Am I the unreasonable one here???

[pumpguy]

Hey everyone, hoping that I can get some advice and help here! I live in Alberta, and know this is a forum based in Ottawa, so not sure if there are any differences in the law between provinces.

Here is the situation. I am in a common-law relationship. We have been living together since 2006. She has decided that she no longer wants to be together. We purchased a house together two years ago. I do not want to lose the house, but I do understand that the house has increased in value by approximately $50k since we bought it. I have a line of credit, in my name, of which there is approx $60k owing on. This was used to purchase our boat and camper, that we both used together all of the time, as well as furniture for our home, and a trip that we took together. The only money directed at the line of credit that was not for something "joint" was $10k for the motor for my truck. When we bought the house, her father gave her $10k to help with the down payment, and I sold the boat to pay for the rest and the moving expenses and some renovations etc.

I only want to divide things up fairly and equitably. The way that I see things and tell me if I am the unreasonable one here, is that we split everything up evenly between us. That includes the profit from the home if we were to sell it today, as well as any debts owing regardless of whose name it is in. As well as fairly split up any joint possessions we have acquired during our time together.

Her opinion is that since the debt is in my name, she is not responsible for any of it, and it is mine and mine alone. She is asking that she signs off on the house to me, and I am responsible for all debts. I pay her $18k, and she takes whatever she likes from the house to set up a new place she is planning on moving into.

We both pay towards household expenses. About 60% me, 40% her. I do nearly all of the cooking and cleaning, as well as all of the house maintenance and upkeep (shoveling, moving, planting, fixing etc). Though doubt that really matters or is any factor.

This has not yet become an adversarial situation, and she says she still loves me and would like to remain friends in the future, so it is not like we can't stand each other etc, just have grown apart.

Am I the one being unreasonable in this situation, or is she? The last thing I want to do is get into a battle over all of this and drag it through court etc. I would much rather settle things on our own. If it does come to that, where do and would I stand in the eyes of the court?

I really appreciate any opinions or advice!!!
Thanks in advance!

[dinkyface]

Her offer actually sounds reasonable.

1) She can reasonably ask for half of the equity increase, plus her downpayment back, so that's $35K right there, plus half of maybe $10K for reduction of mortgage balance in those 2 years ($250K at 5% for 25yrs). But she's only asking for $18K plus $5K (?) worth of house contents? You're ahead by $17K.

2) You keep the camper and the LOC debt for it

3) The LOC debt for the boat was transformed into LOC debt for YOUR downpayment and moving expenses & reno when you sold your board. Ouch ... you effectively put your downpayment on your LOC?

4) LOC debt for your truck motor is YOURS (you keep the truck)

5) The rest of the LOC debt was for shared stuff - trip, furniture, reno, moving expenses - but that is probably is balanced by #1 above.

Her offer sounds very simple and reasonable. But you might have dug yourself too deep into debt with the LOC to afford to buy her out. (thanks for the reminder not to buy fast-depreciating toys and vacations on credit!)

[pumpguy]

Thanks Dinkyface. It seems to me that is not very fair. Am I wrong in looking at is as $60k debt, less $10k my responsibility=$50k debt. House appreciation and amount paid on it approx $50k. Is that not a wash? We're even there. All that is left is the camper, which I have posted for sale, split the proceeds evenly. Split house contents evenly.

At the end of the day, I retain the house, and the joint debt. She walks away free and clear of any debt, or interest in the house, as well as her share of the contents. And her car which we paid off.

Am I totally backwards in my thought process. Seems logical to me, but maybe I am wrong!

Like I said, I just want what is fair for both sides. I don't want to screw her over in any way, nor do I expect to be taken advantage of because she wants to move in a different direction.

[dinkyface]

OK, will describe the same situation from the other side....

You are left with a house that is worth $50K more, and mortgage that is reduced $10K, a camper ($5K?), and furniture ($10K). So that's $75K on the plus side. She only wants $23K of that (18k house + 5k furniture).

On the negative side, you have $60K LOC - most of which was for YOUR use (half of a trip, half your moving expenses, the camper, your truck motor, and most spectacularly, YOUR downpayment). Plus the reno costs - recouped via house increase. Of course you are left with debts!

The part of your LOC that is for her expenses (use/depreciation of camper, half of furniture/moving/trip/reno) is already well compensated for (see first paragraph).

How about you offer to pay her an extra $15K, and then she could give it back to you to pay off 'her part' of the LOC <facetious>

[HammerDad]

If there is an asset on the LOC, you keep the asset and you keep the debt.

So she wants the furniture, but the debt related to the costs of the furniture is on the line of credit, she should have to take that portion of the debt as equalization. If she wants no furniture, you are stuck with the furniture and the debt.

About $20k of the LOC is attributable to you pretty easily. Your portion of the house down payment, moving expenses and truck. Unfortunately, you made the mistake of paying these sorts of things with your LOC.

