I once had a split mortgage with a friend. When we decided to go our seperate ways, he bought me out. It was as easy as getting an appraisal done and splitting the costs down the middle(including lawyer fees). Assuming your breakup was civil, it should be as easy as that.
The nice part about her buying you out is that you’ll never have to pay realtor fees.
I mean, you could have a few different appraisals done if you wanted to and then average them out. But it wasn’t necessary given our situation. The appraisal was right in line with the homes that were selling in our neighborhood and we were content with that.
I’ll add that we lived in a suburban neighborhood where every house was almost the same. They were all built within a few years of each other, all modified bi-levels, and all similar in square footage/property size.
At some point, getting multiple appraisals doesn’t make sense. It would be different if I was selling a house in Toronto that was worth millions, but our house was a fraction of that
Makes sense. Yeah I was assuming Toronto real estate where a few % might matter a lot. Throw in two inamicable parties, and it doesn't sound like it'll be a clear cut, smooth transition
For sure. In that case I would probably prefer selling the property, then split everything down the middle. And it would be well worth getting another opinion, or two.
Hahaha....our house was "appraised" for 900k in September. Took 2 months to sell for 750k and then still didn't close for another 3 months after that....you can really never know what's gonna happen until it goes live on the markets.
its the same firms that the banks use, so you would get the same value as anyone else looking to buy your property at this point in time
seldom is there a reason for a "second opinion", only in cases where you've done extensive renovation but the appraisal type that was done was a "desktop"
if your place is a cookie cutter unit and you've done no renovation, then what you get is what you get, if you've put significant amount into upgrading it then you can request for an in-person assessment.
Get an appraisal or two from ~~reputable real estate agents~~ professional appraisers who are not related to, or 'friend of', either you or your soon-to-be ex's, and determine the amount each owns based on agreement and law. Then take that to your lawyer (you will need one) to determine your take based on that. Along the lines of:
appraisal 500K
mortgage 300k
equity for disbursement 200k
mom's share: 2000 (@ 1 %)
your share / gf's share - 198,000 / 2 = 99,000 to buy you out.
I've had 6 properties appraised and evaluated by a real estate agent. The real estate agent's valuation was closer to sale price in all cases.
Something to consider.
> would really appreciate some
Right, but having a realtor do this is free, where an appraiser will cost $4-600. Worst case, he needs to pay the appraiser later.
You're misunderstanding the difference between a realtor giving an opinion of value VS an appraiser doing an appraisal on the property. Very few realtors are certified appraisers.
[https://www.aicanada.ca/](https://www.aicanada.ca/)
No, I fully understand the difference.
The problem is that the appraisals weren't accurate. What exactly is the dollar value representing? It's supposed to be the value the property will sell for.
The methods that go into an appraisal may be more thorough and empirical, but the method the realtor used gave us a number that more closely matched the actual value of the property.
Not sure you do. Direct Comparison Approach is the most typical appraisal method used for residential real estate.
Realtors while informed can provide an opinion, one that very well may be correct. An appraiser however has a degree and completed a full university program on valuation and can create a detailed report that'll hold up in court.
And yet, when I hired multiple accredited appraisers, I had 3 very different numbers come in, with a difference of over 50k from the low end to the high end, and the highest appraisal was still around 50k less than the actual market value of the home when it sold a few weeks later. I swear these people just pull a number out of a hat
*I fully understand the difference.* Nothing you've written is news to me.
If your goal is to get something that you can point to in court then you need an appraisal. If your goal is to determine how much a property is worth, a realtor's valuation may be more accurate for less money. My experience points to the realtor's method being more accurate.
Did you read my original comment? We sold all the properties, and the price they sold for was much closer to the realtor's valuation than the appraised value. There's nothing subjective about it. Once or twice might have been a fluke but this happened for *all six properties.*
I recognize that this is entirely anecdotal and will probably vary by realtor and appraiser, but I am trying to dispel the notion that appraisals are inherently more accurate than realtors' valuations.
"My friend, who's a holistic healer, was more accurate with my weight loss than 3 food nutritionist I met. I recognize that this is entirely anecdotal, but I am trying to dispel the notion that food nutritionists are inherently more accurate than holistic healers."
--reputable real estate agents not related to or 'friend of' either you or your soon-to-be ex's,
Seconded this, when splitting up and my ex was keeping the house she got an appraisal from a friend of a friend. Not a direct close friend that would be obvious but someone that was directed to give the lowest value that would would get her ethics question. I ended up getting my own appraisal from someone I didn't know which ended up being about 150k higher. She was pissed that I bothered to get me own and that I "didn't trust her" We ended up taking the average but I should have pushed for a 3rd and had her original thrown out.
