Sharing mortgage with girlfriend????

I know I should really see a solicitor about this, but can anyone give me a heads up: I'm a about to buy my first house and putting a 70K deposit down - the mortgage will be in my name alone. My girlfriend may be moving in with me and has agreed to pay half the cost of mortgage and bills. My question is, if we decide to part company 12 months (or longer) down the road would she be entitled to half the value of the property, including my initial deposit? Also, would she have claim to any of my other assets? I really don't know what the legal implications of such a situation is, however, she jokingly (and rather worryingly) told me if we parted company she would take me to the cleaners!!

Reply to
Bdb2112
Loading thread data ...

  1. Don't let her move in
  2. If you ignore 1 then get her to sign a tenancy contract
  3. Best of all see a competent solicitor
Reply to
Peter Saxton

But not half the equity, presumably!

She will be entitled to a slice of any increase in the equity.

No, unless she can convince the judge that you promised it to her (difficult) and that she forewent some opportunities as a result of that promise (e.g. gave up a well paid job).

And she probably will. When people split up, usually money is all that counts.

You can do a cohabitation agreement which specifies who will get what. She is living with you rent-free so her mortgage payment shouldn't entitle her to any equity share. Go and see a solicitor and get one drawn up. If she refuses then her motives are clear!

Reply to
John-Smith

I agree, and the size of the slice should be pro-rata to their respective equity inputs. The OP is contributing £70k initial equity and she none. But if she is paying half the mortgage (assuming it's a repayment mortgage) then the fact she's helping to pay down half the loan debt means she's contributing to the ongoing equity drip-feed. Hence if they split up after the loan has been reduced by £2k, then she has contributed £1 for every £71 he has, and accordingly should be entitled to a 1/72 share of the equity.

Another way of thinking would be to take into account the whole monthly payments, i.e. both the interest and capital elements. But this would have to be conditional on her having previously bound herself to co-repaying the loan. If she is not co-signatory to the mortgage agreement (would have to be as guarantor - she can't be co-mortgagor if he is sole formal owner), this would be difficult to prove unless there is a separate agreement between them to the same effect.

This contradicts what you said above. Or did you mean this bit

*only* to apply if there is a cohabitation agreement, which basically considers her to be paying rent which happens to match the mortgage payments?
Reply to
Ronald Raygun

The latter.

IANAL but have discussed this with various solicitors face to face. "Expert" opinions vary greatly. There is also a solicitor in uk.legal who says he does a lot of this work and he basically says the GF can be turfed out even though she paid half the mortgage, because she lived there rent free, and for a typical UK property if you pay 1/2 the m/g then you are paying no more than if you were renting the same place with 1 other lodger. This makes perfect "fair" sense but the reality appears to be that she can go after an increase in equity even so.

She has no "fair" grounds for going for equity because if the property falls in value, she has no obligation to reimburse her share of the shortfall. So she is getting a one-way bet on property prices going up, while paying nominal rent only!

Whereas if she did the fair thing and bought into half the equity (and paid half the mortgage) she would both benefit from equity increase and also suffer from an equity decrease. If/when she leaves, then the man can buy her out. All fair and proper, no free-riding.

The legal action (I've read about 4000 cohabitation cases came before the courts in 2002, and they are going up) is based on very old land law and trust principles and I don't understand the details. A barrister explained it to me in great detail a few years ago...

I vaguely recall that an action can be based on the usual fact that the incoming cohabitee is no longer in the property market so by moving in with the man she is foregoing a capital gain. But again she has no liability for a loss if there is a market downturn....

Fortunately, a cohabitation agreement IS possible. It is only prenuptial agreements which are generally worthless; a cohab agreement will stand up, provided each party received separate legal advice from their own solicitor.

Very few women will sign such an agreement.

Reply to
John-Smith

Quite. That's why it has to determined as fact, in each case, whether she was paying rent or buying in and taking responsibility. It has to be one or the other, and there ought to be a general provision of what the default assumption is in cases where there is no specific agreement either way.

But she would only have opportunity for making a capital gain if she had capital to invest. If she does have capital, she can (and perhaps should) choose to invest it in the man's house, which would make clear her position as having a stake in the equity, or she could choose to invest it elsewhere, in which case the "foregoing" argument falls.

But if she had no capital to invest, the "foregoing" argument is weakened. Her opportunity for making a gain would be limited to circumstances in which she could get a 100% loan. That, though, would be more expensive and that fact should be taken into account if the quasi-joint mortgage is cheaper as a result of the man's initial equity injection.

Exactly, "no gain without pain" should be the governing principle.

What about a tenancy/lodging agreement instead?

Reply to
Ronald Raygun

Wouldn't that make the money taxable, or would it come under the rent-a-room scheme?

Reply to
Stephen Burke

Even if the rent would exceed the RaR limit of £4250 or thereabouts, then provided it is at the same level as half the mortgage, it's unlikely there would be any profit element involved, since the expenses would probably reduce the taxable profit to zero.

And even if a bit of tax would become payable, it'd be worth every penny!!

Reply to
Ronald Raygun

I don't think a renting scheme would stand up once she said that they were living together as man and wife and it was intended to be a scam, she was all emotional at the time and didn't know what she was signing and would have signed anything put in front of her, was desperate to find a home for her little girl, etc, etc. These "I am a woman and I don't understand legal things" are standard arguments in divorce cases and they often do work.

The problem with this area of law is that we can all argue about what is fair, common sense, reasonable, etc, but none of this matters when it comes to a Court and somebody pulls out some ancient Act under which a Trust was supposedly created.

The problem is that there are very few solicitors in these newsgroups. There is a large number of amateur brain surgeons and wishful thinking amateur lawyers though :)

A cohabitation agreement, and both sides getting independent written advice on it, is the only sure way at present time, and I have this on pretty good authority.

There have been proposals, e.g. by that trade association cynically calling itself the SFLA, and by various feminist lawyers (most of the time it is the woman who fleeces the male homeowner in these cases) to widen the Courts' powers to cover cohabitation, but thankfully so far nothing much has happened...

My own bit of legal wishful thinking on this is that marriage is really very easy and cheap to do, so if two people live together unmarried, clearly it is because at least one of them doesn't want to marry!! And no contract between two parties is valid if at least one party clearly didn't want to enter into it. So why entrap people? The whole reason anyone is still plugging away at extending the law to cover cohabitation is that mostly it is women who gain, and most family law practitioners are either female and feminist, or male and feminist, and it gets worse the higher up the food chain you go.

Reply to
John-Smith

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.