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I currently own a home with my common law partner. We have lived there for 2 years and are now splitting up. Both our names are on the house, and we have paid 50/50 for everything from down payment / renovations / and mortgage payments. He think's that he would like to buy me out, and I am just unsure about how much I am entitled to. How do you calculate this number? I have received a market analysis from a real estate agent to figure out how much our house in now worth, but where do I go from here?

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    You should get a lawyer to help with this. A lawyer can ensure your interests are protected. No other party in the transaction would be looking out for you. – Chris W. Rea Aug 26 '11 at 13:22
  • I'm in the same boat. My boyfriend and I have split and fortunately we are on good terms. What WE decided together to do, and all he asks is for $10,000 because that was the down payment that HE made. We agreed on this and we both are happy. Is this possible? I sure hope so – user10568 Jul 7 '13 at 19:39
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I realize that hindsight isn't much help, but this is the sort of thing that is helpful to have agreed at the time of buying, not the time of splitting up. When I did this (with friends) the lawyer who handled the purchase was very emphatic that we should draw up an agreement as to how the house should be divided.

Moving on to an actual practical solution, the only real way to do this is to find a split that you are both happy with. From what you say a straight 50/50 division sounds appropriate, but it's going to depend on you and your partner. If you can't agree then lawyers will have to be involved, which you would be better off avoiding.

If he wants to buy you out, and its a 50/50 split, and you've been splitting the mortgage payments evenly, you should end up with cash to the tune of half of the difference between the house value and the mortgage (assuming the house value is greater than the mortgage). You are going to need a lawyer to do the ownership transfer, so get them to work out the details. As a final thought, if you no longer own any part of the house, make absolutely sure your name is taken off the mortgage, no matter who tells you it would be simpler to leave it on.

  • @DJClayworth - I know from my split up that there is no way I would have been happy with surrendering even my proverbial pot and She was definatly not happy to let me keep it. But +1 for "make absolutely sure your name is taken off the mortgage". No statement from the bank assuring you that even though your name is on the mortgage it is completely the responisbility of your partner now means anything. If something happens and your name is on there they will come after you too. – user4127 Aug 25 '11 at 15:09
  • Thank you for the replies, good advice. My name will be coming off the mortgage forsure as I have heard this a couple times now. We are still on fairly good terms and trying to be fair to each other, it is not a bad break up, so I guess I am lucky there. Im just trying to come up with a fair number without short changing myself. I appreciate the advice! – Hlick Aug 25 '11 at 15:53
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Are you in an area where there are standard lots and similar houses? If so, finding recent transactions on Zillow will help you get to the current price. I'm reading that this is the question, how to get to fair value. If nearby 'comps' are not readily available, you might seek an appraiser.

  • Thank you, I am in Canada, Zillow doesn't seem to go this far but I will search on other simular sites. I had one appraisal done, but I think an average would be best. – Hlick Aug 25 '11 at 15:55
  • I didn't realize Zillow stopped at the border. You can go to the local assessors office (or what it's called in Canada) and get some comparables on your own. – JoeTaxpayer Aug 25 '11 at 16:38
  • Do you know if I would have to pay any tax on profits I make from this? – Hlick Aug 25 '11 at 18:26
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    @Hailey In Canada there are no capital gains taxes on the sale of your principal residence. – Chris W. Rea Aug 26 '11 at 13:20
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My formula would be

  • How much would you pay to buy the house now if there was no baggage attached? = a

  • The Greater of the Market value or (a) above = b

  • How much is still owed on the house? = c

  • How badly does he want to keep it on a scale of 1-10? = d

((b - c) / 2)(1 + d/20) = The amount I would ask for.

(a - c) / 2 = The lowest I would accept.

  • Thanks alot these are helpful. The formula's give me a higher number then I was thinking. Do you think I need to consider the selling costs to be fair? I was thinking ((b-c) - selling costs) / 2 = #. Would I be short changing myself? Is that not usually considered in a buy out? – Hlick Aug 25 '11 at 16:02
  • @Hailey - I guess it depends what you mean by selling costs. Since he already owns the house(In part) I would think these would be negligible. His loan costs are his loan costs. You can be as generous with your money as you want. I think it also depends on how much money is involved. With just 2 years of payments I would normally expect the equity to be small. But if you renovated the home then i would assume he will sell right after he buys you out for the full value and make your deal with that in mind. – user4127 Aug 25 '11 at 16:20
  • By selling costs I mean realtor/lawyer fees that would have to be paid if we did sell. To be fair, didn't want to benefit to much from him buying me out rather then selling. He did say he would sign something stating if he did sell in the near future and made alot more then we thought when we make our deal, he would pay me some of the profit, but I would rather just work it out now. I am not talking huge money, but for me a little can go a long way. We paid off 20k, the market has gone up plus we did a kitchen reno. A real estate agent said we could get 45k more then we paid if we sold now. – Hlick Aug 25 '11 at 16:43
  • Also, a side issue, he wants me to sign somthing at the bank to change over the pre-authorized payment plan from our joint account to his personal account. Would this have any negative affect on me seeing as we have not worked out our deal yet? – Hlick Aug 25 '11 at 16:43
  • @Hailey - I assume you are talking about the account where the payments come from. So long as the payments are made then there should be no problem. Should he stop making payments and the mortgage never gets turned over to just him then you could get the credit hit too. As for the fees you shouldnt have any since you are not actually selling the house. It sounds like you are talking about 30-35k at least so no that is not small change. I would still make sure i got a pay out above my bottom figure though if you do give him some fees. – user4127 Aug 25 '11 at 17:04
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If the issue remains unresolved in respect to the house value you may go to the MPAC website where all of the home values in your neighborhood will be listed.

protected by Chris W. Rea Apr 17 at 15:28

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