Post divorce, continue to build their equity in marital home even if they aren't contributing?!

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Hi, posting for advice for a friend.

They are in the process of drawing up a consent order with ex. Friend doesn't have solicitor (can't afford their own) but is paying half the legal fees of the ex's lawyer, who is drawing up the agreement.

The soon-to-be-ex moved out of the marital home and has been renting the past year. They are paying child maintenance to my friend who is the primary carer.

Friend has been paying the whole mortgage (can cover thanks to TCredits) payment since then.

In the consent order, the ex and their lawyer wants my friend to continue to pay the whole mortgage - because 'they are having to rent thanks to the marriage ending'.....but at the point of sale sometime in the future, the ex would get the full half of the equity in the house - despite not having contributed a penny post divorce!

Friend can't afford to buy out the current equity or get a mortgage on their own.

This seems ridiculous to me - surely the equity they have built during marriage should be frozen, and split and the ex can retain that percentage as a stake until such time the house can be sold or friend can buy out.

Otherwise they are literally gifting the ex any futher equity post divorce and buying them the house too! In effect, the child maintenance payment is offset by the fact friend continues to pay the full mortgage.

Is this legal? Would any court sign off on such a strange consent order? It places friend in a very vulnerable position going forward.

Their ex earns plenty and can cover their rent etc no problems - and that is surely not my friends concern anyway after marriage ends. I thought that only the equity built in the marriage should be of interest to the ex.

Ex also wants a clause where if friend lives with anyone for a certain (quite short amount) time, that they must buy him out. Again, surely that would be dependent on financial circumstances?

Thanks for any advice!

Your friend needs their own lawyer! She needs to beg, borrow or steal to be able to afford her own legal advice. Her ex's lawyer is working for her ex. She needs someone working for her.

I know Anne - thanks. Silly thing is my friend is paying half the fees to the ex's lawyer anyway!!

Thank you so much FamilyLawSolicitor - that's exactly how I see it. The ex is entitled to the stake as a percentage from point of divorce - if prices increase (or indeed decrease), then whilst the nominal £ value of the equity changes, the percentage doesn't. Otherwise the Ex is getting an absolute gift.

No worries on friend picking up the tab for the whole of the interest payment. Currently that would be about 50% of the repayment anyway (and will obvs decrease over time as outstanding mortgage decreases)- but yes, should absolutely get the full credit for any further reductions in the mortgage.

As far as co-habitation bit goes, I think that's a shame but OK.

Ex has taken control over all this and friend is alone - any help that I can give I will.

However, Friend thinks ex will not ever agree to divorce unless the order is drafted so they get 50% of house :-( Which is part of the problem as to why they are letting the ex draft everything.

Actually of course, if prices drop ex should be entitled to

(market value - mortgage left - capital reduction made post divorce) / 2

at point of buyout / sale. If prices drop, the equity percentage would drop too.

She is paying for him to get advice from a solicitor and that same solicitor is drawing up the order. That solicitor will be acting in their client's best interests, not hers.

She should stop funding his advice to get her own.

It would be very unusual for a divorce to end up being "defended" so I am sure she will get her divorce and she should not feel pressurised into agreeing a financial order by this type of emotional blackmail.

It would not be fair in a legal sense for the value being set at point of divorce aka house is worth 180k in 2000 ex is awarded 50% so 90k but the house is sold in 2012 now worth 800K the EX should be entitled to 50% of total value as his "capital" aka his share was tied up in the house so he could not benefit from it and invest it in their own house.

This is how it currently works in England and Wales , capital repayments can be credited but the house price value increase cannot in the same vain if the house value falls the EX would get less rather then the full 90K rather then 50% of the current value so it works both ways. (though currently its rare for a house to lose massive amount of value its still a protection).

The ex is entitled to the stake as a percentage from point of divorce - if prices increase (or indeed decrease), then whilst the nominal £ value of the equity changes, the percentage doesn't

I don't think you have fully understood FamilyLawSolicitor. FamilyLawSolicitor is saying that the husband would normally benefit from any increase in the equity. He does not get a percentage of the equity as it was at the time of divorce. He gets a percentage of the equity at the time of sale.

Let us say the equity in the house today is £100k. She pays the mortgage but does not make any capital repayments, nor does she make any improvements to the house. By the time the house is sold the equity is £150k. Under a typical order, if he was awarded 50% of the equity, he would now get £75k, not £50k. So he benefits from the increase in value of the house even though he hasn't contributed towards the mortgage.

Sorry - I think I do understand but I wasn't clear. Thank you everyone.

Example. Please correct if wrong

Time of divorce:
House 500k
Outstanding mortgage 200k
If sale at this point -150k each

One party takes on remaining mortgage. Then at point of sale :

House worth 1m
Outstanding mortgage zero
Equity for occupier 500k + 200k capital repayment - 700k
Equity for ex 500k - 200k capital repayment made by other party - 300k.

If things drop...

House worth 200k
Mortgage nil
Equity for occupier - 100k + capital payment (capped) - owns whole house.
Equity for ex 100k minus 200k capital payment made by other party - effective nil?

That seems right to me.

Or I guess I could be wrong!

Maybe it would be I'm the above example if the house doubled.

House at 1m at point of sale, no mortgage now.
Take off 200k my friend pays off from mortgage solely.
Equity is now 400k for ex.

Either way this is still much better than paying of the remaining mortgage for the exes benefit. Thanks so much to everyone. I'll try and explain and then friend can hopefully see solicitor and be better informed from beginning.

I found the wording in your posts confusing which is why I wasn't sure you'd understood. I think you've got it now. Your answer in your most recent post (£400k for each) is correct. Take the value of the house at the point of sale, deduct any outstanding mortgage, deduct any capital repayments made by the occupier and divide whatever is left (if anything) between the parties.

Amazing. Thank you all so much. Sorry about any confusion - I'm not very good with explaining things - so you're very kind to bear with me!