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Legal matters

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Original poster

Any conveyancers? Who should get the equity in this transfer?

23 replies

sander85 · 30/03/2021 14:43

Annie and Bess buy a house together.

Bess moves out very soon after, and Annie continues to live there and pays 100% of the mortgage.

Bess has not been able to come off the mortgage as the banks said Annie never earned enough to take it on by herself. Annie is now in a position to get a re-mortgage on her own.

Let's say there is £30,000 equity in the house. Annie says it should all be hers as she has paid the mortgage all by herself. Bess thinks she should get half of it, because half of Annie's mortgage payments have been in lieu of rent to her. Also Bess has had this as a millstone round her neck for years and has not been able to buy elsewhere.

Annie is threatening not to go ahead with the remortgage unless she gets all of the equity. Bess is keen to walk away from all this so is considering acquiescing.

Who is right?

OP posts:

Marmite27 · 30/03/2021 14:44

Bess should get half.

SoupDragon · 30/03/2021 14:48

Has Annie done work to the house (repairs or improvements) and did Bess contribute?

SoupDragon · 30/03/2021 14:50

How was the deposit funded? Was any of this returned to Bess?

Jabba2020 · 30/03/2021 14:51

Bess should get half, she should be able to force a sale/remortgage too.

crapbuttrue · 30/03/2021 14:53

What should have happened is that half of the mortgage and any repairs/improvements should have been paid by Bess. But Annie should have been paying Beds rent to live there.

Can you work out what situation you have been in if this had happened?

crapbuttrue · 30/03/2021 14:53

But no, Annie should not get all of the equity.

MiddlesexGirl · 30/03/2021 14:57

Beds should have carried on paying the mortgage if she wanted full rent.

What was the value of the property at purchase in relation to the size of the mortgage?

Bess should certainly get some of the equity as she's had her money sunk in a house but not half if she didn't pay half of the mortgage.

Original poster

sander85 · 30/03/2021 14:59

@SoupDragon

Has Annie done work to the house (repairs or improvements) and did Bess contribute?

Not really, some painting and perhaps new carpets

OP posts:

littlewhitestar · 30/03/2021 15:29

Really Bessie should have insisted on the sale of the property when she left or asked for occupational rent.

The fairest way would be to calculate the deposit as a percentage of the purchase price then split the same percentage of the sale price by however much each person contributed to the deposit as a percentage eg Bessie paid 25%, Annie put it 75%, the deposit was 10% of the purchase price so Bessie gets 2.5% of the sale price and Annie 7.5%.

Then for any remaining equity, as Annie hasn't done any work/maintenance, I would split it proportionally based on how much Annie has paid for the mortgage and how much Bessie should have been paid in occupational rent (50% of the market rent). So if the mortgage payment was £1000 per month and the market rent for the property was £800 per month, Bessie should have been paid £400 per month so her contribution to the mortgage was £400/£1000 so she gets 40% of the remaining equity, Annie gets 60%. You'll need to calculate it as a total for the whole period though as mortgage rates and rental prices will have varied.

Unless Annie has remortgaged to release equity, then it is even more complicated...

Original poster

sander85 · 30/03/2021 16:45

It wasn’t possible for the house to be sold when Bess left as it was in negative equity. The deposit was split 50/50.

OP posts:

MrsBertBibby · 31/03/2021 20:17

How do they own it? Joint tenants? Tenants in common?

MrsBertBibby · 31/03/2021 20:18

And did they ever discuss what they intended?

crapbuttrue · 18/04/2021 04:01

And have they sorted it out yet?

Soontobe60 · 19/04/2021 21:25

Annie has benefitted massively from Bess continuing to be on the mortgage as it has meant that she has been able to continue living there although technically she would not have been given a solo mortgage.
Bess has been penalised through staying on the mortgage as it has meant she has had to pay rent, which is usually more than a mortgage, and has nothing to show for it. For those saying take into account the rent she’s been paying, what if the rent was 25% more than the mortgage? Eg mortgage £500, rent £625. That would mean that the split should be 75% Bess, 25% Annie.
Equity should be split 50/50

youcancallmequeene · 19/04/2021 21:47

This is interesting as this was exactly my situation with my ex. We bought a house together and he moved out within the year. I paid the deposit and he paid nothing except a small amount towards the mortgage for the first few months he lived there.

When I sold several years later it had increased in value. He was still on the mortgage as I couldn't remortgage due to income but could afford the whole payment 🙄

Anyway. I sold, got his permission and didn't give him the equity. He wasn't prepared to deal with it when it was in negative equity so he could piss off as far as I was concerned when there was equity in it and he'd contributed sweet FA.

Bess should be entitled to nothing. Unless she kept up her share of the mortgage in which case she should get 50%

Lineofconcepcion · 20/04/2021 03:03

In the absence of any agreement the property is held either with equal shares as tenants in common or as joint tenants therefore the equity should be divided 50/50.

In legal terms it is irrelevant who paid the mortgage unless there is an agreement made to the contrary at the time of purchase, I.e. a deed of trust or other document setting out terms, or a clear verbal agreement.

ScrumForward · 20/04/2021 06:17

This sounds a similar situation to a Mesher order where one person stays in the mortgaged property for a set time.

My understanding is that the person staying has to pay the full mortgage. When it comes to selling it is split between the owners as the other person would have had to pay rent elsewhere.... so their outgoing costs would have been the same

ChocolateDeficitDisorder · 22/04/2021 07:10

I always wonder why the person who chose to leave should expect 'rent' from the person they left behind in the house. Surely it was their choice to get into a mortgage and their responsibility to pay their share until the house is sold.

alwayswrighty · 22/04/2021 07:13

@sander85 how much was the property initially bought for. How much is it worth now? Did you buy tenants in common with a certain percentage each or joint tenancy?

BuggerBognor · 22/04/2021 07:14

This reply has been withdrawn

Message from MNHQ: This post has been withdrawn

Bluntness100 · 22/04/2021 07:16

Bess should get half, Annie is taking the piss.

sandgrown · 22/04/2021 07:19

@littlewhitestar thanks for that information. I have split from partner of 20 years . Unfortunately , for lots of reasons, didn’t go on the mortgage but was the major contributor due to him not working for long periods. Trying to sort this before a very expensive court case so I am having to do lots of calculations.

Lineofconcepcion · 22/04/2021 12:52

@littlewhitestar the law doesn't operate like that.

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