House ownership on relationship split.

[Peanutte]

Background: My daughter has been with her partner for about 15 years. He has just told her that he doesn't want to be with her any more. (We are all stunned - he is very nice and we have no particular animosity towards him.) He is moving back with his mother and he works away Monday-Friday, so selling their their jointly-owned house is not an immediate issue - but he will want his share of the equity in due course to look for somewhere else.

Their little girl will remain with my daughter - they are still living in the house. For the sake of stability - both for my grand-daughter and my daughter - it would be better if they can remain in the same house.

So instead of selling the house and splitting the proceeds, my daughter is wondering if she might be able to 'buy him out'. We know he will be entitled to his share of the equity. So to my question - is she effectively - as one person, buying the house from them as two people? (The same as if an unrelated person is buying from a couple.) Or is she buying part of the house from herself? And is there SDLT payable on that transaction? (The house is worth around £330,000.)

They own the house jointly. Can you transfer from Joint owners to Tenants in Common when the house is mortgaged? And if so, and they transferred it to TiC with 50% each - could he sell her his share?

This is all new to us so any thoughts welcome please.

Thanks in advance,

Pea.

[Adamski]

(Just a personal opinion, and wait for reply from someone with a law background) but think yes on the divorce the combined net assets value gets split 50:50, with agreement of both parties, your daughter can take ex partners name of the deeds, and the paperwork gets filed with hm land registry. As part of the deal you could gift your daughter to pay the ex off. I dont think stamp duty would need to be paid. It'd all have to go through both of the divorce lawyers. Certainly don't gift money to your daughter before everything agreed for and signed. Good luck, Adam

[scrumpyjack]

Certainly get legal advice even if everything seems amicable at present. It may be that because the mother is looking after the child that her entitlement is more than 50/50.

The legal advice would be to establish entitlement and issues to consider, not adversarial (at this stage)

There are a lot of other issues to consider, eg splitting pension funds, maintenance etc

[monabri]

I suggest you seek professional advice. Your daughter is not married so

https://attwells.com/is-stamp-duty-paya ... x-partner/

"The situation is different for unmarried couples who own property together. If you agree that one of you will take over ownership of a property you bought together, including any outstanding mortgage on the property, stamp duty is payable by the person taking over ownership. The amount of stamp duty they will have to pay will be based on any cash payment that the person taking over ownership makes to the other for their share of the property and the proportion of the outstanding mortgage that belongs to the share of the property being transferred"

The highlighted text ( red) needs to be determined.

[ElCid]

I suggest you seek professional advice. Your daughter is not married so

https://attwells.com/is-stamp-duty-paya ... x-partner/

"The situation is different for unmarried couples who own property together. If you agree that one of you will take over ownership of a property you bought together, including any outstanding mortgage on the property, stamp duty is payable by the person taking over ownership. The amount of stamp duty they will have to pay will be based on any cash payment that the person taking over ownership makes to the other for their share of the property and the proportion of the outstanding mortgage that belongs to the share of the property being transferred"

The highlighted text ( red) needs to be determined.

I think that your daughter should seek legal advice especially as there is a minor child. Most such cases I have come across the couple splitting have been married and the husband has had to concede some of his equity (as part of the divorce) to the wife so that their child/ren are not rendered homeless. I am not a lawyer, hence the suggestion that she seeks legal advice.

[DrFfybes]

Certainly get legal advice even if everything seems amicable at present. It may be that because the mother is looking after the child that her entitlement is more than 50/50.

The legal advice would be to establish entitlement and issues to consider, not adversarial (at this stage)

There are a lot of other issues to consider, eg splitting pension funds, maintenance etc

Him referred to as "Partner" suggests they are not married, so her entitlement to his assets are 0/100.

However her entitlement to jointly owned assets would probably be 50/50, unless there is some other split specified, or one decides to argue that they have contributed more than the other. As you say, amicable mediation seems a very sensible first step.

If not married, then AIUI the only other issue is child maintenance.

Paul

[Peanutte]

Many thanks for all your thoughts.

They are not married. So far there is no animosity between them, though of course that could change in the future.

The link provided by Monabri is particularly useful. It's reassuring to know that this is an established and recognised process.

There are no jointly owned assets apart from the house, so that is straightforward.

The only thing I am not clear about is whether the SDLT is payable on the full value of the house or just on the part for which she would be paying. I think the latter - but we are in the early stages so I have plenty of time to find out.

Thanks again,

Pea.

[Clitheroekid]

So instead of selling the house and splitting the proceeds, my daughter is wondering if she might be able to 'buy him out'. We know he will be entitled to his share of the equity. So to my question - is she effectively - as one person, buying the house from them as two people? (The same as if an unrelated person is buying from a couple.) Or is she buying part of the house from herself? And is there SDLT payable on that transaction? (The house is worth around £330,000.)

They own the house jointly. Can you transfer from Joint owners to Tenants in Common when the house is mortgaged? And if so, and they transferred it to TiC with 50% each - could he sell her his share?

This is a very common situation, known as a `transfer of equity', and there is no problem in principle with her buying her partner's share in the house. However, a couple of points that arise from other posts need clarifying.

1. As they aren't married there are no specific rules about who gets what in respect of property owned by them as individuals. Generally speaking, and in the absence of any specific agreement, neither side in a cohabitation arrangement has any claim on the other's assets or income.

However, the daughter does have rights, and if a dispute arose a claim could be made under the Children Act 1989 on her behalf against the father which could encompass him, for example, being forced to defer a sale of the house until the daughter was 18, or other similar orders. He is, of course, also liable to provide financial support for his daughter.

2. As there's a mortgage the transfer cannot take place without the active agreement and co-operation of the mortgage lender. As the father would be released from the mortgage in the event of a transfer the lender may not be satisfied that she can afford to pay the mortgage by herself, and refuse consent. In that event the house may have to be sold, though usually a solution can be found, for example by a parent acting as guarantor.

3. SDLT will be payable on the actual purchase price of the share in addition to the amount of mortgage debt being taken on. This is because when she releases him from half the mortgage debt it's the equivalent of her handing him a cheque for that amount.

The way it woks in practice is that the payment she is making for his share is added to half the mortgage debt and the sum is then subject to SDLT. If the sum exceeds the SDLT threshold of £250k there would be SDLT payable.

In your case it sounds extremely unlikely it would be payable. For example, if the house is worth £330k and the mortgage is £230k she would logically pay him £50k for his half of the equity. The sum would therefore be the £50k payment + £115k (half share of the mortgage) = £165k, which is way below the threshold.

[Nimrod103]

If I may I would like to continue this thread as it is very similar to the problem a friend’s daughter currently has. In this case they are married but the husband had a nervous breakdown six months ago, lost his job and has not worked since. He moved out and the daughter wants a divorce. They have two young children.

It would be best for the children if they stay in their house, but she can only do that if her parents help with the mortgage, which they will do if asked. She can’t afford to buy out her husband, but he is in no position to contribute to the mortgage nor pay maintenance for the children.

Any suggestions as to what she should do, apart from finding a good divorce lawyer.