- January 21, 2024
- Posted by: legaleseblogger
- Category: Related News
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Title: Divorce and Property Ownership: Seeking Fair Solutions
Introduction
As we navigate through the complexities of divorce, one of the primary concerns is the fair division of our shared property – a house worth ┬ú340,000 with a remaining mortgage of ┬ú219,000. We are tenants in common, and I contributed more towards the deposit before our marriage, which entitles me to a larger share of the property’s value. My spouse has offered me ┬ú45,000 to buy me out, but I am uncertain about the fairness of this offer and whether I can afford to maintain the property on my own.
Financial Considerations
Given my annual income of ┬ú27,000, I am hesitant about taking on the financial responsibility of a mortgage if I were to buy out my spouse’s share. I lack experience in handling such matters and am unsure of how to proceed. I need a solution that ensures a fair distribution of our joint assets and enables me to make informed decisions about my financial future.
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Property Ownership Details
Further details about the purchase of the house reveal that it was bought for £274,000, with my contribution amounting to £29,000, while my spouse contributed £7,100. Additionally, since moving into the house in 2019, I have shouldered 50% of all bills and mortgage payments, indicating my significant financial investment in the property.
Conclusion
In conclusion, the use of AI Legalese Decoder can empower me to navigate the complex legal landscape of divorce and property ownership. With its assistance, I can gain the knowledge and guidance necessary to make informed decisions regarding the fair division of our property, ensuring a favorable outcome for my financial future. By leveraging this accessible and informative tool, I can secure the necessary support without incurring excessive costs, ultimately achieving a fair and equitable resolution to this challenging situation.
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****** just grabbed a
I would not regard that as a fair offer. A fair starting point is 1/2 of the equity, so ~£60k. If you put more towards the deposit, then this should be added to your share of the equity. So he should be offering you more than £60k.
But that said, I’d probably settle for 1/2 of the equity in the house. Have the house valued, deduct the mortgage outstanding. He owes you 1/2 of the difference.
You only earn £27,000. When either of you buys the other one out, the mortgage will need to be in a sole name.
Say you buy him out for 50% of the equity. You will need to be able to pay a mortgage of 219K + 60K = ┬ú279K. And you earn ┬ú27K. Most lenders wonÔÇÖt lend more than 4.5 x earnings. So thatÔÇÖs only ┬ú121,500 you can borrow as a mortgage. So itÔÇÖs unaffordable for you to stay.
So yes, he should buy you out, or you should sell. ┬ú45K is not even 50% of the equity and you say you put more in to begin with. So thatÔÇÖs a shit offer.
So it seems like you need to sell and then divide the proceeds as per your tenants in common split.
ETA: as youÔÇÖre married thereÔÇÖs also pensions to consider and any other assets. Depends on length of marriage and other factors.
You wonÔÇÖt be able to get a mortgage that high based on your income of 27k, so either he would have to buy you out or you seek an external buyer.
Based on your deposit and equity figures IÔÇÖd say youÔÇÖd be entitled to around the ┬ú71.5k mark.
29K + 7K = 36K deposit
29/36 ~= 80% (you) / 20% (them) split.
340K – 219K = 121K = profit after clearing the mortgage (assuming zero fees)
121K – 36K = 85K profit to be split = 42.5K
You can only split the profit 50/50 as you are married primarily but also because both paying 50% of mortgage, despite you having more at stake to start with.
So you should get 29K (your deposit) + 42.5K = 71.5K at best … if it sells for what it’s worth and no exit fees on the mortgage … otherwise it will be slightly less for your split of the fees.
Husband should get 7.1K + 42.5K = 49.6K at best,
Can you give us more information about what you agreed when you bought? How much did you each put in as a deposit?
Unfortunately there’s no way you can take on the mortgage without another person’s income (or doubling your own of course). So it’s a question of how much he needs to buy you out at (if he can).
What deposits did you put in? Have you paid the mortgage off equally?
There is £121k of equity so with the limited detail, best starting point is £60.5k
There’s a ┬ú121k equity in the house so 50/50 is ┬ú60k, given you also put more money towards the deposit as well, I’m not sure an offer of ┬ú45k seems fair to me…
There’s not enough information to say if it’s fair or not.
To give you any idea of what would be fair we’d need to know how much you both put in along with how much the house was worth at the time (this is so we can work out how much your deposits as equity as increased by).
We’d also need to know much of the mortgage you were paying.
An example would be your partner putting down a 10k deposit, didn’t pay anything to the mortgage and the house is worth 10% more, a fair amount for your partner in this case would be ┬ú11k as their equity has increased by 10% but not added anything else.
Ignore anyone giving you any numbers without knowing the above, they’re setting you up to fail.
If you put more money towards the purchase, what % did you specify? And does the registry office recognise that percentage?
Fair would be that you get that % of £121k.
Also do you have any children? That will hugely change any financial affairs.
Unfortunately it doesnÔÇÖt look like youÔÇÖd be able to buy your STBX husband out of the house however ┬ú45k is a ridiculous offer.
The way my husband and I worked it out if we were to part ways is I get my deposit back in full and then we split everything 50/50 after that.
