Page 9 | A money one - who is being unreasonable?

AnnaQuayInTheUk · 2025-02-27T19:55:55+00:00

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!

TillyTrifle · 28/02/2025 08:09

It’s not really reasonable for him to walk away with his £30k untouched if the house has lost money. He unfortunately has to expect to lose some of that £30k as the house was a bad investment. However, I do think he should get more than Sophie from the proceeds of the sale, so she is liable for more of the outstanding mortgage. However, as he didn’t ringfence the deposit this relies (I assume) on her goodwill so he probably has to prepare himself for losing his £30k and walking away with nothing. He should get legal advice though, I don’t know if there is any recourse if he can prove he paid the deposit. But if that’s enough, why do people need to go to the effort to ring fence their deposits? So I suspect it isn’t enough. And legal advice/proceedings may well cost too much to be worth it anyway.

Basically it sounds like Josh is in a bit of a lose lose situation unless Sophie has a fit of conscience. Sounds unlikely as it sounds like she possibly left him for someone else.

Nervousforscan · 28/02/2025 08:13

Sophie likely won't agree to have her name taken off the mortgage and the house given straight to Josh without any money. That would be a foolish financial decision for her - should the house rise in equity once sold down the line she won't get any money if she hands over her right to 50% of the property.. If she stays on the house now and it sells down the line, she will. That's regardless of whether she continues to pay the mortgage.

Currently, they are equal and equally have nothing whatsoever.

If josh keeps the house and it rises in value then Sophie has lost future value for no pay off. That's why he won't be able to buy her out without exchanging money. Any solicitor would advise her against this.

Again, is that moral? Probably not.

Morality is completely irrelevant. People should be very careful about purchasing houses with people under joint conditions when they are fronting the cash. It is a HUGE tie and fair doesn't come into it. That money stopped being his the day he put it into a joint asset.

Josh doesn't have to like this. But that doesn't change a single thing.

HhalloNine · 28/02/2025 08:16

AnnaQuayInTheUk · 28/02/2025 08:07

@TerrorAustralis I don't know exactly how much of the capital has been paid off, but I think very little as it's only been 3 years and the first few years of mortgage payments are mostly interest aren't they?

The house may sell for more of course, but none of the agents were optimistic about that. Sophie will be pushing for a quick sale as she wants to buy with her new partner

Josh is exploring whether he can have the mortgage in his name only. If so, that would be the best option. Hopefully by the time he then wants to sell the house will have regained value.

And if there is no agreement, Sophie and Josh will have to stay on the mortgage. Tough that Sophie wants to move on. They both agreed to buy, both committed. That doesn't change because it was a poor investment.

Why should Sophie be able to walk away?

They both may need to rent it out until then market recovers.

Nervousforscan · 28/02/2025 08:18

You are given the option to ring fence money given by one party. If this is not done there is no 'his' deposit, it's theirs.

Even if he had done this, currently there is no equity for him to keep.

But legally Josh and Sophie are on an even keel. So it would be legally no more valid for her to sign over her 50% with no payment from him, then it would be for Josh to sign over the house to her entirely without payment. Does that make sense?

As hard as it is, and I'm sure for you who has a tie to josh this will be hard to accept, the fact that deposit was his inheritance has ceased to be of any relevance whatsoever.

They are two people who jointly own a home, that currently has little to no equity.

Presumably, you agree it would be a poor financial decision for Josh to hand over the house to Sophie with no money exchanging whatsoever, and let her keep the home forever, and enjoy any equity to come in the future.

Flip that around and you'll see it also makes zero sense for Sophie to do that for Josh. Speaking financially and legally, not morally, as again, that doesn't come into it.

otm · 28/02/2025 08:24

AnnaQuayInTheUk · 27/02/2025 20:46

@Phonicshaskilledmeoff Josh earned more so paid more of the mortgage, but they both contributed

With this in mind I don't understand how Sophie can't just be removed from the dreeds. And count herself lucky if Josh decides to stay and she doesn't then owe him anything. He owes her nothing based on this plus deposit. She'd have lost a lot more paying rent for past 3 yrs

Nervousforscan · 28/02/2025 08:28

otm · 28/02/2025 08:24

With this in mind I don't understand how Sophie can't just be removed from the dreeds. And count herself lucky if Josh decides to stay and she doesn't then owe him anything. He owes her nothing based on this plus deposit. She'd have lost a lot more paying rent for past 3 yrs

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That's not the case she owes him nothing. They are joint owners. Who pays in what doesn't matter - they equally own 50% of the house.

