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  • Advise on Settlement offer

    A rundown of the situation.

    My ex and I separated in 2012. House was valued at 300k at separation, mortgage was at 256k when she left. I stayed in the house, paid all the bills and mortgage, taxes etc. House was vacant for 8 months before sale, all the time I paid everything as well. House sold for 335k. 90k in equity results. I borrowed the 5%down payment from a line of credit that I was and am solely responsible for and paid all interest on it. I agreed to 50/50 of equity split when she moved out minus my down payment and a roof repair. We verbally agreed I would pay her equity in 500/mth installments until paid in full(12500) or house sold. She changed her mind and then demanded 45000 despite contributing nothing from separation onward even when asked by me when the house was vacant. She has today lowered her offer to settle to 25000 but I am still feeling cheated by this. here is the breakdown.

    Down payment 15150
    roof repair 5250
    Mortgage reduction after separation but before vacancy 21000
    Mortgage reduction while house was vacant 4500
    Taxes, insurance utilities maintenance while house was vacant 10000
    Equity payments from initial agreement 2600

    My ex and her lawyer feel she is entitled to half of the money that I reduced the principal by plus discounting what I already paid. They continuously delay by taking months to respond to my offers and requests. This latest offer was 5 months after trying to schedule questioning which has still not taken place. It has been almost 3 years now. I also reduced her debt by 15k during the relationship, 4k was student loans she had before me and I also gave her 5k in furniture that I paid for when she moved out. She does not acknowledge any of this despite my vast proof. My lawyer thinks I should take it but I don't feel she should get any more then 15k. Any thoughts or advise?

  • #2
    Sorry, This should have been posted in the common law section.

    Comment


    • #3
      The house was valued at $300k and sold for $335... do you think she would have agreed to the original offer if she knew the house was worth 35k more? What if the house sold for $280k... you would be here wondering how to change your agreement because the house sold for less. Ask yourself the cost of going to court on this. Does keeping the extra $10000 get you any further when you will spend $15000-$20000 in court? V

      Comment


      • #4
        Berner_Faith,

        I did not change the agreement, she did. The house went up in value because 2 years had passed since the initial agreement. She went from want 12500 to 43000 to 45000 to 37000 to 35000 to now 25000. I left out most of these values as I did not feel they were pertinent. I am not sure what your comments mean as you really have no idea what I would be doing right now had the price gone down. I am a very fair person. I don't feel your assumptions of me are warranted as you have no idea of my character.

        Comment


        • #5
          I made no assumptions of your character, but you cannot sit there and say if value had dropped you would still uphold the same agreement.

          She may not be entitled to the whole value of the increase however that's not up to you to decide so you basically have two options. Fight it out and court and blow $15000 or work with your ex and save yourself some money.

          Why was the house not put on the market 3 years ago? This is what happens when equalization isn't done properly from the start. If you were living in the house she may have a chance to claim rent from you, which more often than not cancels out what she may have owed you for the mortgage.

          Don't get defensive just because I didn't agree with you.

          Comment


          • #6
            Originally posted by bjm44 View Post
            A rundown of the situation.

            My ex and I separated in 2012. House was valued at 300k at separation, mortgage was at 256k when she left. I stayed in the house, paid all the bills and mortgage, taxes etc. House was vacant for 8 months before sale, all the time I paid everything as well. House sold for 335k. 90k in equity results. I borrowed the 5%down payment from a line of credit that I was and am solely responsible for and paid all interest on it. I agreed to 50/50 of equity split when she moved out minus my down payment and a roof repair. We verbally agreed I would pay her equity in 500/mth installments until paid in full(12500) or house sold. She changed her mind and then demanded 45000 despite contributing nothing from separation onward even when asked by me when the house was vacant. She has today lowered her offer to settle to 25000 but I am still feeling cheated by this. here is the breakdown.

            Down payment 15150
            roof repair 5250
            Mortgage reduction after separation but before vacancy 21000
            Mortgage reduction while house was vacant 4500
            Taxes, insurance utilities maintenance while house was vacant 10000
            Equity payments from initial agreement 2600

            My ex and her lawyer feel she is entitled to half of the money that I reduced the principal by plus discounting what I already paid. They continuously delay by taking months to respond to my offers and requests. This latest offer was 5 months after trying to schedule questioning which has still not taken place. It has been almost 3 years now. I also reduced her debt by 15k during the relationship, 4k was student loans she had before me and I also gave her 5k in furniture that I paid for when she moved out. She does not acknowledge any of this despite my vast proof. My lawyer thinks I should take it but I don't feel she should get any more then 15k. Any thoughts or advise?
            Wording is crucial. What exactly does your agreement say about equity? Does it specify "equity as of separation date", or specify $12 500 as the amount to be paid to equalize the house? If so, the calculations are pretty simple.

            However, if your agreement just says "equity", the calculations are also pretty simple, although not as favorable for you:

            50% of equity = $45 000
            Minus $15 150 (down payment) = $29 850
            Minus $5 250 (roof repair = $24 600

            ^^^ This is what you agreed to, so her offer of $25 000 looks reasonable to me. Normally, your down payment and roof repairs wouldn't be excluded from equalization because they would be viewed as a contribution you made towards the marriage, and become part of the value of the house which is common property. The fact that your ex agreed to exclude these two costs is saving you money.

