Charge on property - options?

[gingerbiskit]

Hi there,
I have been divorced for about 6 years now and I have one of these charges on my property. When my youngest reaches 18 or finishes full-time education, or a partner moves in with me, or I sell the house for whatever reason, my ex will get 50% of the equity in the house (which is quite a lot, since we bought the house for a very low price - it belonged to my father and he did a good deal for us). Does anybody know of any other options I may have other than offering him a large sum of money instead? I feel that I should never have trusted my solicitor when he talked me into making this decision...I've never had anything to do with solicitors before and no one in our close family had been divorced before, so I feel that I did not have a lot of help with making the right decisions - I was very naiive really. My ex was a bully and is even more so now we are divorced. My son even refuses to visit him now as he does not like the way he is treated by him. Does anyone know of any way out of this situation? I really do not want to have this hanging over my head for the next 10 years (and I couldn't afford to pay him any large sums of money anyway..!) Sorry to ramble on, only I just found out that I can't borrow any extra money on the mortgage (to buy a replacement car - mine just died) until he's signed a letter asking for his permission first !! I hope all that makes sense !

Ginger - sorry don't have any answers but wondered if it might be worth posting this over in Legal?

Hi Gingerbiskit, The fact that you acquired the house at a bargain price from your father, might well have entitled you to more than 50%, especially if this was a short marriage. Without seeing your Form E as it then was, showing all the matrimonial assets, it is not possible to advise you accurately. Were there other assets, pensions etc? You are right, you cannot charge the property without his consent. He may permit you to charge your half of the equity. I hope that your solicitor made sure that your ex is responsible for 50% of the maintenance of the property until the charge is realised. It is very very difficult though not impossible to appeal a financial settlement after 6 years, unless your son has special needs for example. Do you anticipate special difficulties in 10 years' time? Property is at its lowest value now. If you could buy your ex out now,( giving him 50% of the net equity) with the help of your father, partner or some other person, you would probably have to raise a far smaller sum than you will be obliged to raise when property prices rise. If that is not possible, you may find that your ex would prefer a smaller sum now to a larger one in 10 years' time. Mortgage lenders used to help with this. Grandparents often help by releasing equity on their own property. It is far better to buy him out now, in my opinion. Would your Father help? Maybe your son will buy his father's 50% share when he leaves education and gets a job. If a partner assists you in "buying out" your ex, you could well end up in the same position as now, if that relationship fails.

This post illustrates the need to get good legal advice from a specialist. It really does save money in the long run.

The thinking behind the charge realisable when your son leaves education, is that the property has served as a home for him and that it should be sold and the equity divided between the parents when he can earn and provide his own accommodation. In reality, the father will have acquired an alternative home years before the child becomes an adult, and the proceeds of the charge will probably be used to discharge the father's mortgage. This leaves the father mortgage free, but the mother usually has to take on a mortgage to buy elsewhere or pay off the father. The Mother is at least middle aged by this time, and could be paying off a mortgage into her retirement. Furthermore the Mother's career will usually have been adversely affected by her child care obligations. Of course, if the property is of high value, there may be enough equity for her to buy some where outright. Only by awarding the mother more than 50% can this inequitable situation be avoided.

Good Luck

A charge on the property is legal and binding. Purchase price is irrelevant. Your best hope is that he will be reasonable when the time comes to sell, but he can enforce sale once your child is of age. Sorry, but it is unfair and it sucks.

Hi Gingerbiskit further thoughts. Who is currently paying the mortgage?

If in 10 years' time your ex receives his half of the net equity of the house, it well may be that the law will be that he has to pay Capital Gains Tax (CGT)on that sum, as it is the proceeds of a property that is not his primary residence. I believe, and your solicitor will and must check, that at present he is not obliged to pay CGT on his 50% charge, but it is a grey area which will no doubt be clarified in favour of the Inland Revenue. He may prefer a smaller tax free sum now, rather than a taxable sum later. He will need to check the tax situation to be sure.

One more thought. If your property is in negative equity, buy your ex out now. He can have 50% of nothing.

Sorry to hijack but I tried that Baggy. Bastard soon cottoned onto it, waited, and took thousands off me! Would have rather given him 50% of nothing!

Do it asap Ginger if negative equity!

Thanks all for your advice - I will certainly look into more legal advice from a specialist. No negative equity I'm afraid..!

Hi, Karmann, your legal representative should have drafted the Mesher Order (charge) so that you could realise it at any time of your choosing before your child finishes education or attains 18 years or whatever date you agree. This would have enabled you or Gingerbiskit to realise the charge at such time as best suits.

Do check the mortgage position. Who is paying it? Is the interest only being paid? Whilst mortgage rates are so low, would it be advantageous to pay off capital?

Couldn't do that, we weren't married so it came under property law rather than matrimonial law.

Hope it works out for you ginger.

It's just me paying the mortgage. It's a repayment mortgage. I work 20hrs a week so i can take/collect the kids to and from school. I couldn't afford to pay off the capital. He pays nothing towards the maintenence of the property. Thanks for pointing all these things out to me - I'll certainly have a few questions when I go and see someone for legal advice..!

Sorry, I got that bit about maintenance wrong: He pays maintenance through the CSA every month, but i didn't realise that was towards the upkeep of the property - i thought it was supposed to be his share of money for things for the children, like food and school uniform etc..? I suppose it could be for anything though..

Hi Gingerbiskit, You need some serious financial assistance quickly. If you alone are paying off the mortgage, you are reducing the outstanding balance. This will increase the equity, of which he gets one half share. It would probably be far better for you to have an interest only mortgage. The payments would probably be lower, and the outstanding balance would remain the same. You could save the difference in mortgage payments and keep that money for you. You might well need savings in 10 years time. Why should you reduce the outstanding balance when you only benefit from one half of the equity? There must be more to this.

The CSA is for the children and NOT for the upkeep of the property. That should have been drafted in the financial order.

Get some help Gingerbiskit. T

Bot sure why this is seen as unfair. Presume once duty to jointly house your dc is over then 50/50 is fair!

Hi Hairytriangle, I suppose the point is that I feel that I was wrongly advised by my solicitor, and I was also bullied into making a decision far sooner than I should have. My ex used all sorts of tactics to bully me into making a quick decision (forcing his way into house and not leaving; turning up at school pick up time in a state and shouting at me in front of all the other mums etc; threatening to leave the decision up to the courts to decide). I was in a very difficult position and I had little knowledge of what people do in this situation. If I sold the house there and then, the kids and I would have had to either move in with my parents (not enough room) or we would have had to buy/rent a place in town - which would have meant my kids would not have been able to go to the school that I wanted them to go to. As we did not move, I have been able to get my son into the school that I wanted, which is brilliant, as obviously the kids and their education come first. I just wish I had been given more options as I'm sure there would have been another way and I wouldn't have had this worry about what will happen when it's time to sell/give him his share.