But the remaining $40k on the LOC is a bit of mystery to me. Furniture, I can see some money there (again, bad financial decision, but I am not here to judge especially considering my financial situation). Home reno's, well you will get the benefit of any appreciation on those in the years to come.

Her offer isn't bad, aside from wanting to take the furniture without the offsetting debt. I would counter offer with $18k, no furniture other then what was not paid from by the LOC. Or $12-15k with some furniture.

[dinkyface]

I'll make a guess at the 60K LOC

Shared Portion (20K + 20K)
-------------------
15k Reno (assuming you split the house increase)
2k Moving expenses for 2
10k Furniture (assuming you split the items)
3k Trip for 2
10k camper (assuming you sell and split proceeds)

Your portion (20K)
---------------
10k Truck motor
10k downpayment

House equity has increased by 60K (50K price increase plus 10k mortgage reduction over 2 years). Camper sells for $4K. She also can request her $10K downpayment back.
So you hand over 30 + 2 + 10 = $42K to her.

Then she hands $20K back to you to cover her share of LOC, and walks away with $22K ($10K of which was originally give from her father).

As I said ... pretty reasonable.

[pumpguy]

If we were to sell the house today, the total net gain, not including any realtor or legal fees would be $50k. I may not have been clear on that. All of the money owed to the line of credit other than the motor for the truck was for things that I paid for, for both of our gain. The only thing on the LOC that is directly attributable to me is the truck. Is she not responsible at all for half of the money owed on the LOC, less the truck? How is that equitable? She did not contribute any money towards any of the things purchased on it, ie trip, boat, camper, moving, renos etc. It was left up to me to put it all on the LOC, to be dealt with later. She is not willing to accept any responsibility for any of the money on the LOC, yet she expects to share in the net gain for the house.

Why she entitled to her down payment back, and I am not?

She will be taking half of everything in the house, furniture etc. so there is no gain for me or her there. Selling the camper and splitting that, so equal there again.

The basic math I am doing says---$50k-total gain in house subtract $50k-our debt=$0 owed either way. Rest is even split of all assets.
If I keep the house, I also keep the debt, therefore she is compensated that way. Is this not a fair assessment of the situation? What am I missing?

And yes, definitely some terrible financial decisions, but at the time was making really good money in the oilpatch, before the crash. Picking up the pieces now and have learned a valuable lesson!

I apologize if it sounds like I am being rude. I am just frustrated, and do not understand. It seems simple to me, but maybe that's why lawyers make so much money!

[dinkyface]

If you were to sell your house (numbers made up for illustration)

Original home cost 270K
Downpayment 20k (10k each)
Therefore initial Mtg was 250K.
2 years later, mortgage balance is reduced to 240K due to your regular payments.

Sell house for 320K (50K more than purchase price)
Subtract 240K mortgage balance and 10K realtor fees ->70K in your pocket
You each get your 10K downpayment back, which leaves 50K to split.
-> 35K each (10+25).

$35K is what you owe her for the house (5K lower than my original, to account for realtor fees). That's whether you sell or not. Subtracting realtor fees is a common arguing point, since you are NOT selling your house NOW (but will eventually), but nevermind...

She is willing to give up HALF of that amount to contribute to her part of the joint LOC charges. i.e. she takes $17K of her share and gives it back to you to apply it to your LOC, and she walks away with $18K.

Basic math. I'd suggest you find a friend who can help you go over your (real) numbers. Otherwise, you might end up with another 5-10K in lawyer fees added to your LOC!

I'm not sure how much more help you will get on a forum.

[pumpguy]

Thanks Dinkyface! She is claiming now, that since the loc is in my name, she has no responsibility for it whatsoever. But still wants her share of the house equity.

If this were to go to court, or mediation, any idea which way the ruling would go? I agree with you on the numbers, basic math. Actual numbers, mortgage payout today $324k, realistic selling price $385-390k less realtor fees.

[HammerDad]

Thanks Dinkyface! She is claiming now, that since the loc is in my name, she has no responsibility for it whatsoever.

Then she should have no claim on any of the assets paid from it.

Generally, in common-law, all assets and debts in your name remain in your's. Any assets/debts held jointly are split. The exception to this rule is the matrimonial home.

So you may be on the hook for the LOC in your name, but you should be entitled to all assets paid for by that LOC. If she is on title (of lets say the trailer) as a joint owner, you could argue she has accepted her portion of the debt by accepting 1/2 of the ownership.

She could also be responsible for her portion of reasonable legal and real estate fees. But that is somewhat discussionary here as some agree, others don't.

[standing on the sidelines]

Then she should have no claim on any of the assets paid from it.

Generally, in common-law, all assets and debts in your name remain in your's. Any assets/debts held jointly are split. The exception to this rule is the matrimonial home.

I thought that the house was treated differently also?? If he owned it before living together it remains his property??

[Mess]

The home can be a slight exception to the rule due to constructive trusts, but they have to be shown not assumed.