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Harris
Harris, Family Law Expert
Category: Family Law
Satisfied Customers: 2851
Experience:  Family Law - Specialist in Divorce, Financial Relief and Children Matters
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I own the house, by way of my mother lending me the money

Resolved Question:

I own the house, by way of my mother lending me the money (to which I pay interest). I then took out a mortgage on the house as I needed extra funds for various reasons. The house was in my sole name and I pay ALL the bills. I am now getting divorced so last week my husband put his name on the deeds without my knowledge until I received a letter to tell me this. He now tells me we have to sell (I want to buy him out) to settle everything. To round figures up the house is worth 300,000. The loan from my mother was for 170,000 which covered the cost of the home in 2011, the mortgage is for 165,000 which I have solely in my name. What happens next as I have read if the house is sold all mortgage/loans must be paid off first then we split the remainder, but looking at the figures it will be negative equity? Many Thanks, Sue
Submitted: 1 year ago.
Category: Family Law
Expert:  Harris replied 1 year ago.

Hi, thank you for your question. To confirm, in 2011 you took out a loan with you mother for £170,000 and this covered the full amount of the property?

When was the £165,000 mortgage taken out and for what purpose?

Customer: replied 1 year ago.
that is correct the 170,000 from my mother allowed me to pay the bank mortgage off (from 2006), as I had just started a new business (due to redundancy) and my husband could not afford to pay the mortgage or any other bills. The bank mortgage was in my name solely as from previous employment I was making an amount that allowed this, and my husband could not afford it. He did provide the initial deposit of 10,000. The 165,000 was taken out Feb 2015 to allow me to buy the house next to me, with additional funding again from my mother, as I am paying for everything (includes improvements and day to day living costs) I have not been able to make any savings, so this was to be our "pension fund". Apologies all amounts are in pounds but I have an NZ keypad so cannot put the pound sign in.
Customer: replied 1 year ago.
My mothers money has also helped to keep my husband business going through the ressession to round it up she contributed 20,000 via her loan to me and I have over the years given about 10,000
Expert:  Harris replied 1 year ago.

Thank you. Just a bit more information required:

-How old are you both?
-How long have you been married?
-Do you have any children together, if so their ages and proposed arrangements?
-What assets and pensions do you both have (both sole and joint), together with values?
-What are your respective incomes?
-What is the value of the second property, and what is the outstanding mortgage, if any?
-Who is now living in each property?
-Whose name is ***** ***** in?

-Is there any formal agreement with your mother regarding the money she has given, if so what are the terms and have you been making any repayments?

Customer: replied 1 year ago.
I am 51 (born 12/01/65), husband is 43 (born 11/05/73)
Married just over 19 years
No children
I have a small pension set up from when I was employed, I have not paid into it directly it was all done by the company. My last statement showed it was worth 15,000 but this changes as it is based on investments. Husband has nothing. I have the house next door solely and bought the car (he does not drive). His business owns a work boat, prob worth 2,000 if that counts.
I am self employed so my income can be flexible but usually 30,000 a year, he pays himself 950 a month WHEN he can afford to, he has in the past paid himself dividends but can no longer afford to.
Second property is worth 210,000, and is owned outright no mortgage, but my mother lent me the money so I have to pay her interest. The idea when I bought the other house was to get the mortgage on the second house but it was in such a state that the person who surveyed it would not but a price on it so I ended up putting the mortgage on the original house.
I and husband are living in original house, the second house is not being lived in but I have rented out a room for a business.
Original house was in my name until my husband went behind my back and got a solicitor to put his name on the deeds without my consent. His name was taken off the deed when my mother lent me the money to pay for the house as his business was about to go under and we would have lost the house and his business, his name being removed from the deeds was a mutual decision and had the consent of his mother (a solicitor). The second house is solely in my name.
Yes there is a formal written agreement drawn up from my mothers lawyer, we are to pay 5% on the loan based on quarterly payments, which comes to approx 11,000 a year, to which we had an agreement the husband would pay 3 payments of 2,500 and I would pay the last payment of the year, however he has not been able to pay the last 2 repayments, which is now being covered by another member of the family (my mothers husband) as I cannot afford them having had to take out a 10,000 loan to get a new roof on the original house last year. My husband does not pay for anything to do with the house and I purchase the majority of food and drink etc, I even pay for his life insurance!! His company does pay approx 100 pounds a month for medical insurance which also covers employees, and as secretary I am entitled to this.
I also own 500 (half) the shares in the company, but with the company is such financial difficulty I am wondering if I should just gift them back to the company, as if it goes under would I be liable to have to try and pay anything and put the second house in jeopardy?
Many Thanks,
Sue
Expert:  Harris replied 1 year ago.

Thank you for the detailed clarification. However, the news is not going to be good for you. Given the length of the marriage you will not be able to "ring-fence" assets as yours and his and it is likely that the court will consider all assets to be matrimonial. Therefore the court will consider what both your total assets are worth and what both your total liabilities are, and it is likely that your mother's loan will be considered a true loan given the formal agreement you have in place.

Despite you stating that the first property will be in negative equity, the true purpose of the remortgage was to purchase a new property next door, therefore the actual equity position for just the properties will take into account both values and the total loans - therefore by my calculations there is an actual equity of £165,000 (less costs of sale) in both properties.

You will both need to provide each other with full and frank financial and income disclosure, as well as disclosure of your reasonable needs. The Court's starting point is a 50-50 split of all matrimonial assets and ensuring that both your needs are met in relation to both assets and income. The criteria considered is:

1. The income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;
2. The financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
3. The standard of living enjoyed by the family before the breakdown of the marriage;
4. The age of each party to the marriage and the duration of the marriage;
5. Any physical or mental disability of either of the parties to the marriage;
6. The contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;
7. The conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it;
8. In the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.

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