House Split - what's fair ?

B

big_bear_grr

Guest
Myself and my friend bought a house 5 years ago. I put down his portion of the deposit 12k (punts) as he didn't have any money at the time. Now we are going our seperate ways and I want to buy him out.

My 2 questions is How do I work out what I owe him in order to buy him out. Would I be right in assuming I get possible 3 valuations and if we can agree either the middle one or should it be the average of the 3 valuations ? Then subtract the remaining mortgage and split the profit as if we were selling?

Also as I put down the €12 k (punts) do I say own a bigger % of the house like 58 % as the origional cost was € 147k. Obviously £12 k then is worth a lot more now.

Thanks in advance.
Grrrrrr
 
Grrrr

If you did not have a written agreement up front, I would imagine that it would be assumed that you bought the house 50/50.

The language you use "I put down his portion of the deposit" suggests to me that this was a loan to him. Was it a loan? Did he pay it back? How did you deal with the repayments on the loan?

If you had asked the question 5 years ago, I would have suggested that you owned 58% of the house.

On the valuations, I think you should discuss this between you and agree a figure. If you can't, each of you can appoint a valuer and they will agree it between them.

Brendan
 
Thanks Brendan

There is no written agreement upfront as we are very good friends. ( i know people fall out no matter how good friends they are and especially when it comes to money ).

It was a loan but has never been paid back. It was offered to me once the person had the money about 2 years later but i declined and now like to think I own more than 50% of the house but this wasn't agreed now that i think about it, rather it is assumed.
 
Of course you declined but if house prices went the other way you would have taken the cash, I really feel you dont have a leg to stand on ,It is a hard one to put to your friend aswell, 12K is about 8% of the 147K you paid for the house, so best you could hope for to be fair is 54% to you 46% to him, this is an 8% difference , But then thinking you had to put up your 6K anyway and you chose to put up his 6K which is actually 4% of total amount of the house at the time of purchase, Then to stay friends and all that there should be a difference of 4%, ie you 52% friend 48%, just an opinion
 
dodo said:
12K is about 8% of the 147K
Click to expand...

The OP does not make it easy as there is a mix of punts (his friend deposit £12k), euro (original house price €147k) and euro punts (op deposit €12k punts).... So god knows who paid what ...:)

Grrr said:
I put down his portion of the deposit 12k (punts)
Also as I put down the €12 k (punts)
Click to expand...
Also, was the deposit 12k (6k+6k) of some currency or 24k (12k + 12k)?

May be the OP could clarify...
 
Since your question is 'whats fair' and you have stated that a portion of the deposit paid by you on behalf of your friend was a loan then the equity should be divided evenly with your friend repaying your loan + nominal interest.
 
If as you say, you both saw it as a loan (and particularly seeing that he offered to pay it back) then phoenix_n is spot on.

If however you both agreed that it meant you owned more of the house (although legally you wouldn't have a leg to stand on seemingly), this is how I personally think it should work.

Value of house including solicitor's fees etc!
Assume it's 147k (I'll ignore currency! :) )

Amount you put forward... again not clear whether you paid 12 or 24.
Assume 12k

And the balance of 135k being the mortgage split evenly between you.

So he "owns" 67.5k and you "own" 79.5k of the original 147k...

i.e. a 45.92% : 54.08% split...

Same as what's already been said really, but I like to spell it out :rolleyes:

Good luck with whatever way you work it out.
 
Thanks for all the replies....now I'll clarify my post..

The deposit was £12k (6k each but I put the whole lot down) punts and house price was £147 punts

The deposit which I paid was only offered back to me when my friend just happen to get an unexpected lump sum. Then he obviously wanted to try and close the gap on what % he had in the house and offered me the money.

Thanks for the help so far......

Big_bear_grrr

Grrrrrrrrrrrrrrrrrrrrr :)
 
Well say it to him, and see what he says. Come to some agreement (maybe meet halfway) and get on with it. No point causing a fuss over a few thousand euros. I'm sure you've both done pretty well out of it, so try not to fall out over it.

:)
 
so it was only a loan of 6k not 12k

I dont think its has got to be worked out on a percentage, if it was a loan then it shouldnt be linked to a % of property price increase. Say the property had gone down in value to 100k - would he now only owe you say 4k?? I doubt it!

If it was a friend of mine I would split is 50/50 and deduct 6k compounded at say 2-3% for the number of years that you both have owned the property (5 years) whcih equates to approx 7k. You will need to convert for euro/punts if applicable.

So say the property is now worth 200k - you would get 107k and he would get 93k. I would say that is fair as you had to put 6k in yourself anyway

AFAIK 1 punt = 1.27 euros if you need to alter for conversions
 
Grrrrrrrrrrrrrrrrrrrrr

Thanks for all the advise and replies. I'll hopefully sort this out and still have a great friend hopefully at the end of it.
 
Actually No I was quite happy with the replies and helpful advise.

I was grrrrrrrrrr ing as my fur was all matted and I need to eat some plants and insects.
 
Well we are going to discuss it and get the house valued by a few valuers and agree a figure. Also hopefully we can agree a deal on the deposit etc. All the work done to the property over the past 5 years has been done by me at my own expense and obviously this would have increased the value of the property. All in all lots to discuss and hammer out. Anyone got a lend of a hammer?!!!!!
 
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