DD splitting from BF - how to split the property?

[Housemum]

Hi, I know we need to get legal advice but thought I’d test the water here to work out what we need to be asking.
DD and BF bought a place together. She put in the 10% deposit with money from her granny. 2 years down the line she says it’s over and has told him to leave - she will take on the place herself with a bit of help from us. He is claiming he is owed half of the equity - surely not, as he didn’t put anything in?

Background:

• both earning, she has earned more than him slightly, so they have paid equally
• she had a car, it was used towards purchase of his car and she’s letting him keep that (was only worth a small amount in the end but initially it was her £3k that bought it)
• they have equally bought furnishings and she’s happy for him to take half of anything that wasn’t part of the property already (so he can keep desk/sofa/computer etc)

My view (and actually it’s what I did when I left her dad) is that 10% belongs to the person who put it in, and the rest after mortgage is split equally. But is that legally possible or can he argue somehow that despite not contributing more than her he is entitled to half granny’s deposit money?

Thanks for any advice

If they were married, it would be different, but I'm with you - I think they should look at the equity, take her £10K out and then split the difference. What argument can he have otherwise?

She ought to be careful re saying he can have what he wants - she will have to replace those things.

I think there world need to be proof that the deposit was her money. Has she got anything? Bank statement etc

All the background is irrelevant if they are both named on the mortgage.

They should have had something written at the time to protect her money. I think its called a deed of trust?
If not, unfortunatly he is entitled i believe. My brothers partner is going through the same thing now ad he didn't protect his deposit money.

How is the property owned? Tenants in common?

Is there anything in writing about who put what in?

When I bought a house with my ex we had a separate document drawn up with the solicitor that protected the respective deposit amounts we had put in (he put in approx £10k more than me) but also recognised that I as the higher earner would be paying a higher percentage of the mortgage, at the end of the 5 year mortgage period of me paying the higher percentage my share of the equity would then be agreed to be equal to ex's.

As it happened we split 4 years in but for a variety of reasons agreed to split the equity 50/50 any way.

After only two years there may not actually be that much equity above the initial deposit amount? It's worth finding out how much it is as it may not actually that much to pay him off.

Not legal advice (I'm sure someone will be along with more informed advice soon) but I think legally it depends on what they put on the land registry submission etc. On those forms you can detail how the property will be owned, eg joint tenants (equal shares) or tenants in common (where I think you can own different percentages 50/50 or 90/10 or whatever).

Have they had it (realistically) valued? If they bought two years, at the top of the market, they may find the equity has diminished and even disappeared with a small deposit.

Also, if she wants to stay there, and he is on the mortgage, she will need to buy him out of hia share of the property and take on the whole mortgage herself. Does her salary mean a bank will lend her the whole property value?

If not they will probably have to sell and take their money and both start again

When my then bf and I bought our first house he paid the deposit, this money was referenced as an extra share of the property in the paperwork as otherwise we were told it wasn't legally certain he would get it back. Have the deeds reflected the unequal deposits or are they a 50/50 split? Dd needs legal advice.

The moral thing to do is get three valuations take the average take away the mortgage, the value of the deposit and split the remaining equity so she buys him out that amount

Legally unless it is set out it’s difficult to prove

What lala said. Get it valued firstly, it may not have increased or even decreased in value. A friend was caught out when she split from her H, negative equity, which she didn’t really understand meant she should have given him money if they were to sell up to pay off the loan.

If he gets very obnoxious, I’d offer him 5k to piss off, it would be worth itn

It will depend on whether they own it as joint tenants or as tenants in common with a specified share,

Morally and ethically, he should agree that he is owed half of 90% of the equity, with your Dd entitled to her 10% and then half of the remainder.

But who knows how being asked to leave the home he thought he was buying will affect him.

I think there is a difference between joint or in-common tenants wrt who can force a sale, or not.

