Relationship Property

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throbb

675 posts

Ultimate Geek

#203158 19-Sep-2016 22:35

So I recently broke up with my partner of just under 3 years together.

In November last year we bought a house together. Now the break up has been pretty amicable and I thought we had come to the arrangement of splitting the house and signing a partnership agreement and continuing using it as a rental property. I wanted to come to a mutual agreement before going to the lawyers to sign it off.

Now I think her family has gotten hold of her and want her to try and force me to sell her my half of the property, I got a feeling there are some hefty lawyer fees incoming.

The facts.

The house is in both our names

We went in to the house as equals and all our income was combined

She earned slightly more than me over the last year ~5k more

our relationship was less than 3 years so the Property Act does not apply

Has anyone else been through something similar and know the possible outcomes?

P.S. I know I will be needing a lawyer, but I'm sure there are some of you that have been through something similar and can tell em how it turned out for you.

Thanks

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1443 posts

Uber Geek
Inactive user

#1636265 20-Sep-2016 04:47

What's the problem with selling her your half? You could consider offering to sell the whole property and splitting the proceeds, but selling her your half would improve your return; no agency fees. It's only a house, not worth making things worse over.

michael001

160 posts

Master Geek
Inactive user

#1636275 20-Sep-2016 06:26

Sell to her:

Get a couple of private independent valuations done.
Talk to the ex and agree to her terms based on an independent valuation.
Get a valuation done by a valuer you both agree on / pick at random.
Talk to the valuer in advance and mention the valuation you are hoping for (for a bank loan) is the highest of the previous valuations + 20%.
She pays you out half of that valuation.

If the valuer has scruples (he won't, never met one that did) then fall back on your previous valuations if he comes in wildly low and re-negotiate.

Buy another house.

frankv

5680 posts

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#1636281 20-Sep-2016 06:59

Why do you want to keep half-ownership of the house anyway? My guess is that her family has pointed out that if you keep half-shares in the house, neither of you will be able to buy their own house.

Don't try to screw her over financially. It's not worth it, and will just cost megabucks to lawyers.

Think of a number at which you would be happy to buy the house. Sell it to her at that price. Or buy it from her at that price.

Batman

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#1636287 20-Sep-2016 07:20

Well if you don't want to lose then sell the whole house! Surely you can't be forced into selling only your half? If i were you it's all or nothing. Don't even negotiate. Unless there is a place in the law that allows her that option, but surely not?

throbb

675 posts

Ultimate Geek

#1636289 20-Sep-2016 07:33

frankv:

Why do you want to keep half-ownership of the house anyway? My guess is that her family has pointed out that if you keep half-shares in the house, neither of you will be able to buy their own house.

Don't try to screw her over financially. It's not worth it, and will just cost megabucks to lawyers.

Think of a number at which you would be happy to buy the house. Sell it to her at that price. Or buy it from her at that price.

I'm not trying to screw her over or anything, my initial proposal was to keep the house as an investment or I buy her out. The thing is if one of use were the buy the other out, it would be difficult to find another property in Auckland.

I thought keeping the house together and holding it for a bit longer (say a year) to grow some more equity before we sell.

The contract would contain things like

Cant sell for a year unless both parties agree
If you want to sell the other person gets first right of refusal at market valuation
Cant borrow on property
etc

Anyway we have booked in a valuer to come next week so we will see where it goes from there.

This is really more than money for me, I love the house, I have so many projects on the go with it, I would love to finish them.

Geese

1028 posts

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#1636290 20-Sep-2016 07:35

I've been through similar situation.

Under 3 years, it was a case of leave with what you came into the relationship and added since.

We had bought a house together, but i didn't contribute to deposit... My house deposit stayed in the bank and i left with it. As i did with my vehicles and money i had in separate (non joint) bank account.

Under 3 years the only thing to contest was my 1/2 share of payments on mortgage (I moved out when relationship ended). That's 1/2 less interest paid to bank. The GF wanted a trophy house so mortgage requirements were very high, due to interest, I walked away with 22c in the dollar of the payments made.

Had to go to lawyer (required by law both parties get advice), lawyers fee was just over $600.

