Buying out EX - Answer to my example

[Just&Fair]

Ok,

Bought a house with my former common-law partner (both of our name on the title and mortgage) and I'm thinking of buying her out. I want to make sure that I understand how much it's going to cost me. I know that the house needs to be appraised by a professional, but for argument's sake, let's say these are the numbers:

- Price of the home - $330,000;
- Down payment (paid by me) - $30,000;
- CMHC - $10,000 (just an example);
- Balance owing when she left - $300,000.
- It's appraised at $340,000;
- I'm the only one paying since she left.

So how much would it cost me to buy her out?

Help, please!

[OrleansLawyer]

If the house is worth 340k and there is a mortgage of 300k then equity in the home is 40k. This would indicate that it would cost 20k to buy her half, as well as assuming the mortgage in its entirety.

Depending upon when the house was purchased and you put the 30k in, you may have an argument for unjust enrichment.

Considering the low amount of equity in the home and that, after taxes and real estate fees you are not likely to get anywhere near the full 40k, you could negotiate with her a fair amount since if you can't come to an agreement and need to sell the property she would receive less than the 20k (as would you).

[Just&Fair]

If the house is worth 340k and there is a mortgage of 300k then equity in the home is 40k. This would indicate that it would cost 20k to buy her half, as well as assuming the mortgage in its entirety.

Depending upon when the house was purchased and you put the 30k in, you may have an argument for unjust enrichment.

Considering the low amount of equity in the home and that, after taxes and real estate fees you are not likely to get anywhere near the full 40k, you could negotiate with her a fair amount since if you can't come to an agreement and need to sell the property she would receive less than the 20k (as would you).

So even if I'm the one who put the $30,000 down, I still have the give her $10,000 of that amount for her to get her half ($20,000)?

And if we sell the home, she's entitle to half of the equity ($40,000), which includes part of the deposit? I was under the impression that I could get the deposit back.

[HammerDad]

If the house is worth 340k and there is a mortgage of 300k then equity in the home is 40k. This would indicate that it would cost 20k to buy her half, as well as assuming the mortgage in its entirety.

Depending upon when the house was purchased and you put the 30k in, you may have an argument for unjust enrichment.

Considering the low amount of equity in the home and that, after taxes and real estate fees you are not likely to get anywhere near the full 40k, you could negotiate with her a fair amount since if you can't come to an agreement and need to sell the property she would receive less than the 20k (as would you).

Would his $30k down payment not also be worked into the numberes? This is one area I am never sure about.

To me, it seems fair that the numbers would be that she is only entitled to 1/2 the equity in the house once he receives his down payment back. Otherwise, she is getting a windfall of $15k {(340 = FMV - 330 = 300 mortgage plus $30k downpayment)/2 vs (340-300)/2} for monies she never contributed.

[FaithandMorals]

I am not sure how the court views it but I would make sure that the FMV worth is only listed at 95% of the appraised value to account for real estate agents fees if the property were sold. For your example if the appraised value is $340K, a realtor would expect 5% plus HST so I would expect the net value to be $340K - (5% + HST) or $340K - (17K+2210) = $320,790.

[Just&Fair]

Most of the equity is in the $30,000 deposit that came from me. Isn't that taken into account, regardless if I buy her out or if I sell?

[OrleansLawyer]

Would his $30k down payment not also be worked into the numberes?

No. She owns half of a property; she gets half of the equity, notwithstanding claims for unjust enrichment or trusts.

I am not sure how the court views it but I would make sure that the FMV worth is only listed at 95% of the appraised value to account for real estate agents fees if the property were sold.

If the property is sold then whatever the proceeds are is split, regardless of the numbers. This takes into account the costs. In terms of negotiations, you can claim that not selling it therefore increases the equity (since you are taking on the future burden of selling costs), as a part of your position to pay less than half of the equity for her half interest. As always with negotiations, it depends on mutual agreement.

Most of the equity is in the $30,000 deposit that came from me. Isn't that taken into account, regardless if I buy her out or if I sell?

It depends when you put the money in. If you bought the house together six weeks ago then you would have a strong argument for getting your money back. However, if it was many years ago and there has been an unequal contribution to the maintenance of the house (mortgage, bills, etc) then your success would likely be reduced.

[Just&Fair]

It depends when you put the money in. If you bought the house together six weeks ago then you would have a strong argument for getting your money back. However, if it was many years ago and there has been an unequal contribution to the maintenance of the house (mortgage, bills, etc) then your success would likely be reduced.

Well, it's been a year and I've got all documents/receipts to show that I've contributed more to the maintenance of the home. Paid all appliances and contributed more toward the mortgage.

Hopefully I can get this deposit back. I would like to get another place as soon as it's settle.

[Mess]

No. She owns half of a property; she gets half of the equity, notwithstanding claims for unjust enrichment or trusts..

If this were me, I would offer $5k based on:

• She appears to have not made any financial investment in the property. (revise the amount if she did.)
• the property increased in value, according to the recent appraisal, by $10k since the purchase date
• You agree that as co-owner, she has a right to 50% of the increase in value
• You state that a claim of unjust enrichment would refute any claim by her for any amount of money you invested into the property

She may just accept the $5k you are offering since, really, it is fair. If she disputes, ask her what her justification is for being paid from money that you invested. Make her back up her claim with reasons. She'll probably settle for the $5K. If not, you have to decide if the difference is worth the cost of going to court.

[raven70]

down payment

i was in a similar situation with titles, morgages and down payment in a CL relationship, i was awarded my down payment back and majority of remaining equity bases on proof on contributions, raven

[Just&Fair]

If this were me, I would offer $5k based on: She may just accept the $5k you are offering since, really, it is fair. If she disputes, ask her what her justification is for being paid from money that you invested. Make her back up her claim with reasons. She'll probably settle for the $5K. If not, you have to decide if the difference is worth the cost of going to court.

Well, in this little adventure, she's already taking me to court for sole custody of the child, as well as an order for partition and sale of the house and equal sharing of the net proceeds.

Talking about unjust enrichment. She used to own a property that we lived in for two years before buying the home together. I think she made a profit of about $20,000 of the sale of that property. Now she's trying to profit from the home when she clearly has not contributed as much as I did.

Could I in turn go after the profit that she made of the sale of her previous property?