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.

As a lawyer do you recommend that people take advice from anonymous posters on the Internet whose qualifications they know nothing about, or do you suggest that they seek legal advice from lawyers in real life whose qualifications and experience they can check?

Tenants in Common will be recorded on a legal document called a Deed of Trust, that's what I was referring to when I said the deed document.

The OP said she seemed to recall Tenants in Common being mentioned at the outset 16 years ago.

If her and her sister own equal shares, the house proceeds will be split equally.

It doesn't matter who paid what.

You don't need a deed to own as tenants in common.

You can in fact sever a joint tenancy simply by advising the other person that you are severing it and you now intend to own as tenants in common, although it would be wise to do so in writing, and advise any other interested parties of the fact that you have done this. For example, if you own a property as joint tenants with your spouse or partner, if one of you dies the surviving partner then owns the whole property. If you own as tenants in common and one of you dies, the surviving partner still owns their half and the other half forms part of your estate. So, for example, if you own as joint tenants and then split up with your partner, it is wise to sever the joint tenancy as soon as possible and make sure all relevant people are aware of that fact. Otherwise if you get run over by a bus the next day the whole lot goes to your ex, rather than, for example, to your children in accordance with your will.

I suspect what you are referring to is situations where people own property as tenants in common in unequal shares, as is frequently the case when, for example, an unmarried couple buy a property together and one of them has a much bigger deposit than the other. In those cases, yes, you need a legal agreement in writing setting out what shares each of you owns. This can be done at the time the property is purchased, or later on if something changes, for example, one person inherits some money and decides to put it towards paying a chunk of the mortgage off. But you would need input from a solicitor.

If two people own property as tenants in common and there is no document proving unequal ownership, they are presumed to own it in equal shares.

Always get paid for advice.

Let me ask you a question. I now this is not Legal, but what made you come on this thread and confidently advise "she will probably get something" when I can only assume you have no legal training whatsoever?

Do you go on to medical message boards and offer diagnoses there? What is it about people's legal issues that makes you think you can pass off your opinion as actual advice? OP hasn't got a clue that you don't know the subject matter.

How did you manage to rent the house out without her permission.

There was a case last week where a wealthy family in London had purchased a property for their nephew (roughly 2 million pounds) and his name was on the deeds.

The nephew tried to sell the property as just like is mentioned here he was on the deeds. (Only him)

However the judge said he could not sell the property and gain the proceeds as his uncle had only bought him the property as an act of kindness and the judge seemed to side with the uncle who said his nephew was ungrateful and greedy!

He was apparently only on the deeds for something to do with the aunt and uncles management of their own wealth.

That was entirely different as there was also a legal agreement that although the property was bought in his name, the money used was not his, and he had no beneficial interest in the property as it was held in trust for his aunt. He then tried to invoke Taiwanese law, saying that he understood the property had been ‘gifted’ to him in accordance with tradition. The judge didn’t agree because there was legal documentation which proved this wasn’t the case. The aunt and uncle routinely bought property in the names of family members so that they could not be used as collateral in business dealings. So, although someone’s name can be on the deeds of a property, it’s the agreement as to the division of the beneficial interest that counts.

There’s similar case law supporting this position on joint bank accounts too.

But there would need to be evidence of the clear intentions of the parties at the point that it was set up - so if it’s for tax reasons (as long as not unlawful evasion), clearly to be held in trust etc, the law will indeed revert back to the original owner. It would be different if the property/bank account was clearly labelled as a gift from the outset.

I read about this case a while back. I think the poster was being a bit simplistic in saying that the judge ‘sided’ with the aunt and uncle. There was actually a clear cut legal agreement stating that the aunt and uncles funds had been used to purchase, that the nephew’s name was on the deed for business purposes only, and that he had no beneficial interest in the property as it was held in trust for his aunt.

Despite all of that, greedy nephew tried to cash in saying that the property had been gifted to him. I think he ended up losing and paying legal fees in excess of £150,000. There was something that struck me as dodgy about it because it seems they routinely bought property in the names of family members so that it couldn’t be used as collateral for business dealings.

That little known* technicality of a resulting trust…

• little known except to lawyers and those clients whose cases involve the need to explain what these are, which does not include OP.

Work out what you have paid out on the house over the years. Give her a copy. Explain that as part owner she is liable for her share of expenses, but you will agree to deduct them from her share of the equity. Decide how much you are willing to offer her. Offer a bit lower to give you negotiating room. Say if she doesn't agree you will take her to court. Hopefully she will then reflect and accept an offer from you. Don't let her stitch you up.

It’s already been established that the OP can’t legally deduct anything from her sisters’ share of the profit. They are joint tenants, and in the absence of any binding agreement to split the proceeds any differently, legally it’s a 50/50 split after sale fees have been paid. Doesn’t matter who paid what.