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Ask Clare Your Own Question
Clare, Solicitor
Category: Law
Satisfied Customers: 34895
Experience:  I have been a solicitor in High Street Practice since 1985 with a wide general experience.
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There, I am looking advice on a disputed equity

Customer Question

Hi there,
I am looking for some advice on a disputed equity share between my ex-partner and I who bought a house together back in 2007 and we are now looking to sell. I have proposed what I think is a fair distribution of the equity from the house but we are miles apart.
Rather than bias your opinion, I am going to state the facts of our situation simply as Person A and Person B (of which one is me) and I would like some advice on what you feel is a reasonable position. I would then like to compare it with my calculations to see if I am indeed being fair. I hope that is not too unusual a request.
The facts
At the Start:
• House bought in 2007 with a mortgage of £268,000 (purchase price £282,000)
• Both names are ***** ***** deeds
• Person A invested £50,000 of inheritance money into the deposit, legal costs, stamp duty and fittings/furnishings. Person B did not invest any capital at this point.
• The house was renovated with left over money from the 50K, plus some joint savings and a loan (see below).
• A loan of £15,000 was taken out and paid jointly until split to pay for renovations.
• The mortgage was paid jointly until split in April 2011.
• Person A and B were never married.
At the split:
• The house was not valued at this time. Nor an agreement made on equity.
• Person B remained in the house, Person A moved to another location/property
• Person B paid to maintain Person A in property £850 per month to help cover cost of living/rent. In addition a car was purchased for £5000.
• Person B paid £20,000K of personal savings back to Person A in instalments between 2011-20113
• Person B paid £37,000 in mortgage repayments (interest only) from the time of the split until now, solely. Person A contributed £0 in mortgage repayments in this time.
• Person B paid off the remaining £12,000 loan solely. Person A contributed £0 to the loan repayment in this time.
• Person B remained in the property from the split until now. No rent was paid to Person A, only the agreed £850 per month maintenance.
• We both wish to sell the house. The evaluation is £400,000 (approx. gain is £132,000 less fees).
• We cannot agree to a split in the equity in the house.
I would like some advice on what a fair financial/legal perspective is on this is please.
Submitted: 2 years ago.
Category: Law
Expert:  Clare replied 2 years ago.
Thank you for your question.
My name is Clare
I will do my best to help you but I need some further information first.
Are there any children involved?
Customer: replied 2 years ago.
Hi Clare
Thanks for responding. Apologies for the delay the reply went into my spam folder.
Yes we have a 7 year old son. My ex and I keep a good positive relationship and I enjoy full access to my son.
Please let me know if you require further information.
Expert:  Clare replied 2 years ago.
How much does a cheaper two bedroom property in the same general area cost to buy?
Customer: replied 2 years ago.

Hi Clare - I guess the market value of other properties in the area around £350-400 depending on the house. Our neighbour's proprety sold for £385K and is not as nice a house. May I ask how that is a factor?

Expert:  Clare replied 2 years ago.
It is a factor as the housing needs of the child are relevant - what are the current plans for the ongoing housing of the child?
Customer: replied 2 years ago.

Sure - they moved to Dorset when we split. We agree a maintenance amount of £450 per month, which was topped up a further £400 per month to £850 to cover most of the rent. I was paying her £850 a month for just over 2 years until she and my son moved in with her current partner in Exeter. When they moved in, we agreed (amicably) to revert monthly payments back to £450.

Expert:  Clare replied 2 years ago.
Assuming that the £450 is absolutely in line with the CSA guidelines is would seem that the following is the case.
1. Your ex paid £50,000 at the time of purchase.
2. A further £15,000 loan was taken out to pay for improvements and used for that.
3. Following separation you paid your ex a total of £34,000 by capital instalments and monthly payments of £400 and the purchase of a car
In addition you paid the mortgage and the loan in full - but since you alone were living in the property this could be seen as "occupational rent" and be discounted.
technically of there was no previous agreement as to how the equity shoudl be shared between you then the division should be 50/50 - however case law does allow for some deviation from this.
If you look at the capital invested then the split is roughly 60/40 in favour of A - and one option would be that this is also the equity split.
Another (spreadsheet) option is to 'refund" the capital that you have each paid (including the £400 a month) and then divide the rest in two
Both options have merits but given the lack of a declaration of Trust whether either is worth arguing over is a different matter
Please ask if you need further details