I own a property with my sister as joint tenants. She has chosen to live with my mother but retains the keys to the property. The mortgage has been paid up. I continue to maintain and pay for this leasehold property with respect to repairs and building insurances. If we were to buy one another out, how will the courts decide the split of value.
Hello, I am a solicitor with 20 years experience. I will try to help you with this.
You own along leasehold as joint tenants. The mortgage is paid off but you deal with running costs as your sister no longer lives there. What agreement was made between you and your sister when you jointly purchased the property?
We just made a joint ownership agreement to the property (no agreement on shares or how we would pay for maintenance). We assumed we would both live and pay for the upkeep but she decided on and off to move in but now lives with my mother.
I assumed that if one decides to buy the other out we would buy the other's share (presumably 50:50) even though I have paid for the maintenance and improvements (new bathroom, painting, windows staircase etc)
I think you are basically right in your assumption. If you bought a place jointly and made more or less the same contributions to the purchase then a 50:50 split will be the starting point for negotiations. Re: the improvements, did your sister want them carried out? If the mortgage is paid off are you living there basically free of charge at present? This is not a istuation where you want to involve the courts without good cause unless you want to lose a large chunk of the value of the property to lawyers etc. If there is a dispute you could try mediation.
Some of the repairs were essential - as part of the peppercorn (999 yr) lease we are required to maintain the property in good condition - eg guttering fencing, roof repairs. Some were voluntary to enhance aesthetics (I'm guessing at my expense). We are both paid up on the mortgage so property is now owned by us with no debt. She prefers staying with my mother whilst I live in the property. No part of the property is rented out and she still retains the keys to the property.
Yes so it looks like you start your discussions at 50:50. Is there anything else I can help with?
Can one of us claim more for any reason. I'm ok with the 50:50 but wanted to understand possible claims from either side eg sister choosing not to live in the property.
If you had contributed significantly more than 50% of the purchase money you could argue that you should get more than 50:50. But your sister might be able to argue that you have had the benefit of living in the whole property which she jointly purchased and that that benefit was relevant to working out a settlement figure.
one more thing... the benefit of me living in the property is her choice. She has free will to come and go. Would I have a case to counter the benefit of living. She will have had the benefit of the house increase due to enhancements.
Yes it is all about negotiations but the starting point is 50:50 and if you have both paid similar amounts it is unlikely a court would order much different.