Divorcing – 2 years separation with consent following six years marriage. Gotten over the horrible realisation that it wasn’t working for either of us and we are moving on – me making a life abroad while she (an Australian) is well settled in UK! Now trying to find a practical solution to MH property question. Apartment worth £160,000, mortgage nearly £100,000 still.
I bought the apartment in my name before we even decided to marry, and have continued to pay everything since – mortgage, service charges, bills, etc. Wife still lives there and works locally, I live and work abroad. If we sell the place to split assets, then we both seem to lose – I, because it was part of my longer term plan for pension purposes, while she would have nowhere to live and would not be able to generate sufficient mortgage to buy something else. It seems unnecessarily drastic to sell it right now, but I am concerned at the feasibility of coming to a practical and workable compromise.
I don’t want to force a change in her home situation, so considered the option of keeping it for liquidation some time in the future, at a more convenient time for both. To achieve that, I imagined changing property to joint names, she taking on 50% of mortgage payments and all normal charges that I have been paying, while I accept she continues to live there, but over the much longer term I will get my 50% of the asset. I know I would be putting half the mortgage (£400) into an asset that could be rented but won’t, so effectively am giving her £400 a month without any short term return.
Do this sound like a pipe dream? The asset stays and I get my return in longer term, while she continues living where she likes, providing the stability she needs to move on. On downside, I can see some risks - like she failing to pay her mortgage share, or with a future change in circumstances, wanting to sell anyhow. But I am finding it hard to analyse this all properly and in particular, I really don’t want to force a major drama like changing home, which could be untenable for her.
If you can afford to maintain the mortgage, why not put a charge of say 25% of the value on the deeds for your x2b as her share, and then charge her rent on the house, reduced by a certain amount making up her other 25% in the longer term by smaller rental than another apartment of the same type. If she then wants to move on, you either buy her out or I suppose sell up to release her money.
Actually, need to work out the % in terms of 50% of £60K not value of apartment I guess, on today's value, that way she gets growth on her share too.
Not sure how feesable this option is, but thought I would just pass it by you.
Firstly, can I say how nice to see someone trying to do their level best for their STBX. Well done you!
However, as you say in your title ...not lose out!
OK, what you are describing sounds a bit like a Mesher Order. This typically used by a court to give a parent with care the right to live in the marital home post divorce, whilst the absent parent maintains a financial interest in the property until such time as the youngest child reaches 18, or the parent with care co-habits with someone for 6 months or more, or the parent with care re-marries. Any of those events triggers a sale of the property allowing the absent parent to realise their asset. Obviously in your case there are no children involved, but the fundamental principle is the same. The absent owner retains his stake in the property whilst the occupier continues to live there until some trigger event occurs. I understand that there are sometimes capital gains tax implications, so you should seek professional advice in setting the thing up properly.
Also, putting your soon-to-be-ex on the mortgage makes her jointly and severally liable, so she can't just stop paying if it suits her - you will both be jointly liable for any arrears.
Think carefully about doing this, because sometimes circumstances change - you may meet someone and need your equity in a hurry, just like she may. Your trigger events for sale need to be carefully discussed and agreed.
Many thanks for your advice, and for the kind words Mike! Can't see much point in making a bad situation worse, so in my view it's worth trying to make a win-win. Grand ideals?
Valuable food for thought. Mike, very useful to see that it's not a new scenario (I imagine there are not too many in this particular domain!) and maybe the Mesher model will help finding something workable. Yes, I see that I could get caught by a clause as well, but I also need to create some certainty if I do this. Not sure how to overcome that.
Sarah, I confess to being a little unsure of the mechanics and implications of what you suggested, so I need to do some research to get my head around that. What in your view is the best way to find specialist support for working out an approach like that?