She can be removed without him buying her out (at 50% of the current equity which is hardly anything) if she agrees. But it makes no financial sense for her to agree. Why would she give up an asset that she owns 50% of for nothing and lose everything? If you can see that it would be silly for Josh accept that, you have to see it's silly for Sophie to. They are equal in this equation legally, if not morally.

LadyGAgain · 28/02/2025 08:30

AnnaQuayInTheUk · 28/02/2025 08:07

@TerrorAustralis I don't know exactly how much of the capital has been paid off, but I think very little as it's only been 3 years and the first few years of mortgage payments are mostly interest aren't they?

The house may sell for more of course, but none of the agents were optimistic about that. Sophie will be pushing for a quick sale as she wants to buy with her new partner

Josh is exploring whether he can have the mortgage in his name only. If so, that would be the best option. Hopefully by the time he then wants to sell the house will have regained value.

But she should still be giving him back half the money.

Tryingtokeepgoing · 28/02/2025 08:30

Nervousforscan · 28/02/2025 08:13

Sophie likely won't agree to have her name taken off the mortgage and the house given straight to Josh without any money. That would be a foolish financial decision for her - should the house rise in equity once sold down the line she won't get any money if she hands over her right to 50% of the property.. If she stays on the house now and it sells down the line, she will. That's regardless of whether she continues to pay the mortgage.

Currently, they are equal and equally have nothing whatsoever.

If josh keeps the house and it rises in value then Sophie has lost future value for no pay off. That's why he won't be able to buy her out without exchanging money. Any solicitor would advise her against this.

Again, is that moral? Probably not.

Morality is completely irrelevant. People should be very careful about purchasing houses with people under joint conditions when they are fronting the cash. It is a HUGE tie and fair doesn't come into it. That money stopped being his the day he put it into a joint asset.

Josh doesn't have to like this. But that doesn't change a single thing.

That makes no sense…. Sophie put no money in, and the house is currently worth less than they paid for it and, crucially, after selling costs less than the amount owed to the bank. And that’s before considering any early redemption penalties on the mortgage. She wants to sell so she can get a mortgage with another man. If the house is sold, she gets nothing for her share. Whether that’s sold to Josh or to someone else. Why should she be entitled to future equity if she wants to sell now? There’s no legal basis for that. Furthermore, if there’s insufficient proceeds to clear the mortgage then the least she owes is half of that shortfall.

Imbusytodaysorry · 28/02/2025 08:37

Nervousforscan · 28/02/2025 05:58

But Sophie doesn't have to give Josh any money.

If they were joint tenants they're both equally entitled to any proceeds from a sale - in this case that's nothing.

If they were tenants in common then Josh is entitled to more of the proceeds - but that's still nothing.

Perhaps morally it would be nice for Sophie to produce 30k from nowhere and hand it over, but that has no legal binding and she likely doesn't have 30k to hand over as a nice thing to do!

If they currently owe 180k on the mortgage and the house is valued at 180k the only person getting any money is the mortgage provider.

If their original mortgage was 180k and the house is valued at 180k then it's possible they may have paid off a few grand - maybe as little as less than 0k total. That will be eaten by the estate agent and solicitor fees. If they paid of 10k they'll be lucky to have 5k of that at the end of this. If they are joint tenants then that means they'll both walk away with 2.5k.

I personally only paid off £4k on my mortgage last year. We don't know how long they've lived in this house. They may have only paid off a similar amount.

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I didn’t need a break down I’ve read the post.

Sophie is pushing for the house to be sold as she has a new man .
Sophie can find money , sign the house over to Josh or she can just wait for the house to be sold so Josh gets his money back .

Why does what Sophie wants trump what Josh is due never mind his needs or wants ?

Imbusytodaysorry · 28/02/2025 08:38

Tryingtokeepgoing · 28/02/2025 08:30

That makes no sense…. Sophie put no money in, and the house is currently worth less than they paid for it and, crucially, after selling costs less than the amount owed to the bank. And that’s before considering any early redemption penalties on the mortgage. She wants to sell so she can get a mortgage with another man. If the house is sold, she gets nothing for her share. Whether that’s sold to Josh or to someone else. Why should she be entitled to future equity if she wants to sell now? There’s no legal basis for that. Furthermore, if there’s insufficient proceeds to clear the mortgage then the least she owes is half of that shortfall.

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Exactly !

otm · 28/02/2025 08:48

AnnaQuayInTheUk · 28/02/2025 07:23

Thanks everyone.

They've not paid much of the mortgage off, it's only been 3 years. So there's no "buying out".