            I would take this offer. I don't see where you have a case to pay less than $24 600, unless a lower amount is specified in your separation agreement. Going to court sounds risky because you aren't on firm ground here (and could end up spending most of whatever additional money a judge might award you in the court process). The details about student loans, furniture, etc aren't relevant to the agreement that you made about the house.

            Comment


            • #7
              Basically, my questions are am I entitled to the amount that I reduced the mortgage by after separation 256 to 230(25k)? Am i entitled to be reimbursed half the expenses i paid while the house was vacant(5k). 50% of equity was at separation and based on appraisal done at that time. 300k-down payment and roof repair/2 = 12500 My intention was to buy the house once I was able to do so as I had just become self employed and I needed 2 years to qualify. This is an alberta common law case as well. We were not married.

              Comment


              • #8
                I don't think you're entitled claim back the running costs of the house over the past three years ($10 000) as you presumably had the use of the house and your ex did not. So leave those out of your calculations.

                I get different results using your numbers:

                The equity at the time of separation was $300K - $256K = $44 K.

                Minus down payment ($15 150) and roof repairs ($5 250) = $23 600

                Half of that is what you owe your ex: $11 800 (you say you owe her $12 500 - not sure where that figure is coming from)

                Your ex wants $25 000

                The difference between $11 800 and $25 000 is $13 200.

                Is that worth going to court over? I don't know. If I were in your shoes, I would try to understand where the $25 000 figure is coming from, and then negotiate a reduction.

                Comment


                • #9
                  Stripes,

                  Your figure is correct about the initial agreement, I just rounded up. As for the 25 k, that is just the latest number they have thrown out. It was first 50%, then it was 37000 and now it is 25k. She wants occupational rent for the time I was living in the house. She made the occupational rent claim in november 2013 and I left the house January 2014 and it sold it august 2014. I paid about 55k in mortgage payments, taxes and insurance after separation. I lived in the house for 21 months after she left and it was vacant for 7. I also paid everything while vacant. How would rent be calculated here?
                  We did not have a written agreement that had all the terms but i did make payments to her and she did refer multiple times in email about our equity sharing agreement but she denies this also even though I have eveidence of it. She also denies that i paid her the 2600 even though i used cheques and memo equity payment 1,2....I feel she is being impossible but what do i know.

                  Comment


                  • #10
                    It sounds like her numbers are pretty arbitrary, so why not make an equally arbitrary counteroffer of $20K in equalization to her, less the amount ($2 600?) that you have already paid? That's a good deal for her, and it's worth it to you to stay out of court.

                    In situations like yours, where one party is living in the house and paying the mortgage before it sells, many people just assume that the occupational rent owed by the party in the house is equal to the half of the mortgage payments owed by the other party, so the two cancel each other out. You don't owe her rent, she doesn't owe you mortgage payments. That's the simplest thing to do.

                    (Even if you weren't technically living in the house for several months, you still had the exclusive use of it, so you would owe occupational rent [and be responsible for all the running costs] for the months you weren't living there).

                    Comment


                    • #11
                      I have made offers up to 18500 but she feels she should get 1/2 the principal I paid down during separation and she will not acknowledge the money I already paid and all the other bills I paid. I was curious as to what a court would say. I have never received any reasons as to their position other then "that is what I think is fair" fair seems to range from 45000 to 25000 now and fair used to be 12500. I have tried to reason with her but she will not listen to me. Most of the case law I have reviewed always gives the person back the principal paid down after separation as long as he does not ask for 1/2 the bills which I am not doing.

                      Comment


                      • #12
                        There's no way to know what a court would decide, but if your own lawyer is recommending that you settle with your ex outside of court, I would take that advice seriously (especially because lawyers have a vested interest in litigation, so when a lawyer says "this isn't worth litigating", it means something).

                        Perhaps you could trade off the house equity against some other item - you pay her $25K to settle the equalization and in return, she gives up claims to your pension (or whatever else may be on your "wish list").

                        Comment


                        • #13
                          Not my lawyer, he wanted to give them what they wanted at the outset. If it wasn't for all my research and case law studying, she would have gotten 44k. MY lawyer is very disinterested in this case and I feel it is because he may not understand unjust enrichment in common law cases.

                          Comment


                          • #14
                            Originally posted by bjm44 View Post
                            Not my lawyer, he wanted to give them what they wanted at the outset. If it wasn't for all my research and case law studying, she would have gotten 44k. MY lawyer is very disinterested in this case and I feel it is because he may not understand unjust enrichment in common law cases.
                            Good for you... You should note that down. Later you can sue your lawyer for his lack of dilligence.

                            In terms of the amount, if the case law is on your side then tell her so, stop negotiating and let her go to court tell her she is going to end up with nothing after legal fees.

                            Comment


                            • #15
                              Originally posted by bjm44 View Post
                              Not my lawyer, he wanted to give them what they wanted at the outset. If it wasn't for all my research and case law studying, she would have gotten 44k. MY lawyer is very disinterested in this case and I feel it is because he may not understand unjust enrichment in common law cases.
                              In that case, maybe you would be better off representing yourself or getting another lawyer, as it appears your ex is more interested in saving you money than your lawyer is.

                              If you have no incentive to settle right away, why not let time be on your side? Offer $20K and let your ex decide whether to take it or not. If she doesn't take it, you can either wait her out (until such time as she really needs to get the divorce done, e.g. remarriage when she will be motivated to take your offer) or until she decides to take you to court (and based on what you've outlined here, you are not being unreasonable in this offer).

                              Comment

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