Can''t afford to buy out ex partner.

Hi All

Two years ago I bought a 2 bed flat with my girlfriend for £140,000 we both put in a £20,000 deposit.
I basically gutted the flat as it needed some modernisation and have put new kitchen,bathroom and redecorated throughout.
January of this year my girlfriend left me and moved out of the flat into her own place (at the beginning of March). I''m keen to stay in the flat and carry on paying the mortgage and she is happy with this, but the bank won''t give me the mortgage on my own as I''m self employed and have recently started up my own business.
The ex is happy for me to carry on paying the mortgage on my own and in a few years time I should be able to re mortgage the flat and give her her deposit back and the extra equity that is in the flat now due to the work I''ve done on the property over the last 2 years (It was valued at £165,000 2 weeks ago).
Is there a way that I can get ownership of the flat even if she is still on the mortgage while also writing up some kind of contract so that she still gets what is owed to her from the flat (£33,000)in the future, maybe 3 or 5 years down the line?

Thanks in advance

Matt

You can get a declaration of trust / deed of trust drawn up. If you cirrently own the property as Joint Tenants you would need to sever the joint tenancy (which means that instead of you both jointly owning all of the flat, you each own a specific share) you can then set out in the deed of trust what share each of you has an how it will be calculated (i.e. is a a % of the value of the flat, or a fixed lump sum)

I would normally suggest you express it as %''s - e.g. if the flat is currently worth £165,000 and you''ve agreed that she is entitled to £33,000 then the deed would say she is entitled to 20% of the GROSS value - this would mean that she will get £33,000 if the value of the flat remains the same (i.e. she won''tr benefiot from future mortgage payments you make) if the value of the property increases then she would get more, as she has invested her money into the hosue (so if the flat was worth £20,000 at the time you are able to buy her out, she would get 20% of £200,000, or £40,000. Equally, if the value of the flat goes down, she would get a smaller lump sum.

You can draw up a deed which secures a specific lump sum for her, but this means she is, in effect, lending you that money interest free so if she takes advice she is likely to be advised to ask for some form of interest, or occupation rent, if she does it that way.

I very strongy advise that you gat any deed of trust drawn up professionally.

You will need to register with the Land Registry that the beneficial ownership of the property has changed.

(in effect, you and she will still be the legal onwers of the proeprty, but you will own it as trustees for yourselves, with each of you having a diferent legal share of the property, under the trust)

Thanks for your quick reply TBagpuss.

I will hopefully be speaking to the ex this week to see if we can come to some agreement.If we come to an agreement then going to see a solicitor together to get something drawn up professionally.Hopefully what you proposed above as that is exactly what I was hoping to do and the Ex suggested when we split that I could wait a few years until I was financially better off before paying her share back.

As it stands we are joint tenants so how will that stand if she changes her mind and want us to sell the flat so she can be paid her share as soon as possible? Can she make me sell the flat to get her share back out of the property if I''m not able to buy her out? or do you need both to agree the sale regardless of her share being stuck in the property?

Thanks again

Matt

Matt986532 wrote:

Thanks for your quick reply TBagpuss.

I will hopefully be speaking to the ex this week to see if we can come to some agreement.If we come to an agreement then going to see a solicitor together to get something drawn up professionally.Hopefully what you proposed above as that is exactly what I was hoping to do and the Ex suggested when we split that I could wait a few years until I was financially better off before paying her share back.

As it stands we are joint tenants so how will that stand if she changes her mind and want us to sell the flat so she can be paid her share as soon as possible? Can she make me sell the flat to get her share back out of the property if I''m not able to buy her out? or do you need both to agree the sale regardless of her share being stuck in the property?

Thanks again

Matt

Update:

After paying the mortgage payments for the last few months on my own as i thought we''d agreed on me staying in the flat, I''ve received an email from the ex saying she thinks it''s in both of our interests to sell the property. She is still refusing to pay any mortgage payments untill the flat is sold as she claims she can''t afford to rent a flat and pay half the mortgage.

If she were to follow up on this and try and force a sale how long would that generally take and if I didn''t want to sell would I have any chance of challenging this?

Bumping in the hope of some more advice.

Thanks

Hi,
Can you afford to pay the whole mortgage yourself ? I can''t see that you can expect her to continue paying half the mortgage. Usually the partner staying would be expected to pay for the mortgage in liue of rent to the other partner for sole use of the property.
Selling the property would appear to be a reasonable way forward, she could force this via court order, but that will involve both of you with costs and chances are the court would order it anyway.

LB

Hi LB.

Thanks for the reply.

Yes I''m paying the mortgage payment on my own at the moment and don''t see that being a problem in the future. Problem is getting a mortgage on my own as I''m self employed with a recently started new business (last 4 years).

I was only expecting her to pay her share of the mortgage if she was insistent on selling the flat, (which i think she is) up until it was sold as I''d need to move out and find somewhere else to live.

If she were to force the sale of the flat how long and at what cost roughly would we be looking at and is there anyway the courts might refuse a force sale or postpone it?

Thanks