The catch is... The 3 years starts earlier than some think, some might classify it themselves as when the first moved in together, or got engaged, but it really goes back to day 1. The lawyer said that's a common point where people come unstuck thinking they are safe.

Geese

1028 posts

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#1636295 20-Sep-2016 07:44

Thinking about previous replies here, I think i was very lucky actually things worked out the way they did because without my income, the mortgage/rates/insurance must have been near 100% of her weekly income, the bank was fully aware of the situation but did not force the sale of the house. I think that would have ended in financial disaster for both of us.

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davidcole

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#1636296 20-Sep-2016 07:45

Can you afford to buy her out?

Though if she wants to buy it now - then it must almost come down to an internal auction between you two as to who wants it more.

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PolicyGuy

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#1636341 20-Sep-2016 08:59

throbb:

So I recently broke up with my partner of just under 3 years together.

our relationship was less than 3 years so the Property Act does not apply

Sorry for your relationship loss, been there, done that, still got some scar tissue.

Do you both agree that the "relationship was less than 3 years so the Property Act does not apply", have you got that in writing?
[When the Relationship Property Act first came in, there was an article in the NBR in which a lawyer said 'we will know when a relationship starts only when Dame Sian Elias tells us' and as far as I know, there hasn't been a sufficiently large relationship property dispute to take it all the way to the Supreme Court ... yet.]

You need a lawyer.
You need a Relationship Property Lawyer Right Now
Do not delay

You have entered a legal minefield and need a skilled de-mining expert to improve the chances of getting out with all your limbs intact.

IANAL, so this is not 'legal advice'

frankv

5680 posts

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#1636366 20-Sep-2016 09:43

throbb:

I'm not trying to screw her over or anything,

Sorry... that was not aimed at you. It was a response to the previous poster, who suggested getting a corrupt valuer to get you a high valuation for selling it to her.

The thing is if one of use were the buy the other out, it would be difficult to find another property in Auckland.

[snip]

This is really more than money for me, I love the house, I have so many projects on the go with it, I would love to finish them.

This is the kind of sh!t that happens when a relationship breaks up. Sometimes you have to bite the bullet and accept some losses.

If the house is more than money to you, then a valuer isn't going to help.

As I said, IMHO the simplest thing (if you can do it) is to reduce it to monetary terms. What's the house (including emotional attachments and not having to buy another property and all those intangibles) worth to you? One way to figure that out is to decide what's the price you would be equally happy to sell or buy at, even allowing for all those things. $1M? $2M? $10M? If you sell it to your ex at that price, you will not be unhappy (at least about the house price). If she sells it to you at that price, you'll also not be unhappy. Make it an auction if you like... each of you writes down the price you're willing to buy at, and whoever writes the highest price gets the house at that price. One person will be happy with more money than they thought it was worth, and the other will not be unhappy with buying the house at their price. No possibility of future accusations of someone screwing the other person over.

If you keep the house as an investment under the terms you suggest (no borrowing allowed against it), then *neither* of you can buy your own house... it's a lose-lose situation. In many ways, it becomes a millstone preventing both of you from moving on. I also suggest that keeping the house as a joint investment is a risky thing to do. What if she (or you) decides next month/year that the property market has peaked and wants to sell? What if you (or she) refuse to sell, then it turns out she's right and there's a price slump and you (and she) lose all your equity? There's scope for an endless sea of accusations and recriminations and possibly litigation.

throbb

675 posts

Ultimate Geek

#1636485 20-Sep-2016 12:01

frankv:

throbb:

I'm not trying to screw her over or anything,

Sorry... that was not aimed at you. It was a response to the previous poster, who suggested getting a corrupt valuer to get you a high valuation for selling it to her.

The thing is if one of use were the buy the other out, it would be difficult to find another property in Auckland.

[snip]

This is really more than money for me, I love the house, I have so many projects on the go with it, I would love to finish them.

This is the kind of sh!t that happens when a relationship breaks up. Sometimes you have to bite the bullet and accept some losses.

If the house is more than money to you, then a valuer isn't going to help.

