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What's a reasonable buyout figure.

Posted by vitamindeficient 
What's a reasonable buyout figure.
May 03, 2022 12:11PM
My wife and I are separating and need to reach an agreement over the house. We bought the property for £440k 4 years ago. I put in £70k, she put in £190k, and we had a £180k mortgage. Since then I’ve paid £40k in mortgage payments, £12k in council tax payments, and spent goodness knows how much money on bills, redecorating, fixtures and fittings and so on, plus hundreds of hours of work carrying out jobs. Today the property is valued at £530k, a £90k increase. She wants to buy me out. What amount is reasonable for me to ask for?
Re: What's a reasonable buyout figure.
May 03, 2022 04:53PM
Well, assuming the mortgage is still £180K the equity is about £350K. The property is jointly owned so your respective presumptive shares are half of that or £175K each. I would suggest you start from there. It is true you could start by saying that she contributed £190K in capital and you contributed £70K and so you should each get that back before dividing the remaining equity by half. No doubt that is what your wife will say but how the capital from a jointly owned matrimonial home is divided is not just a matter of totting up who paid what. That might be the case if you were unmarried and if the different contributions had been recorded in a deed of trust or something of that nature. But you are not unmarried and marriage is treated as a partnership.

What would actually determine how the capital was divided in the case of a marriage would depend upon things like your respective future housing needs, your respective mortgage capacities, whether there are any dependent children etc.

Since it is your wife who wants to keep the house and to buy out your interest you can safely assume that she will want to do that as cheaply as possible and will try to negotiate you down from whatever figure you first propose. Therefore it would be sensible for you to start at 50/50. In point of fact if there are no dependent children there is no obvious reason why your wife's future housing needs should be prioritised over yours which is probably what her proposal amounts to.
Re: What's a reasonable buyout figure.
May 04, 2022 05:30PM
Many thanks, it's much appreciated. I have no desire to be unreasonable, and I think a split of the gain in value since we moved in is more than reasonable, especially since I've done all the work on the property and paid for it all. Maybe a little bit of the equity too to reflect that.

I have 3 kids and she has 2 (it's both of our second marriages). Mine are younger. Should/would that make a difference?

If we cannot reach an agreement on the money, what then? Would you be able to assist me in getting a court to force a sale? Would that even be wise if it was possible?

Edited 1 time(s). Last edit at 05/04/2022 05:32PM by vitamindeficient.
Re: What's a reasonable buyout figure.
May 05, 2022 10:33AM
The children make a difference depending upon whether they are still dependent or not. If they are then their housing needs also have to be taken into account. If you have three and she has two then in principle you who needs bigger accommodation. You should bear that in mind before you start your negotiations.

It is better to reach agreement if you can because that is cheaper and quicker. Even if you can't reach agreement directly you may still be able to do it through mediation if you both enter into mediation in good faith. Contesting these things in court should be a last resort which is sometimes necessary and economically justifiable but you should always try the simpler and cheaper routes first.
Re: What's a reasonable buyout figure.
May 05, 2022 11:37AM
Hi David,

Thanks again. It's possible she can pay me most of the money now, and some at a later date following the sale of an asset. Is it feasible to draw up a binding agreement (one that will stand up in court if needs be) in order to ensure the later transfer takes place and that steps are taken to lead to it? If so, how much would you charge to draft such an agreement?
Re: What's a reasonable buyout figure.
May 05, 2022 12:29PM
It is certainly possible to draw up a court order which provides for the payment of a lump sum in two (or more) instalments. Similarly it is perfectly possible (and quite common) for payment of a lump sum to be upon the happening of a certain event such as a sale and to provide for ensuring that sale takes place. There is nothing unusual about either of the these things. Before drafting such an agreement or charging for it I think you first need to reach agreement. It is a waste of time and money to draft something which has not been agreed.
Re: What's a reasonable buyout figure.
May 05, 2022 02:26PM
Thanks. I will contact you directly at the appropriate time.
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