Sophie wants to be off the mortgage so she can get another mortgage with her new partner. Josh doesn't want to agree to this until the deposit money is sorted out. He's hopeful that he might be able to hang on to the house but worried about paying the mortgage by himself - assuming the mortgage company will even agree to that.

I'm trying to give him advice but am very conscious that there is a difference between what is morally right and what is legally right. If it goes down a legal route, that could cost £££. I'm also conscious that I'm not neutral in this as I feel Josh has been treated very badly. Hence asking for opinions on here.

This. And feel sorry for the new bloke, and also it's a shame Sophie most likely has no accountability or sense of the financial commitment she was making, and in wanting to do it again has learned nothing. Really hope Josh can keep it and yes, she should be paying the difference in loss if she wants to remove herself from the financial commitment she made.

pinkfondu · 28/02/2025 08:55

Regardless of being a cheating slapper op, the legal view is there's no agreement to ringfence.

It's an expensive lesson to learn, from someone who had too!

Nervousforscan · 28/02/2025 09:06

Her behaviour is irrelevant.

There are sufficient funds to clear the mortgage so she owes nothing to anyone.

It is true that she's entitled to nothing in a sale currently as there's no equity and that is the case whether she sells to Josh or someone else. But she has to agree to sell to Josh. She might not. Particularly if Josh is wanting to keep the house and continue paying for the mortgage on it without her.

If she doesn't agree to the sale and he continues to keep the house (jointly owned) and pay for it without her she gets to keep her stake, be eligible for equity when he does sell down the line and lose nothing. That's a benefit to her which might prevent her agreeing to be bought out, rather than sell to a third party.

That's why it makes a difference to her whether she sells to Josh or a third party.

GrannyAchingsShepherdsHut · 28/02/2025 09:49

I think Josh needs to accept there is no deposit money to 'sort out' - it's gone.

The best thing he can do is get Sophie off the mortgage, keep the house, and hope it increases in value. Even if it doesn't, he will still have a house that he's paying off. If they sell it he has nothing and might never get back on the property ladder. If he can afford the mortgage solo but doesn't pass the affordability checks, has he got a relative (parent?) that would go on the mortgage in the place of Sophie for a few years until he's able to take it on solo?

PandaTime · 28/02/2025 10:22

Mnetcurious · 28/02/2025 08:01

Yes, clearly there’s no equity. But Sophie would walk away in the same position she started from (ie with nothing) and Josh would walk away with £30k less than he started with.
That’s not fair, so he should get some of his deposit back (albeit less than £30k as his investment decreased in value). If the property value had increased as is usually the case, Sophie would rightly have expected a share of the profit, so in the same vein she should pay Josh a share of his loss (the % of the decline in value).

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That's not how it works. The money from the sale of the house goes to the bank to pay off the mortgage. If that's not enough, they are both equally responsible for what is still owed. If there is a profit, they are entitled to it 50/50 since his deposit wasn't ringfenced.

In this case, buying this house was a failed investment. There is no equity and there is no debt. They both walk away with nothing.

Had he ringfenced his deposit, he would still walk away with nothing. Any percentage of £0 is £0.

Tryingtokeepgoing · 28/02/2025 10:43

Nervousforscan · 28/02/2025 09:06

Her behaviour is irrelevant.

There are sufficient funds to clear the mortgage so she owes nothing to anyone.

It is true that she's entitled to nothing in a sale currently as there's no equity and that is the case whether she sells to Josh or someone else. But she has to agree to sell to Josh. She might not. Particularly if Josh is wanting to keep the house and continue paying for the mortgage on it without her.

If she doesn't agree to the sale and he continues to keep the house (jointly owned) and pay for it without her she gets to keep her stake, be eligible for equity when he does sell down the line and lose nothing. That's a benefit to her which might prevent her agreeing to be bought out, rather than sell to a third party.

That's why it makes a difference to her whether she sells to Josh or a third party.

But, she’s the one that needs to sell…because she wants to buy another house with another man. So it really doesn’t make a difference, because Josh doesn’t need to do anything. Her need to sell is much more pressing than his desire to purchase it. She’d be foolish not to sell to Josh in the first instance, because until it is sold (to Josh or a third party) she can’t move on to the next man and house.

polyesterdress · 28/02/2025 12:55

Morally - she should be removed from the paperwork and Josh becomes the sole owner. She didn't put in a deposit, and there's no equity. She gets nothing, and has saved on rent which is presumably a lot more than her contribution to mortgage payments.

Legally - she still gets nothing as there's no equity.

