A money one - who is being unreasonable?

[AnnaQuayInTheUk]

A family member, let's call him Josh, and his girlfriend, Sophie, have been together for 5 years. Three years ago they bought a house together. Josh had inherited some money so put down the deposit of £30k, Sophie didn't have any money so didn't put down anything.

The house They loved was £210k so they used Josh's inheritance as a deposit and took out a joint mortgage of £180k. All good.

However, they have now split up. They've had 3 house valuations, and have realised that the house has gone down in value. On the advice of the EA, they are putting it on the market at £189k but have agreed that they will accept £180k for a quick sale.

The issue is this. Assuming the worst case scenario that the house sells for £180k, should Josh accept he's lost his inheritance and suck it up, or should Sophie pay Josh £15k as her "share" of the loss?

AIBU - Josh should suck it up
YANBU - Sophie should pay Josh £15k

They are both aware that the house might not sell at all!

Josh was an idiot. Sophie won't pay a bean. Whether thats morally right isn't worth a pile of beans.

If I was Josh I'd keep the house, buy her out on lower price and rent the house.

Imo Josh should get his deposit back then split the rest 50/50

If it sells for £180k the won't really "make" anything

The rest of what? The bank gets 180K (ish) to pay off the mortgage, leaving maybe 9k. He should get that, but there isn't anything else to split, I assume.

Morally they should split the difference and she should pay his ‘half’ of the loss, but now they’ve split she owes him nothing so I expect she won’t pay. Legally nothing that Josh can do.

Oh dear what a mess. Agree that he should make her a lowball offer- could he buy her out at £175?

Legally if the deposit wasn’t ringfenced he isn’t entitled to any of it back, it’s not his anymore, it’s 50/50. Meaning if it sells for 189k and there’s 9k equity he’d get 4.5k.

He put the deposit down but presumably they have both made payments so it is fair she does get some of that equity.

If he wants the house and she wants off the mortgage he could buy her out?

I think they need to figure out how much the equity is, subract EA costs for selling it, then divide what’s left so that Josh gets roughly 85% (depending on what they sell for) and Sophie gets roughly 15%. If Josh wants to stay he will have to buy her out. It should just be a few thousands.

Did you read the OP? There is no equity.

I thought that she meant other than the 30K. If there really is zero equity if they sell at 189k then there is nothing to divide.

There's no equity! They've lost money on it

I think it should be worked out on a % basis.

Josh's deposit was 14% if the total value of the house. So he should be entitled to 14% of the equity in the house, and then anything left over should be split 50/50.

We can all write what we like… but Sophie’s walking off never be seen or heard from again and Josh has taken a £30k bath.

Ok, so the question is who should walk away with the biggest debt?

This!
He should get more out of the sale but his deposit should have decreased by the same %
assuming all other things were equal of course, did they split mortgage payments and household expenses equally all through their marriage?

Agree with this. It’s not that long since they bought the house so he should get the deposit back. However he has to accept that the deposit has lost value along with the house.

@Mauro711 exactly.

So basically if they sell at £180 k the mortgage is paid off . There's nothing left to split. The solicitor's fees will be deducted from the costs of sale so Sophie could pay the shortfall to the mortgage company.
I think the deposit money was a gift from Robert , he could have asked Sophie to pay more to the mortgage but didn't. Where would Sophie get the money from ?

I think they should hold onto the property until it increases in value. Could they get some advice from the estate agent about when this might be or if there are things they could do to improve it in the short term which would increase the value.

They both take the loss equally. If there was profit he should get his deposit back, the deposit is gone. There is nothing to get back.

This almost exact scenario happened to me. I was Sophie in the situation. The difference was that my Josh has been unemployed for 2yrs and I has covered all of the mortgage. So I had no qualms in insisting that we split the proceeds from sale equally. Had ‘Josh’ been employed and covering mortgage, I would have paid him back.

It probably makes a difference how they split finances whilst together. If she earned significantly more and paid the mortgage and bills etc I’d probably say she doesn’t owe anything. Otherwise she should probably cough up

Have they not paid any principal on the mortgage in the 3 years they've lived there? Could josh afford to take on the mortgage himself? I would do everything to avoid being a forced seller here - realistically Sophie is never going to volunteer to give Josh any money.

I agree with this. But morally and legally are two differnet things. He's not gonna get anything back since she's already buying a new house.

Can Josh buy her out? EG half of the £180k less his £30k deposit, ie £75k off her share of the remaining mortgage. Or compromise on agreeing that "his" £30k deposit has been reduced by the % fall in the houses value.

If he's not in a position to buy her out, and doesn't want to sell, then she's pretty stuck really.
IMO he should get his deposit less % fall in house value, and then split the other part 50/50 (or in line with how they split the mortgage). I'm sure legally he can't make this happen. But then I doubt she can't force him to sell, either.