Split up but neither can afford to buy the other out

I know,... if I had a Deloren I would go back in time and get some agreements in place......Recently experienced the end of my 20-year relationship and cohabitation. Tracker mortgage with 225k remaining, current house value would be 550-600k. I decided to remain in the environs of the house and as a solution, I chose to convert our b-built garage into a living space where I currently reside , its far from ideal but little other option due to the housing crisis.

Since the breakup, I still pay 50% of the mortgage payments and contribute half towards shared bills like utilities and broadband and maintenance for my daughter. I handle my personal expenses, such as food etc . Over the past four years, the house has operated as a business with my ex-partner as the sole trader, managing the business under her name including accounts.

While I plan to eventually move out as its the only sensible option as I don't want to disrupt my daughters home, my ex-partner remains uncertain about her next steps, as the business constitutes her only income, and I don't receive any share of the profits. My primary concern is providing for my 14yo daughter while safeguarding my financial interests for a future home purchase. She currently is not in a position to buy me out ( prob cost about 200k) and even if she could she wouldn't be able to fund another property as she would have lost her only income which would have been 40-->60k per year

Personally I was made redundant in Feb and have approx 100k after tax from that, no other loans. I have a new job offer and should I accept will start next month with a salary of around 80k.

I am unlikely to get considered for another mortgage elsewhere, or a help to buy scheme while I still have an interest in the property so I am kinda stuck in limbo.

I spoke to a solicitor who advised drafting up cohabitation civil proceedings as the site is in her name, but the mortgage in both our names so it gets messy and expensive now. with a barrister needed. ( about 10k...)Solicitor is also adamant that at the end of the day the house will prob have to be sold if my other half cannot buy me out. Any other options or ideas from folks would be welcome.

This is extremely confusing so it's hard to advise. I will try to tease out what you actually mean.

wurdle said:

Over the past four years, the house has operated as a business with my ex-partner as the sole trader, managing the business under her name including accounts.

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Do you mean that she has operated a business from the house?

wurdle said:

She currently is not in a position to buy me out ( prob cost about 200k)

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wurdle said:

225k remaining, current house value would be 550-600k.

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Take €575k as the house value.
Deduct the €225k mortgage
The equity is €350k

So your ex would need to get €175k cash to buy you out but would also need the bank to agree to give her a mortgage.

So this is probably not going to happen.

Brendan

wurdle said:

if she could she wouldn't be able to fund another property as she would have lost her only income which would have been 40-->60k per year

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Again, very confusing.

If she buys you out, she retains the house and I presume she is operating some sort of personal service like physio from the house?

If you agree to sell the house, then you get €175k each.

She has no business and your child has no home.

Brendan

wurdle said:

I spoke to a solicitor who advised drafting up cohabitation civil proceedings as the site is in her name, but the mortgage in both our names so it gets messy and expensive now.

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How do you mean the site is in her name? Do you mean that the entire house is in her name? But you are on the mortgage?

How was the house funded in the first place? Did she provide the deposit?

wurdle said:

My primary concern is providing for my 14yo daughter while safeguarding my financial interests for a future home purchase.

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Does your ex agree that you own half the house equity? Or does she dispute this?

The only solution in a situation like this where neither person can buy the other out is for you to agree now to sell the house when your daughter is finished education or at age 23 whichever comes first.

That you rent a place and you share the cost of the rent and the mortgage equally between you.

One of you will probably form a new relationship and you may be able to change things then e.g. she and her new partner may be able to buy you out earlier. Or you and your new partner may be able to buy a house together.

Brendan

Get a legal opinion only and go to mediation to work this out together outside of court, you only need a solicitor for sale of the house

You don’t know how well she’s doing in her business and whether she can buy you out? Have you always share the mortgage? Why aren’t you on the deeds?

1. How much of a mortgage could your wife get approval for on her income? She should apply to the bank and get a figure. Say €175K, current mortgage is €225k, so I would suggest you put €50K from your redundancy into the mortgage so she can get a mortgage in her own name and continue to have a home and income for your daughter, until she is finished education or is 23.
2. You stop paying the mortgage and either rent or purchase another home (you should be able to get a mortgage for €330K suitable for you and your daughter to share.

Your outgoings should be pretty similar, given the converted garage your wife could consider the rent a room scheme to supplement her income. So doing step 1&2 should allow you both to move forward with separate homes, both with an income and both have a home for your daughter.

Once your daughter is 23 you can reassess, between you both you will have a large mortgage exposure so do you sell the family home, divide the equity and your wife either rent or purchase. If you could decide this via meditation it would save a lot of cost.

Thanks all for the detailed replies and advice. Just to fill in some of the dots
- Site was transferred into my partners name from a parent so its just in her name
- Site was used as the deposit, valued at the time around 100k
- we had to buy out a sibling to get the site, this was factored into the mortgage (50k)
- Its a joint mortgage
- we tried mediation, not going to happen
- In the first couple of years she was the main earner but in the last 12 years it has been myself.
- business is a BnB and does pretty well, she has a good accountant and a lot of items like daily expenses/utilities etc can be factored under expenses.

Solicitor has advised me to get all my paperwork together in terms of what I have contributed over the decade, salary, bonus, share dispersion, probate income.At present she doesnt dispute my contribution however I was also advised legally she has some entitlement to my redundancy and also my current pension pot of around 120k.

Solicitor thinks if I can get 100k,keep my redundancy and pension I should take it to get my name off the deeds and hopefully a bank would let that happen, however I think thats unlikely.

Who paid for the construction of the house?
Are you saying the whole property is in her name?

1) Take legal advice on your rights and obligations.
2) Seek to come to an agreement with her directly yourself. Don't use solicitors to negotiate at this stage.
3) If you can reach an agreement, then go to your solicitors to make it binding.
4) If you can't reach an agreement, try mediation.
5) If that fails, then let your solicitors get involved in the negotiations. But legal fees will use up a good proportion of your assets.

Brendan

Both of us paid for the house build, joint mortgage
On the land registry site is just in her name, transfer to child to avoid CGT I assume at the time

Thanks for the advise on solicitors, will do my best to avoid their costs.

wurdle said:

Both of us paid for the house build, joint mortgage
On the land registry site is just in her name, transfer to child to avoid CGT I assume at the time

Thanks for the advise on solicitors, will do my best to avoid their costs.

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You're married so the site is owned in joint tenancy. In other words it's a marital asset and you own it jointly. It doesn't matter whose name it is in.

The OP doesn’t mention being married.
I suspect that adds a complexity with regard to property but no divorce which might be helpful.

Do you need to buy a new place? Wouldn’t renting make more sense for the next couple of years anyway. At 18 your daughter may be away at uni so the need for a large family home changes.

Nope not married, hence the untidy arrangement in relation to the site. WE have started the discussion between us to see what optios are there for one person to buy the other out etc, trying to avoid a house sale really. Renting wasnt an option considering the state of the current market. At the end of the day I would be happy to be bought out and start fresh however as it currently stands I would be the only one in a position to buy out for now