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Ask Clare Your Own Question
Clare
Clare, Solicitor
Category: Law
Satisfied Customers: 34510
Experience:  I have been a solicitor in High Street Practice since 1985 with a wide general experience.
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I am buying my ex out of the house we purchased together. I

Customer Question

I am buying my ex out of the house we purchased together. I provided all of the deposit and lent her money to cover the legal fees and stamp duty which she is yet to pay me back for. I have got a valuation on the property and subtracted what is owing on the mortgage to calculate what equity we have made on the increase in price and mortgage payments made. I have then subtracted what any estate agent fees would be and legal costs from that amount and split it by two to calculate her half. From this I have then deducted what she still owes me from initial purchase costs. Is this a fair way of doing it? I feel a little bit annoyed that I lent her money to buy the house in the first place and paid the deposit but yet she still is getting half of everything back. Can you advise please?
Submitted: 2 years ago.
Category: Law
Expert:  Clare replied 2 years ago.
Hi
Thank you for your question.
My name is Clare
I will do my best to help you but I need some further information first.
Did you protect your investment with a Declaration of Trust when you purchased the property or other evidence of an agreement that the sale proceeds would be divided unequally between you?
Clare
Customer: replied 2 years ago.
Hi Clare,
I got a declaration of trust drawn up for the deposit (5%) amount but not for anything else I lent her. We used the help to buy equity scheme also which gave us a 20% deposit payable back when property is sold. She originally agreed to doing a transfer of equity to me as she was leaving and signed all the paperwork etc (tr1 form and so on) stating the transfer was for nil value. Now the help to buy part have sent a form for us to sign that transfers all of the equity loan we owe from both of us to just me. In order to complete the transfer of equity this needs to be signed. She is now decided that she wants money despite originally signing it all over for zero and won't sign the new document unless I give her money. Also to point out that if I pay her for the transfer then I also I have repay the equity loan as it is seen as a purchase. So it's a bit tricky and unsure of what is best. Given everything else has been signed is it possible to force her to sign the outstanding document?
Thanks
Dan
Expert:  Clare replied 2 years ago.
Hi
How much is the property worth and how much is outstanding on the Mortgage and the equity loan?
Clare
Customer: replied 2 years ago.
Hi, I got it valued by two estate agents at £425k and there is £282k remain on mortgage. It was bought for £390k, I put in a 5% deposit at £19.5k and paid for most of the initial costs such as stamp duty and legal fees. I pad £12k and she paid £4k towards these costs, so she is still owes me money for these amounts. Is it fair that as I paid most of the initial costs and deposit yet she expects the same back as me in any gain. I just feel a little like I am being done over given without me and the financial support I provided she could never have bought with me, I was going to buy anyway without her but thought it would be nice to get her on the mortgage as well and never envisaged this situation arising. If it all went to court where would I stand?
Expert:  Clare replied 2 years ago.
Hi
Does she accept that she still owes you the money she borrowed to pay her share of the costs or is this an argument which is still to be won?
Clare
Customer: replied 2 years ago.
She accepts that she still owes me the money. It feels like I lent her the money to help her buy the place then she takes all the gain from it rising in value which I funded her to do in the first place.
Expert:  Clare replied 2 years ago.
Hi
What does the Declaration of Trust actually say - and how much will the equity loan cost to repay?
Clare
Customer: replied 2 years ago.
The declaration of trust says that I own the 5% of the property which is equivalent of the deposit amount. The equity loan is 20% of the value of the property when sold and gets repaid in full on sale.
Expert:  Clare replied 2 years ago.
Hi
That cannot be correct as that would suggest that your ex owns 95%.
Do you mean that in fact it states that the first 5% of the equity should be paid to you and then the balance divided between you?
Clare
Customer: replied 2 years ago.
The declaration of trust is for 5% of property value in my favour, equity loan is 20% of value and the remaining 75% was bought using a joint mortgage. I lent her money for stamp duty and legal fees for the transaction which I haven't been paid back for. Want I want to know is that as I lent her money for the transaction which I am yet to receive back and paid all the deposit required where do I stand as without my support she would never have been able to do this?
Expert:  Clare replied 2 years ago.
Hi
The second option then
I am afraid that since there is a clear written agreement setting out the basis on which the property is sold then you are bound by it and you will need to act on it.
This does at least mean that the amount due to her is relatively limited bearing in mind the equity loan.
You can certainly point out that if she wishes to avoid having to take court action then she will need to be willing to agree that the TR1 states that it is for nil value.
I am sorry not to give you better news - please ask if you need further details
Clare
Customer: replied 2 years ago.
Thanks Clare, one final question in calculating her share. Would you deduct and legal fees and estate agent fees from final amount as if the property was being sold?
Expert:  Clare replied 2 years ago.
Hi
Yes - but be flexible since they won't actually need to be paid- so if she agrees to most but not all of it then don't hold out too far!
Clare
Customer: replied 2 years ago.
Where do I legally stand in claiming them out of interest. Seems unfair not to given that one day I will have to personally pay them in order to release the money I am paying her now?