As I said, IMHO the simplest thing (if you can do it) is to reduce it to monetary terms. What's the house (including emotional attachments and not having to buy another property and all those intangibles) worth to you? One way to figure that out is to decide what's the price you would be equally happy to sell or buy at, even allowing for all those things. $1M? $2M? $10M? If you sell it to your ex at that price, you will not be unhappy (at least about the house price). If she sells it to you at that price, you'll also not be unhappy. Make it an auction if you like... each of you writes down the price you're willing to buy at, and whoever writes the highest price gets the house at that price. One person will be happy with more money than they thought it was worth, and the other will not be unhappy with buying the house at their price. No possibility of future accusations of someone screwing the other person over.

If you keep the house as an investment under the terms you suggest (no borrowing allowed against it), then *neither* of you can buy your own house... it's a lose-lose situation. In many ways, it becomes a millstone preventing both of you from moving on. I also suggest that keeping the house as a joint investment is a risky thing to do. What if she (or you) decides next month/year that the property market has peaked and wants to sell? What if you (or she) refuse to sell, then it turns out she's right and there's a price slump and you (and she) lose all your equity? There's scope for an endless sea of accusations and recriminations and possibly litigation.

I hear what you are saying, I guess I was looking at this as an option to delay either of making a rash financial decision, keep the house but give the option to sell to the other person as an out.

Blurtie

468 posts

Ultimate Geek

#1636503 20-Sep-2016 12:51

throbb:

I hear what you are saying, I guess I was looking at this as an option to delay either of making a rash financial decision, keep the house but give the option to sell to the other person as an out.

On the flip side (to play devils advocate) from your ex's perspective, if she was to buy out your share, would it not be best to buy you out now rather than a year or however long down the track? Esp considering the crazy way house prices are going in Auck...

While you say it's amicable now, delaying the inevitable may just lead to growing resentment and sour things later on down the track (with issues and problems arising from share ownership of the property as has already been mentioned above)..

mattwnz

20142 posts

Uber Geek

#1636541 20-Sep-2016 13:55

I think it also comes down to whether you will make a loss if you sell now. eg did you overpay for it? But it sounds like whoever wants to buy the other one out, wants to make a large profit from the house, hoping for a big capital gain. If you both want to keep it, and make money off the capital gain and rent, then going halves is the fairest way, but not ideal in your situation, unless you are still friends. You may also be subject to additional taxes, such as capital gains tax, especially if you sell early. I think there is now a brightline test over this. You should definitely get a lawyer to discuss this all with, and any tax implications by selling your half. Did you have any form of prenup in place, as it is recommended by many these days to have one?

sxz

761 posts

Ultimate Geek

#1636544 20-Sep-2016 14:02

throbb:

So I recently broke up with my partner of just under 3 years together.

In November last year we bought a house together. Now the break up has been pretty amicable and I thought we had come to the arrangement of splitting the house and signing a partnership agreement and continuing using it as a rental property. I wanted to come to a mutual agreement before going to the lawyers to sign it off.

Now I think her family has gotten hold of her and want her to try and force me to sell her my half of the property, I got a feeling there are some hefty lawyer fees incoming.

The facts.

The house is in both our names

We went in to the house as equals and all our income was combined

She earned slightly more than me over the last year ~5k more

our relationship was less than 3 years so the Property Act does not apply

Has anyone else been through something similar and know the possible outcomes?

P.S. I know I will be needing a lawyer, but I'm sure there are some of you that have been through something similar and can tell em how it turned out for you.

Thanks

Property (Relationships) Act DOES apply. You can be De facto well under 3 years. Under 3 years is considered a relationship of short duration, but some provisions do still apply.

Dont co-own property. Mortgages are all obligations, which means if either of you borrow any money from the bank it will be secured against this property. This includes credit cards, car loans etc. Sever your finances. Sell the property on the open market if you must & invest with someone else.

invisibleman18

1360 posts

Uber Geek

#1636549 20-Sep-2016 14:26

mattwnz:

You may also be subject to additional taxes, such as capital gains tax, especially if you sell early. I think there is now a brightline test over this.

Yes, if you sell within 2 years, but there are exceptions such as if the house has been your primary residence. Not sure what happens if you are just selling half to the owner of the other half though, definitely need a lawyer here.

No experience of such a situation myself, but wouldn't the healthiest thing be to just sell and move on? Presumably there was a reason you broke up and keeping the house jointly means you still need to continue to deal with each other rather than being able to make a clean break. Different if there are kids involved.

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