentage or the proceeds.

Gosh OP, it sounds like you've had a basin full. Difficult tenants and evictions alone are enough of an issue (speaking from personal experience). I think you're doing a sterling job in the face of all these issues.

I agree with PPs that now is the time to get legal advice. It may be that there is a way to mitigate your sister's claim, given your sister has contributed nothing, but a lawyer will be best placed to advise you of that. She sounds like a petulant child tbh, and not someone I would want to spend much time around, sister or not.

Good luck and I hope there's a quick and peaceful resolution.

I see people putting “34F” on posts and think it is their bra size, why is this creeping into posts ?
But anyway OP, legal advice now.

So, to sum up these answers;

Sister is entitled to half
Sister is entitled to a third
Sister owes you money
Sister gets nothing

Madness, but then so is buying a house with a teenager (blame your parents for that one) and keeping it for 16 years without any discussion on outcomes.

Good luck!