Blondeshavemorefun · 28/02/2025 14:27

@Comingupriver I said the same !

in 3yrs she buys a home. Falls out of love with poor Josh. Finds a new bf and wants to buy with him

slow down

if Sophie wants off the mortgage and Josh wants to stay and can afford the mortgage alone - even if he take out a new 30yr one

house prices should rise again so if he stays put he may get his money back in years to come

MrsTerryPratchett · 28/02/2025 14:35

GrannyAchingsShepherdsHut · 28/02/2025 09:49

I think Josh needs to accept there is no deposit money to 'sort out' - it's gone.

The best thing he can do is get Sophie off the mortgage, keep the house, and hope it increases in value. Even if it doesn't, he will still have a house that he's paying off. If they sell it he has nothing and might never get back on the property ladder. If he can afford the mortgage solo but doesn't pass the affordability checks, has he got a relative (parent?) that would go on the mortgage in the place of Sophie for a few years until he's able to take it on solo?

This. Josh needs to stop thinking about the lost deposit and start thinking about the chances of getting on the property ladder if he sells. Which are zero with no deposit.

Chiconbelge · 28/02/2025 16:00

AnnaQuayInTheUk · 28/02/2025 07:23

Thanks everyone.

They've not paid much of the mortgage off, it's only been 3 years. So there's no "buying out".

Sophie wants to be off the mortgage so she can get another mortgage with her new partner. Josh doesn't want to agree to this until the deposit money is sorted out. He's hopeful that he might be able to hang on to the house but worried about paying the mortgage by himself - assuming the mortgage company will even agree to that.

I'm trying to give him advice but am very conscious that there is a difference between what is morally right and what is legally right. If it goes down a legal route, that could cost £££. I'm also conscious that I'm not neutral in this as I feel Josh has been treated very badly. Hence asking for opinions on here.

Frankly I think Josh needs a short conversation with a solicitor to educate him about his true position. This won’t take long and it won’t cost a lot - it could even be free. What Josh will learn is that he should have protected his deposit in advance as pp have been saying and if he didn’t do that then there is nothing more to be done unless Sophie offers something voluntarily.

I can see why it’s hard for you, but there is no expensive option to “go down a legal route” because unless they took one of the routes available when they bought, as pp have said, then there are no grounds for taking any legal action.

stayathomegardener · 28/02/2025 16:22

Josh would benefit from marketing the house at around the price they paid just in case there's the perfect buyer for it.

By dropping the price in increments the true value will be revealed.

Sophie may also find an element of her moral compass the longer she has to wait.

pengymum · 28/02/2025 19:27

I would let house until prices improved.
Or Josh can let rooms if he is still living in it.
Better actually as benefits from the tax free rent a room & easier to get lodgers out than tenants if need to sell.

But IMHO Sophie is foolish to consider buying another property so soon with new partner as who knows how long this relationship is going to last!

But buying is definitely better than cohabiting in a partners house & contributing to joint living costs but getting no equity in the property.

Luddite26 · 28/02/2025 20:26

At the risk of sounding like a total fool why has it lost so much value in 5 years.
Yes I have heard of negative equity but I didn't know things were so bad right now ? Or that this was even a thing really in recent years.
I would want more valuations and josh should stay there regardless . If there is no money to be made there's nothing to pocket.

Hankunamatata · 28/02/2025 21:05

Could Josh look at getting a couple of lodgers now to share the house if 3 bed. That income may be counted towards his mortgage affordability

Greyexpectations · 01/03/2025 10:12

Nervousforscan · 28/02/2025 09:06

Her behaviour is irrelevant.

There are sufficient funds to clear the mortgage so she owes nothing to anyone.

It is true that she's entitled to nothing in a sale currently as there's no equity and that is the case whether she sells to Josh or someone else. But she has to agree to sell to Josh. She might not. Particularly if Josh is wanting to keep the house and continue paying for the mortgage on it without her.

If she doesn't agree to the sale and he continues to keep the house (jointly owned) and pay for it without her she gets to keep her stake, be eligible for equity when he does sell down the line and lose nothing. That's a benefit to her which might prevent her agreeing to be bought out, rather than sell to a third party.

That's why it makes a difference to her whether she sells to Josh or a third party.

Except she is the one who wants out. Josh doesn’t have to agree to a sale and she would have to go to court to force a sale.

The time and expense of this will weigh more heavily on her than him - he will remain in the house, paying the mortgage and when it gets to court, can argue for a split of any proceeds that takes into account his financial input.

I agree that, long-term, Josh should not continue to pay the mortgage without getting advice on how to ensure this is taken into account in the final equity split. But as there is currently no equity, he probably has a year or so before it becomes important.

Will Sophie want to wait so long to move on with her latest provider?