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Original poster

Separation- who is entitled to this equity?

17 replies

eandh · 19/12/2019 15:42

a friend Of a friend and his partner separated not married but have a child together. Her choice to end it and he had moved to parents, they’ve asked me for advice as I work for a large High st bank but this is beyond what I deal with

Originally house was bought in her sole name for £180k and she was gifted a £90k deposit from parents.

Approx 8 years ago he was added to mortgage, nothing legal put in place regarding the initial £90k that was placed when purchasing property he has always contributed 50% to the mortgage even when in her name

He is now being told by ex partners father that he is only entitled to 5% of the property value which seems strange to me as I would assume with no legal paperwork in place if he was on mortgage and house sold approx 50% of equity would go to him but his decision if he was happy to accept less (which he is but now being told he can have 5% has put cat amongst pigeons)

Also he earns around £1800 take home per month ex partner father insisting he should be paying £850 a month to cover mortgage and child maintenance as far as he can see legally only have to pay her csa calculated amount as a minimum and if he chose to more? (As it is he has continued to pay half mortgage, all the car finance in his name but she has the car as he has access to work vehicle) he is having child 3 nights a week and on the whole it’s been amicable till now

Any ideas? X

OP posts:

666onmyhead · 19/12/2019 15:48

Logic looks to me like this ... He's contributed 50% of mortgage payments on half the value of the property for 8 years :. At most entitled to maybe 25% of the equity overall growth just in that 8 year period once all costs are covered. But not more than that.

Embracelife · 19/12/2019 15:52

Would be 50 50 unless she can prove and argue she put in 90k therefore he not entitled to that 90k
She needs to speak to a lawyer versed in trusts of lands act

Original poster

eandh · 19/12/2019 15:57

Thank you I think he is happy to say the first 90k is ‘hers’ as was a gift to her but he isn’t happy to accept 5% of overall house value when he has paid more than that will feed back

OP posts:

666onmyhead · 19/12/2019 15:59

He was in effect paying rent - ie just the half of the load on the property - and as such shouldn't be cross he's missing out on the investment growth - he didn't invest !

666onmyhead · 19/12/2019 16:00

loan not load

AteAllTheAfterEights · 19/12/2019 16:05

If unmarried it doesn’t matter who is on the mortgage - who is on the deeds?

I’d also be very careful about giving advice - is bet it’s against your employment contract

ByAppointmentTo · 19/12/2019 16:07

When he was added to the mortgage was there a value stated for the house? If so then it's simply a question of him having 50% of any increase in value since then.

DistantVworp · 19/12/2019 16:09

Disclaimer - I am not a lawyer, just an accountant.

There's some more information that would help clarify. When you say he was added to the mortgage - was he added to the deeds as well (ie as a joint tenant / tenant in common)? If so, he would be entitled to 50% (or whatever % is set out in the deeds if tenants in common).

If he was not added to the deeds, then technically he owns none of the house. However, he would likely be able to argue that he has an interest in the property, and a court could recognise that he has a right to live in the property and a share of its value when sold. How much that value would be would depend on its value at the time of purchase, the relative value of contributions made by both parties and the value of the house now, less any mortgage still due.

He would be able to evidence relatively easily the 50% contributions made since being added to the mortgage, however any contributions made prior to that would be more difficult, unless there is a clear paper trail (emails / letters / bank records clearly showing mortgage payments)

For example (if not on deeds). If the house was purchased at £400k on purchase 10 years ago, and he is able to evidence all the mortgage payments (including those made before he was added to the mortgage), then the split could look like:

Deposit - £90k (her) = 22.5%
Remaining equity = 50:50

So, assuming that the outstanding mortgage is now £200k:

House value: £700k
Less mortgage: (£200k)
Total equity: £500k
Less 22.5%: (£112.5k)
Remaining equity: £387.5k
Split 50:50: £193.75k

So his share of the equity would effectively be 38.75%

That is only an example, and will depend entirely on whether he can convince a court of his contributions. Obviously I've used completely imaginary numbers.

MarieG10 · 19/12/2019 16:09

First of all. You say his name is added to the mortgage. Was his name also added to the title deed so he is a joint owner?

If added to the deeds, are they tenants in common or joint tenants.

Does she have any records or other notes as to what was agreed if anything?

When was he added to the deeds/mortgage.

What was the house with when he was added to mortgage and deeds?

Mortgage payments shouldn't just be rolled up as money owed as they are interest on money borrowed, of which he is a joint borrower.

Depending intend above, there could be a multitude of answers but they should seek to reach an agreement. If they end up at lawyers they will be looking at circa £300 plus vat so if it ends up as a full blown spat a lot of the equity will be burnt in lawyers

If he argues she gifted him half her equity then the sums will be different if awarded but seems he isn't (sensible)

What seems sensible is he gets 1/4 of the growth in value of the house. He also gets 1/2 of the reduction in the mortgage capital outstanding from when he was added to the loan. I wouldn't count anything before then as he had no legal rights

What this outlines is the stupidity of putting common law partners on property deeds or mortgages, and especially without a legal agreement in place.

DistantVworp · 19/12/2019 16:17

Sorry, just seen that the purchase price was £180k. In which case, it will still depend on the value of the outstanding mortgage, but the figures would look more like this.

Deposit: 50%
Remaining equity: 50:50

If the outstanding mortgage is now £50k and the house is worth £300k:

House value: £300k
Less mortgage: (£50k)
Total equity: £250k
Less 50% (£125k)
Remaining equity: £125k
Split 50:50: £62.5k

His share would be 25%.

But ultimately, it will depend on the deeds - if the deeds state they are tenants in common, he owns 50% of the house and it would be for her to argue that she put the deposit in etc. If he's not on the deeds, it will depend on how well he can convince a court of his interest.

Embracelife · 19/12/2019 16:43

It s nothing to do with amount paid towards mortgage...if price went down and equity reduced they would still share equally (less the 90k she put in)

If equity is 200k then 200k less 90k gives 110k divided equally 65k each (plus she gets her 90k)
But at depend as was said if held in common or joint

Embracelife · 19/12/2019 16:43

Sorry 55k each

Embracelife · 19/12/2019 16:45

If equity is less than 90k then they need to agree or argue it out.

wellthatwasthat · 19/12/2019 17:15

How long ago was the house purchased?

How long did she pay the mortgage on her own?

When did he start paying towards the mortgage - when his name was added 8 years ago, or before that, and if so, for how long?

Original poster

eandh · 19/12/2019 18:17

Thank you for all the replies I actually don’t know a lot more of the information other than what I was given as I’ve never even met these people a mutual friend thought I may know some info from
The time I’ve worked in banking. I think best advice would be to see a solicitor armed with all the info and find out best way to go, main thing is he wants to be fair but also not be screwed over by the ex partners father telling him he is only entities to 5% of property value

OP posts:

BlouseAndSkirt · 19/12/2019 21:14

“Would be 50 50 unless she can prove and argue she put in 90k therefore he not entitled to that 90k
She needs to speak to a lawyer versed in trusts of lands act”

She bought the house, on her own, in her own name to begin with so I’m not sure how he would be able to prove that it was anything other than her £90k.

5% is ridiculous though.

Why is the father involved in these discussions? Why are they seeking advice from people on the grounds that they work in a bank?

Ellisandra · 20/12/2019 11:04

A friend of a friend asks someone who works in a bank, about a complex legal matter?
< for them, not for you! You’re kindly trying to help. Just tell them to get proper legal advice - there are far too many variables here for advice from Internet randoms requested by a friend of a friend based on incomplete information!

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