What's fair in this case - advice for friend

[KentuckyFreudChicken]

My friend and her ex partner bought a house together 3 years ago. 2 months after they moved in they split up and he moved out (was having an affair).

He put in the deposit 11k
She paid 4k for solicitors bills, costs etc

Other than first 2 months, she has paid all mortgage, bills etc

He refused to sign it over to her unless she paid him 11k (couldnt afford to).
He refused to let her sell it earlier unless she paid the 3k early redemption penalty out of her profits (and split the rest)...she did not want to do this.

So 3 years later, early redemption penalty ends in March. What should my friend do? If they sell how should they split profits to make it fair? She still can't afford to give him his 11k back but he still wont sign it over unless she does and she doesn't want to keep paying all the mortgage forever when he's still on the deeds.

How can my friend safeguard her best interests and what is her ex dp entitled to?

Any help would be greatly appreciated as this has been a big stress to her.

Actually, I guess he does own half the house, since neither side signed anything to the contrary. (IANAL)
KFC has had use of the house for three years, which very roughly equates to the mortgage.

But I think neither law nor fairness should be the only factor here. It's a negotiation, not the same thing at all

If the house price has gone up, then it's very likely that the lender will agree to lending an extra 11K.

However, the 11K + 4K was the original investment, I would robustly reject 11K, and offer (11-4)= 7K + interest, call it 8K since that is the difference.

A key point is when KFC expects to move.
If she intends to stay put, say he can have 8K today in cash, or in 10 or 20 years. I don't know her temprament, but I would personally use the phrase "the executors of your estate can argue it out with mine when we die".
Do not give any impression that selling or any change in the status quo is uncomfortable for you. Indeed you may want to give the impression that you quite enjoy having thousands of his money that you don't have to give back any time soon.

It's also worth pointing out that since it obviously isn't his principal residence, he is liable for capital gains tax.

As a hardline City capitalist I feel impelled to the war strategy of Trotsky. "No peace, no war".
Tell the ex that you are moving out anyway, and that there are two scenarios, and you will let him choose.
a) You sell, he gets 8K.
b) You buy a different property and rent out the old one.
(remember the Heinlein dictum that a threat is not a moral commitment).

You have now engineered a position where he will rationally believe that you will never sell the property.
I'd bet he wants the money now and to him this will be intolerable.
Buy to let is of course not a risk free investment, but the joy of this is that as a mortagee, he is jointly and several liable if it all goes pear shaped.
Relatively few blokes want the ex's to have the ability to bankrupt them if they screw up...

Also houses are at an all time peak in terms of the ratio to average earnings.
Presumably you may want to trade up at some point. The best time to trade up is when the market is going down, since the gap gets deflated as well.
Thus it's quite possible you may move when there is little or no profit, and if you are lucky the move will be when prices are actually lower than they are now.
Thus he will be liable for the difference between price and remaining mortgages. Give nthat you may move to intrerest only, that is a real risk for him.
I assume that he isn't your bestest friend any more, so you may well choose a time to move that means he has to give you money.
Or not.
The point is that you get to choose when you change the situation, and he should fear you doing that to shaft him.
As my former boss, the Chief Executive of a City broking firm said "Money is the best revenge".
Happy new year.

she needs to deduct the legal fees she paid up front, so that knocks off 2k off the 11k, and he has to pay half of the legal fees to sell.

I do think its unfair of him to benefit 50/50 from any price increase as he hasnt contributed to the mortgage for this time
Could she remortgage instead to pay him a lump sum, this would be cheaper than buying another house.

I think she might be better off seing a solicitor,

Thanks MamaG

11k was 10% - so he should get 11K plus 10% of profits? he would probably sign it over to her now for the 11k but if they sell he wants half profits.

She just can't find 11k to give him! her dad tried to help a while ago and offered him 5k (all he could afford) but he wouldn't take this. Ex did say he'd take it in interest free installments of £100 a month

Right. Have they got children? That changes everything if they have.

If not, they need to negotiate this otherwise they will end up paying too much out in legal fees.

She may be entitled to Legal Aid, suggest she sees a Solicitor with a free initial interview (although beware: she may be charged as sols have to give their advice in writing, and we charge for that!) - although she will have to pay LEgal Aid back, it will be at a much lower rate and can be put as a charge on the house if necessary.

