My husband purchased a house along with his brother for $350Ok, however stopped paying the mortgage in 2012. Now it is value $700Ok. How ought to they break up the proceeds?


Dear Quentin,

Before we got married, my husband and his brother bought a new house for $ 350,000 in 2009. Both contributed to the down payment and paid the mortgage. It was a difficult subject between us, but luckily I do a great job and have excellent credit. We saved money for a down payment, and I qualified alone to fund our own home away from his brother.

He moved out of the house with his brother in 2012 and his brother has since taken over all the finances related to the home. My brother-in-law has just refinanced the house and took my husband’s title and certificate away. They talked among themselves about my brother-in-law repaying my husband the $ 30,000 he paid for the down payment.

“My brother-in-law just refinanced the house and stole my husband’s title and certificate.”

I asked my husband why he was only getting the deposit back and not the increase in the value of the house. It is currently valued at over $ 700,000. Wouldn’t it be more appropriate for my brother-in-law to pay back the down payment twice as the home value has doubled?

My husband said they talked about it, and because he moved out in 2012 and his brother has paid for everything since then, his brother-in-law is getting all the increased equity. I absolutely feel like my poor husband was betrayed by his greedy brother! Do I push this or do I just stay out and leave it between them?

I am the one who manages our finances. We have no debt other than our mortgage, so we don’t need the money at all.

Wife and sister-in-law

Dear sister-in-law,

All eventualities should be formally agreed before purchasing a home with a family member or friend. For starters: if you buy the property as a “co-tenant” you own 50% each and if one of you dies you cannot leave your half to a third party. If you are a “joint tenant”, you can decide on your respective shares and leave your own share to a third party.

Key questions for every civil partnership: What happens if one person moves out and the other pays the mortgage and ancillary costs? What if one person moves out and still shares the mortgage, but one person pays the utilities? How are you going to split your house shares if you haven’t paid an equal deposit? Will one person have the opportunity to buy out the other?

If your husband moved out in 2012 and stopped paying the mortgage and his name is on the deed, he is still entitled to half of the sale of the house, even if it didn’t seem fair to your husband. However, they opted for a different path and your husband accepted repayment of that deposit after living in the home for three years.

Other options

Her husband could (i) have insisted on 50% of the appreciation between 2009 and 2012, provided the house had equity at the time. At the very least, they could have (ii) split the equity in the house 50/50 – minus half the mortgage payments and utilities and taxes from 2009 to 2012. Or (iii) he would have 8.5% of $ 700,000 (as he invested 8 , 5% of the original sales price).

Alternatively, he could have (iv) calculated his down payment and equity in the years 2009 to 2012 as a percentage of the original house price and applied them to the final sale price. A member of the Moneyist Facebook group gives this scenario: $ 30,000 plus, say, $ 8,000 in mortgage payments for those three years. That’s 10.8% of $ 350,000 – or 10.8% of $ 700,000, which would be about $ 76,000.

Or (v) your husband could have simply taken the dollar amount of the down payment and equity from 2009 to 2012 with interest for the years in between, since your husband’s investment did not earn any interest during that time. However, since they have already come to an amicable agreement and your husband is fine, it seems too late to renegotiate this now.

Your is already completed. Your husband should definitely get his deposit back. Could he have forced the house to be sold through a lawsuit for division? Yes, when it got bitter. But since he moved out in 2012 and stopped paying the mortgage, their arrangement seemed to suit the brokers and allowed them to part with no continuing malice.

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More from Quentin Fottrell:

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