June 12th, 2006, 04:21 PM
Here's the history,
My parents helped me buy a house 2 years ago. I payed everything except the down payment. About 6 months after I bought it, my current bf moved in with intentions of giving my parents half the down payment and they would sign over their half to him. He has saved up the half while paying half of everything but we are planning on selling and moving. We could make anywhere from $100 000 - $150 000 on the house.
The original plan for the money was to pay off his debt ($10000) my debt ($16000), pay back my parents ($12000 ish) buy myself a new car ($12000), put about $20000 away for my schooling, and put the rest on the house for a down payment, which is anywhere from $30000 to $80000.
Now my parents are concerned that he payed roughly $6000 only recently and ends up all his debt payed and half of a new house. I know what she is saying, but he will paying for pretty much everything in the new house, morgage and bills. I will be in school full time so will only have a part time job.
I was thinking that we could sign an agreement that if we split up, we will split the profit but I will get the down payment. Is that fair though? He has payed half of everything for most of the time.
What do you guys think? What would you do in this situation?
June 12th, 2006, 04:41 PM
I'd put everything in writing & have it witnessed too. Depending on your location the law may dictate who gets what. For example here in NS 'matrimonial' / common law houses are split 50/50 upon relationship breakdown...but other provinces aren't as sharing. I'd have the house put in both names regardless of who pays what, both names mean your both owners. It is worth it when buying any major item, as it can save hassles latter.
You could have your lawyer draft an agreement on the downpayment & 'spiltting' issues. It will be some of the best money you ever spend. No ones plans for things to end but they can & you'd be better to take the time to cover both of you now rather than be left empyhanded later.
Just my 2 cents .
June 12th, 2006, 05:20 PM
Hi Sarah, get it all in writing, with witnesses and stamped by a notary and I mean ALL of it. I got into a similar situation with my ex where I was making half the mortgage payments on the house, furnished it, kept it clean, and decorated it. We split up, I moved out, he sold the house and I saw not a single cent of any of it and he made over 200K in profit. Honestly, without some legal documents proving ownership and responsibility, I wouldn't continue this sort of thing. It leaves you way too vulnerable should anything unplanned for happen.
June 12th, 2006, 05:56 PM
I agree. You love him now and trust him now, but who knows what the future entails. You need to figure out what you think is fair, and get it in writing.
BTW, I'd keep your parents out of it. Yes, they gave you the downpayment the first time around, but that doesn't entitle them to tell you how to run the finances within your relationship. If you want this relationship to last, you have to work it out privately between you and your man. JMO...
June 12th, 2006, 08:44 PM
You need a real estate attorney. Eastcoaster is right, it would be the best money you could spend. Make sure everything is done up legally for both of your protection. Life happens, relationships change, one of you could have a fatal accident or illness. Also be aware, when planning what to do with the money you'll make off the sale of the house, that the seller pays the real estate commissions, inspection fees, necessary repairs, etc., etc., etc. It's expensive to sell a house. I know, I sold two of them last year. If your bf just recently paid half of the down payment, your parents are entitled to a share of the equity on that half of the house as well. Your parents sound as though they just are concerned that your interests are protected. Best to let an attorney sort out what's fair to all. Your debt and his debt shouldn't be a concern. What you each do with your share of the money is your own business.
June 12th, 2006, 11:03 PM
Not sure where you live, but if it's Ontario, then matrimonial home does not come into play in common-law relationships. That being said, any money you spend during the relationship, and if things THEN go sour, that's money lost. Not saying that could happen (heck, I wouldn't have a clue), but that's what you need to think about, regardless of how strong the relationship is.
I lived with Mrs. Schwinn for 2 years before we were married, and financially, everthing was kept separate just for that reason. I expected us to get married, and I think she did as well, but her being a bank manager and me being a former banker as well, we'd both seen bad situations come from the best of expectations. I paid part of the mortgage, but I didn't have my name on title, or even the mortgage. It was her money that was paid down on the house, so I was okay with it.
If you two really want to do this, I'd recommend getting something in writing, maybe some form of loan agreement maybe, or something like a pre-pre-nup. I don't mean to be cynical, but I've seen it happen before. It's okay to use your heart for romance, but do your finances with your head.
June 13th, 2006, 09:11 AM
I dont want to go into this with my head in the clouds, so thanks!
My parents are not taking any profit for the house, the only thing they payed for was the downpayment, we payed everything else. They wouldnt feel comfortable doing that, all they want is us to pay them back!
My parents were worried that he payed them half, we sell, pay them back, and break up. He automatically makes roughly $70 000, and Im left with far less then what I put in. I do see their point.
We have decided that we are going to stay one more year and I will try to transfer schools next summer. We will do all the fix-ups we planned and hopefully sell for more, pay off all our debts and both move debt free next year, wioth the rest of the money going for a down payment.
Thanks again for everyones input, its great to get some outside opinions!
June 13th, 2006, 01:53 PM
Where do you live? If you live in Québec, i would consult a notary (they're the real estate lawyers of Québec)
I don't blame your parents for looking out for you, I would do the same for my daughter, and I see their point that it's unfair to you that he pays 6000$ and gets 70 000$....
I would get a seperation agreement signed...giving him the right to whatever percentage of the house that represents what he has put in. This is going to sound complicated....
You should get the house evaluated now. Let's say the house is worth 100 000$. Let's say in 2 years the house is worth 200 000$ and he's paid half of the mortagage for 2 years. He gets half of the increase in value since you guys started paying 50/50 plus his original 6000 (so , if the mortgage is paid off...that makes 56 000, and you get 144 000$). All the increase in value that happenend before he moved in would then be yours. When you buy the new house you go 50/50 (example he takes 15 000$ outta his 56000, and you take 15 000 outta your 144000) Does that make any sense?
June 13th, 2006, 02:13 PM
meb.... EXCELLENT advice.
June 13th, 2006, 02:48 PM
I live in Calgary, and thanks meb for the post!
Its a great idea and I will look into it and discuss itwith him.
June 14th, 2006, 09:21 AM
Get it in writing, and get it notarized. Protect yourself.
When my dh and I met, we eventually lived together, I owned the house.
When we discussed getting married, I had him sign a prenuptial agreement, which sucked for him (actually he never complained at all), but protected the fact that I eventually stand to inherit a boatload of $ from my parents, and I wanted to ensure my investments were protected.
There is no absolutes in this world, other than death and taxes :p