Separated couple and Negative Equity

Morning all,

Bought a house 4 years ago and now, my long term partner and I are to separate after 14 years.

The house is in negative equity and my partner wants to walk away from the mortgage. I am very happy with that, as I don't plan to sell or leave the property and I can easily afford the monthly payments etc.

The question is, can we do something legally, absolving her from any debt and future claim to the house, property and contents.

I know the bank will not change the mortgage terms and conditions due to the current economic climate and the negative equity, but can we get a solitor to draw up a legally biding contract between my partner and I.

Can we change the deed to the house without changing the mortgage?

Any help or advice would be greatly appreciated and if anyone can recommend a solitor that can assist, even better.

Thanks!

my partner wants to walk away from the mortgage. I am very happy with that, as I don't plan to sell or leave the property and I can easily afford the monthly payments etc.

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I would be very careful. Plans change. When you bought the house together 4 years ago, you probably assumed you would be together forever. Now you have no plans to move or sell the house. But your circumstances might change. You might want to move in with someone else. You might want to relocate.

Attitudes change as well. If you are struggling in a few years, you will look back and wonder why you let her walk away. If you have just split up recently, I would recommend that you make no decision until things settle down and you can look at the issue more clearly.

To achieve what you want to achieve legally, you have to buy the half of the house that you don't own. The bank will not transfer her mortgage to you as it would reduce their security. Has she cash? If the house is worth €200k and the mortgage is €300k, her share of the negative equity is €50k and she should pay it. If she has €50k, the bank might allow the transfer of the mortgage to you as it reduces the negative equity.

But the most likely outcome is that she remains a half owner of the house and a half owner of the negative equity.

Thanks Brendan.

you're right, we shouldn't rush into any decisions but if we decide that my partner can walk away and I am willing to take the risk, do you know if a solicitor can draw up a contract just between the 2 of us, absolving her from her obligations towards the house, without getting the bank involved.
From the banks perspective, nothing would seem to have changed, as the debit order and amount would stay the same.

Thanks!

I would not have thought so.

You may give your ex an undertaking to pay the mortgage. She may give you an undertaking not to claim a stake in the house.

But the bank has an undertaking from your ex that she will pay the mortgage. You can't unilaterally exempt her from that.

Brendan

Just thought of this.... would something like this work?

Could we agree to reduce my ex's equity in the house, thereby reducing her monthly repayments towards the mortgage.

She would still be listed as joint mortgage holder but her equity in the house would be less. So, when we do sell it in 10 or 15 years (if the housing market has recovered), she could get some her "investment" back.