What about going ot mediation sessions together? AGain, she'll prob have to pay (sorry don't know current prices) but they may get it sorted faster that way?

Kentu, my advice is legally correct by the way. It's 50% each. If this would render children homeless that would affect things - I think there;s then a Children Act application that could be made but not otherwise.

Morality and fairness of course is legally irrelevant. The law says you own it as to 50% each and that is it.

MamaG - they have no children, she is not entitled to legal aid (we checked)

DC - Wow! I'll pass that on to my friend....if it were me I'd be very pleased with your advice but alas my friend has more morals than me and not sure she's a real player as such.

Xenia - friend would be happy to split all 50/50 and pay half fees....this would give them both about 15k each. Its the ex that wont accept this....does he legally have to if they can't agree with anything else (I'm not doubting you just trying to clarify facts ).

if nothing was signed, no kids, then yes, I think a Court would say 50/50. So bollocks to him, tough shit!!!

thanks mamaG - she'll be very pleased with that news!

In law, if this couple are beneficial joint tenants and they did not make any legal agreement when they bought the house about who would own what when they split up, then they own the house 50/50 regardless of who paid the deposit and/or mortgage. So actually he is not legally automatically entitled to his deposit back, just half of any profit on the sale of the house, whenever that might be.
What does she want? If she wants to sell, she needs his agreement, if she wants to stay there then she really does need to get the house in her name, which will also need his agreement.
He is blackmailing her a bit regarding her paying all the costs, because he thinks he is legally entitled to his deposit PLUS half the profits which he isn't, unless they agreed that in writing when they bought the house.
He could got to court to get the court to decide who owns what share, but that would certainly mean there was no profit left to fight over.
They have to negotiate this, or she can go to court to force a sale. She could, however, make it clear that if she does this then he will only get 50% of the profit, not 50% plus 11K, and that should force him to agree a fair deal.

this backs up what I'm saying

mamag - at the time of buying our house our solicitor explained the joint tenant/tenants in common as a percentage owned. I obviously didnt understand him correctly

Yes, Kent - what aloha and I say about the law is right. It is also an important issue for mumsnetters who live together with a partner but do not marry. If they paid £100k deposit on their house and put it in joint names with their loving partner who then goes off with another woman, he gets 50% (unless they agree a tenancy in common with shares other than 50%) In other words putting legally into joint names is a gift and you're a fool to make these gifts without legal advice.

jamp, you can have tenants in common with 50% each of course too. Joint tenants means automatically 50% and also if one dies the other half goes to the other owner, not whoever they leave their money to. My parents owned their house as joint tenants. When they were not getting on my father "severed the joint tenancy" and so he could leave his 50% to whoever he wanted. Their tenancy in common was then 50% but not automatically going to my mother if he died although in fact his will still said that and she died first anyway. he was worried he would die first and she would take all the house and leave to the cat's home not us children I suppose.

Putting things in joint names is a form of gift.

He's a fool for not drawing up a Tenants in Common agreement before sale. We've had to do this (me with big deposit). Xenia and aloha are right.

Purchase not sale

Anothing thing for cohabitants to bear in mind is that if Labour do change the law to give them marital type rights then these TC contracts could be over turned - you put in £200k to the house purchase and you still just get 50% if it's a long relationship particularly with children who need to be housed. I am not in favour of that legal change at all. you can marry if you want those rights. So anyone else against it do lobby the Government as they are consulting now.

• didn't know that.

The new rules if they come in you may be able to contract out of. They are tehre to protect mostly women who give up a career, bring up children over 20 years and then split but the house is in the husband's name and under current law the woman gets nothing of it as she's not married but under the legal change she'd have rights a bit like a wife has now. At present there are no common law wife rights to property (although obviously a right to claim maintenance for children and if you own properties in joint names you share them even now)

Well, that sounds fair really.

I think you need to look at equitable accounting. He has put in the £11k deposit so is entitled to it back. Only capital payments count as the interest is offset against 'occupation rent'.

If he won't agree to a deal why does she not just continue to live there without paying the mortgage, saving the money for a deposit on a new place, until they mortgage company reposses. They will then sell it and send the money to the joint tenants equally unless he applies to Court for equitable accouting.