I bought with a relative, need advice now we are selling!

R

rosie

Guest
I bought with a relative two years ago. She had €80k to put down on the property and I had nothing. We both paid the mortatge equally for the last two years and now we have just sold the house. She mentioned to me that since the house price increased by 30%, the deposit that she initially injected (€80K) will have risen by that much aslo, i.e. she is due her €80K + 30% = €104,000.

Somebody else told me that in the RTE programme 'Im an Adult get me out of here', this very issue was raised and the 'expert' said that no one should be taking any more than what they initially invested and any profits are split 50/50.

I would really love to hear some opinions as we have a great relationship and we don't want to see either one of us left short....:confused:
 
Have do disagree with the "expert" you mentionned, and would agree with your friend.
The 50/50% profit sharing is applicable if both parties have invested the exact same amount of money which is not your case.. She took more risk than you did by putting €80k at the start, while you put in €0.
It seems fair to me that she take back her €80k + 30% profit, you take your €0 + 30% profit (unfortunatly that's €0), and then the remaining gets slip 50/50.
 
I would agree with her - I presume you are splitting the balance of the profit between you so it's only fair that she should get a greater return on her original investment.

Sarah

www.rea.ie
 
Hi Rosie,

I would pay what your relative is looking for, her initial deposit investment has risen by 30%, she is entitled to the gains. As you did not put any deposit down at the start I don't think you can quibble with her request which is fair in my opinion.
 
I would also agree with your relative as she took the risk by putting down 80K and the deal she suggests seems fair, should have been discussed when originally buying but one thing has to be considered if the house had fallen 20% frim the original purchase price and you were forced to sell would your relatives 80K have fallen by 20% as well.

[email protected]
 
I would have (naively) thought that the relative gets back her €80k first, and then all remaining profit is split 50/50. It would have helped to have an agreement put in place when you bought the house... but it's a bit late now
 
IMO your relative is correct, that's the only fair way of distributing the gain. And to annswer someone else's query, if the value had fallen by 20%, i would expect the loss to be distributed in a similar fashion.
 
Yup... Here's how I would work it out (although it amounts to the same thing - but it's a handy rule of thumb if you're not splitting mortgage evenly)...

Say the house was €280,000.

She put in €80,000 and you're splitting the mortgage of €200,000 evenly. So you own €100,000 worth and she owns €180,000 worth at the start. So you own 35.7% of the property and she owns 64.3%. That's how the split should go whenever you sell the property.

In the case of both the purchase and the sale all costs (surveys, solicitors, etc) should be included.

That's how I'm planning to do my co-ownership agreement anyway.
 
beece.
that's an excellent way to do it and most fair.
if you don't bring anything financially to the deal then you are really riding on the coattails of the person who put the cash in at the start.
it's best to sort this out amicably as the other person might then go for another deal which,this time with the money coming from both sides would/could end up a winner for both of you.. if you argue and fall out then you may have blown a good thing and a nice little earner
 
I agree with your relative too. My now husband put in more of the deposit than I did and we agreed that if the house needed to be sold the first 10% profit (ie the deposit) would be split in proportion to our original contribution then the balance split 50/50
 
if you agreed at start that you would own the property 50:50 and say the property cost 480k and mortgage was for 400k ,you didnt put any money up front but took on 50% of ownership so you should have taken 240kshare of mortgage or 60% of total mortgage so you should have been paying 60% of mortgage payments in order to get 50% ownership. i presume you have been paying half of the mortgage every month?? then your relative could legally claim to own 58.3%(280/480) of the property instead of 80k+30% and then 50% of the remainder,if 80k +30% is less than the difference between 50% and 58% give it to her and be grateful. you should have made an agreement at begining to how the ownership was being split and how the resultant debt and debt servicing was to be split.someone putting up deposit when other person doesnt doesnt necessarily result in the person providing the deposit owning more of the property or getting a percentage on their deposit. she provided 80k in cash you provided 80k in debt through the mortgage but you should have paid more in repayments to pay for the notional extra debt you took to balance the 80k deposit.
 
She is trying it on please put her in her place if she put down 80K on the house profit say 100K you get 50K simple as that.If nothing was mentioned before you bought the house no contracts etc she has no legal right, the cheek of some people, she is not right as nothing is put down in writing, bring her out for a meal or something, remember without you she could not have bought the house any how. some cheek
 
I agree with your relative. Also remember the purchase wouldnt have been possible without this depostit.
 
dodo said:
She is trying it on please put her in her place if she put down 80K on the house profit say 100K you get 50K simple as that.If nothing was mentioned before you bought the house no contracts etc she has no legal right, the cheek of some people, she is not right as nothing is put down in writing, bring her out for a meal or something, remember without you she could not have bought the house any how. some cheek
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13 answers: 12 in favour of relative, 1 (you) in favour of Rosie...

Do not you want to cancel your vote and try again?:)
 
bacchus said:
13 answers: 12 in favour of relative, 1 (you) in favour of Rosie...
Click to expand...
bacchus said:

Do not you want to cancel your vote and try again?:)
Click to expand...


All in Favour od BACCHUS? YEAY .... All in favour of ROSIE? murmurmmmm

................. BACCHUS wins by unanimous Verdict
 
The popular vote does not mean anything, legal wise Rosie would be in the right to expect 50%. Nothing stated before hand nothing in writing it is a no brainer I'm thinking. Rosie just say cous nice doing business with you
 
dodo said:
The popular vote does not mean anything, legal wise Rosie would be in the right to expect 50%. Nothing stated before hand nothing in writing it is a no brainer I'm thinking. Rosie just say cous nice doing business with you
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how can you say legal wise she's entitled to 50%? im sure the intention was to have the property 50:50 but the fact that the relative put in large deposit and took half the debt means she has a greater %stake in property,as i said earlier if someone sticks in all the deposit and the property is gonna be owned 50:50 an agreement should be reached and the person who doesnt pay anything up front should either pay greater than 50% of mortgage repayments or pay back the other person half the deposit in a lump sum with interest if agreed before the property is sold on.i wouldnt rely on dodo's opinion as legal fact .The reality is that rosie didnt provide 50% of the finance which is what be expected if one claimed 50% ownership
 
I have asked a legel expert who said if not in writing then it would be hard for counsin to make a case, also where was the risk it was a no brainer,
bearishbull said:
how can you say legal wise she's entitled to 50%? im sure the intention was to have the property 50:50 but the fact that the relative put in large deposit and took half the debt means she has a greater %stake in property,as i said earlier if someone sticks in all the deposit and the property is gonna be owned 50:50 an agreement should be reached and the person who doesnt pay anything up front should either pay greater than 50% of mortgage repayments or pay back the other person half the deposit in a lump sum with interest if agreed before the property is sold on.i wouldnt rely on dodo's opinion as legal fact .The reality is that rosie didnt provide 50% of the finance which is what be expected if one claimed 50% ownership
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dodo said:
I have asked a legel expert who said if not in writing then it would be hard for counsin to make a case, also where was the risk it was a no brainer,
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I've heard of a similar situation involving a couple. One put in all of the deposit but there was no written agreement. They split and it ended up in court where the profit from the sale was split 50/50.

But in Rosies own words
I would really love to hear some opinions as we have a great relationship and we don't want to see either one of us left short....
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in all fairness IMO Rosies relation is entitled to the increase of the value of her deposit.
 
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