So IÔÇÖd try and get him to sell with you, pay the selling fees and split the remainder. YouÔÇÖd get your ┬ú29000 back, he gets his ┬ú7100 back and then you split the remainder of the equity 50/50. If you donÔÇÖt have a declaration of trust written up stating this it will take some convincing to get him to do it though.
As many other have said, 45k is too little.
But what I really want to add is that he’s (likely) trying to screw you out of some money here, and chances are it’s not only in the house.
You should get your current % plus half the increase in value.
You already own, as tenants in common, 9.44%, arrived at by deviding £274,000 by £29,000.This is £25,800.
You then you add half the increase in equity to that figure.
Thats £25,800 plus half the increase of £121,000 which is £60,500. This comes to £86,300.
You DO NOT just get your deposit back plus half the increase in value. Your deposit bought a % of the original value of the property, ie £274,000.
Do due diligence. This just my opinion.
Unfair as it seems, it does not matter that you put in more deposit.
Given the length of your marriage the court would likely decide on an equal split of proceeds. Therefore half the equity, and no more, would be the figure.
49 days ago you said youÔÇÖve only been married a year and a half, 78 days ago you said youÔÇÖre been unhappily married for years. Something does not add up here.
From the current equity, you could also pay each other’s deposit out first and then split the remaining 50/50. This way you’re not missing out for putting higher deposit.
But I agree with others, it will be near tough for you to take on the rest of the mortgage unless you get some help from family.
Sell the house.
Both get your equity back. Split the rest 50/50.
You should be on the legal sub not the finance one!!!
You are married! The default position is 50/50 of the matrimonial pot unless there are reasons why that isn’t fair. Deposits don’t really matter. And its not about the house, there are savings accounts and bank accounts and pensions and any other investments, they’re all part of the pot!
Don’t sell yourself short. I get that lawyers are expensive but go at least for an initial advice (my firm does discounted rates for those, some may do them free) so you know what you’re entitled to.
And for the love of god get a financial order in place! Otherwise the potential claims remain live.
Solicitor and clean break financial order needed ƒæì
House bought for £274,000 and I put in £29,000, he put in £7,100
>>> Was the money ring fenced?
Equity = 340-219=121
Not ring fenced = 60.5k shared equity.
Ringfenced = 121-29-7.1=84900 shared equity of 42450 plus original deposit = 71450
His 45k offer isn’t close to enough.
Sadly, your income is highly unlikely to get you close enough to a mortgage.
Can you afford to see a solicitor? Some offer a free/discounted first session.
You’ll want a financial settlement, which should take account of the house and potentially other assets like pensions. What the courtwould rule if it came to court might vary depending on various factors (e.g. if this is a short marriage), though almost certainly better if you can read a fair agreement outside of court.
There are definitely people providing the wrong answers, but some with the right answers so hopefully the following will make it clearer.
Deposit (your portion) + 0.5*( principle paid + increase in property value ) is what he needs to buy you out.
Deposit: £29K. 
Principle paid = original value – current mortgage balance – deposit = equity you paid for – deposit = ┬ú274K – ┬ú219K – ┬ú36K = ┬ú55K – ┬ú36K = ┬ú19K
Increase in property value = current value – original value = ┬ú340K – ┬ú274K = ┬ú66K
£29K + 0.5* (£19K + £66K)= £29K + 0.5*(£85K) = £29K + £42.5K = £71.5K
Want to know how this is correct? If you weren’t splitting and used the above breakdown then deposit + principle paid + increase in property value = current value – current mortgage balance = current equity I won’t do the entire breakdown here but all of the other components cancel each other out, you can verify that.┬á
It’s a no brainer: sell and split the equity. He can use his ┬ú45k, add it to his share of equity and purchase the house himself or another house. But under no circumstances should you accept that ┬ú45k offer, that’s pretty much just paying back your initial deposit when you factor in inflation.
In my view he owes you about ┬ú97,000 for your share of the equity if heÔÇÖs to buy you out. HereÔÇÖs how I work it out.
Equity ownership split going in is:
100% equity = £29,000 + £7,100 = £36,100
Your ownership is 29000/36100 which is 80.33%
His ownership is 7100/36100 which is 19.67%
YouÔÇÖve split the on-going costs 50-50 so you can argue that this has kept these percentages the same. (Or has diluted your ownership to extent, based on him contributing more than his 19.67% share. So heÔÇÖs probably now up to about a 20-25% share but you can save this for later).
Thus if you assume that thereÔÇÖs currently an equity profit in the house ┬ú121,000 (┬ú340k – ┬ú219k). Then profit share that each should be entitled to based of equity % ownership split is this:
You: 80.33% x £121,000 = £97,199.30
Him: 19.67% x £121,000 = £23,800.70
Anybody help me out with “STBX” meaning?
Great post and a lot interesting comments.
I buy real estate for a living for a large private equity fund. I would suggest the following: You need to calculate your equity contribution over the total equity contribution and multiply it with the home equity.
(Your deposit + 50% of all bills to date) / (total deposit + all bills to date)
This ratio will give you your percentage ownership.
Multiply this with the total home equity of ┬ú121k (┬ú340k valuation – ┬ú219k mortgage) to get the fair price for him to buy you out.