Unless they entered into a Declaration of Trust to protect her deposit, bf is entitled to 50% of the net equity. It's likely they would have received advice on their options by the conveyancing solicitor, but I'm always astounded by the number of people who assume their partner would never "take their money" and don't bother to protect themselves.

Without a Declaration of Trust, unless bf is prepared to agree to repay her contribution, she'll have a difficult and expensive time in trying to dispute the presumption of an equal division.

Cohabitation law is very black & white, & unless legal documents back up your position you're pretty much at a brick wall.

If he has paid half the mortgage then he should be entitled to half the equity minus her deposit. Has the house risen much in value, probably not in 2 years.

@Babyroobs it may have done. My house went up 20k in 2 years

When they bought the place, solicitor should have asked if they wanted to be joint tenants or tenants in common one of them (can't remember which) means you can name who put the money in and that is protected to stop one person claiming half and running off with the other ones money.

When my now husband and I bought our 1st flat before married we were asked whether that's what we wanted to do. Hopefully she has done that so is protected, probably worth speaking to the conveyancer they used when they bought.

Are they holding the place as "joint tenants" or "tenants in common"?

1. If joint tenants, they are both entitled to 50% of the property. You need to seek legal advice ASAP. Your daughter will have to provide evidence that she paid the deposit by herself e.g. bank transfer from the granny to your daughter then to the solicitor.
2. If tenant in common, did they enter into a "Declaration of Trust" which should specify the respective contributions of equity and how to divide the asset in case of split/sale? Then you have nothing to worry about.

She should stand firm: of course he's entitled to half the equity ... after her deposit money is subtracted from the equation.

He sounds like he's going to be an ass, so anything she has in writing needs to be saved. And she needs to put their conversations about it in writing as well if she can.

Thanks for the advice so far - just skimming as I’m at work today.
She can’t remember how they own it (joint or in common) and they didn’t get a deed of trust - I did suggest it at the time but they naively thoughtit was £800 they didn’t need to spend. Probably doesn’t help that when her dad and I split we were fair to each other, so she probably didn’t think about someone wanting to claim more than their “fair share”. She is staying at ours at the moment as he doesn’t have anywhere else to go (when he moved out his parents re-jigged their house so they don’t have his room as a bedroom, whereas we have a sofa bed). She’s going to look through emails but the paperwork is all at their place. The deposit was gifted from her granny so there is definitely a transfer into her account and I think the solicitors got some sort of documentation in case of future inheritance purposes

Unless her earnings are high enough she won't be able to remortgage to remove him from the mortgage unless you have a sum to put in as a gift not a loan (the help from us?). Affordability is key and if she needs help from you then she cant afford it.

If you remortgage jointly with you on the mortgage and it is your second home there may be stamp duty implications.

You may well find that it needs to be sold and half of any equity will be his regardless of who put the deposit in if it wasn't legally protected. Similarly if the property is remortgaged in 1 name then he will be eligible for half of any uplift, that said a remortgage is likely to value lower than a new purchase and so there may be little, if any equity.

Has she been to see her current mortgage provider?

From HMRC
Transfer the outstanding mortgage
Joint owners (this may include unmarried couples who are splitting up) may agree that just one of them will take over ownership of a property they bought together, including any outstanding mortgage.

In this case the person taking ownership will pay SDLT on the total chargeable consideration of the following (either or both), if it exceeds the SDLT threshold:

any cash payment that one of the couple makes to the other for their share
the proportion of the outstanding mortgage that belongs to the share of the property being transferred
Example 3
A couple own a house equally together and:

it’s valued at £400,000
they’ve equity in the property of £300,000
they’ve an outstanding mortgage of £100,000
They transfer ownership so that one of them will have sole ownership of the property. The new sole owner:

pays cash for half of the equity - £150,000
becomes responsible for the other person’s half of the outstanding mortgage - £50,000
The consideration for SDLT is £200,000, made up of the:

cash payment
50% share of the outstanding mortgage
The new sole owner pays £1,500 SDLT (0% of £125,000 + 2% of £75,000) and must tell HMRC by filling in an SDLT return.