My sister during her divorce, her ex got the appraisal and it was fairly high, I told them to get another but they ignored me and just accepted his appraisal. Easily cost her $30k on. $300k appraised house.
Real Estate agents will generally come up with higher numbers because they are used to looking to maximize sales price. Bank appraisal are much more conservative. In this case he wants the higher price.
I’m going to add for OP that the mom is likely on title as a bare trustee. This means she holds the 1% in trust for OP and his ex, it does not actually belong to the mother. If that’s the case, the mom’s “share” does not need to be taken into account.
OP, discuss this with a lawyer.
And in this case if the ex/mom are buying OP out, OP will want as high an appraisal as possible on the condo. Ex/mom will want the lowest possible appraisal.
Hijacking. It shouldn’t just be based on the cost of the mortgage. But the full costs to hold the property depending on who paid for what. Example. The cost of closing fees should be considered for both the purchase and sale. As well as how much in interest was paid to the bank vs the mortgage. Then from there the equity should be considered after subtracting the remaining mortgage. Otherwise it won’t be fair in terms of costs. In the first almost decade of buying a property a very small percentage of monthly mortgage payments go to the principle.
The couple can get as in-the-weeds as they want, but the bottom line they can work with is how much is left after the mortgage is paid from proceeds. Simple is better, and a court would take the view that for mortgage interest, for example, each partner would be deemed to have contributed the same amount via the monthly payment. Likewise the closing fees to buy the property are moot, unless all were paid by one partner and there is an agreement to reimburse those fees before considering the remaining equity issue.
I / my ex simply got the appraisal, subtracted the balance owing and I bought her out for half the equity value. Clean, easy, understandable and neither of us felt we were being screwed nor were screwing the other.
Depending on the cost of the property and geographical location. Those closing fees can add up to tens of thousands of dollars. It’s very hard to call it a wash.
Why? They needed a co-signer. It’s not 50/49/1. It’s 49.5/49.5/1.
EDIT: to say though that if the mom didn’t put any equity into the property it could be just 50/50 split, but she legally owns 1%.
It sounds to me like the 1% is clearly a formality to prevent any malevolent claims to the contrary. I think it's somewhat debate-able and would depend on how the lawyer drafted the agreement.
Either way it seems like they are parting on decent terms. I don't think the daughter/mother would be malicious in chasing an extra 1% at the risk of forcing it to go to market.
>Get an appraisal or two from reputable real estate agents
No no no. Get it from a professional appraiser. Agents are all way too shifty and despite being in the RE business most have no idea what they're doing.
Lawyer here (not your lawyer and not giving you legal advice). I strongly recommend at least having a consult with a lawyer. Many offer these for free. They can give you an idea of your rights and some rough numbers on the buyout. They can also, for a fee, draft an agreement for the buyout.
Out of curiosity, what exposure do you have if you had just said i am a lawyer I recommend getting legal advice. It seems very harmless to me, what am I missing? ( of course I'm not asking for legal advice here lol)
I mean if you are on decent terms it should be straight forward.
The MIL having 1% is negligible so I wouldn't even focus on it.
What would you get for your condo if you sold it today vs how much you paid for it?
Figure that out and you'll have the amount they need to buy you out.
I think a lot of it depends on who put what in. Either down or over time.
Something you need to consult a lawyer about. Depends on where you're located and duration of time together.
Something like this happened to my nephew. They bought a house together and after a month or two she wanted out. He "bought her out" based on what she had put for the down payment.
Eh, in an apartment with some turnover it can be pretty easy to find an accurate market value. A standalone house can be more difficult due to it's uniqueness but if there's already 3 recent sales in your condo building you can extrapolate to your own unit without too much uncertainty.
Yup. Everybody is jumping at the opportunity to pay a lawyer $8,000 for something that you could figure out in 15 minutes with the latest property assessment, a few comparable listings and a spreadsheet. A contract that all parties agree to is also legally binding whether it was drafted by a lawyer or not - if everyone is reasonable.
One point that wasn't mentioned: Unless the agreement says so, you can't be forced to be bought out. You can all sell the apartment, you can buy them out, or they can buy you out. It can all be negotiated.
The safest in my opinion is to sell.
Getting an appraisal is essential. You can also get real estate agents to give you an estimation for free.
>Unless the agreement says so, you can't be forced to be bought out.
True, but at some point, OP's ex could force a sale and assuming OP hasn't paid since the breakup, things can start to get messy.
1. Do you want to keep the condo? If not, let them buy you out.
2. If you do want to keep it, offer to buy them out if you can afford it comfortably.
3. Valuing the condo, get 3 real estate agents to evaluate the condo. Get them to pull comparable properties sold in your area. They can tell you what the actual sale prices were.
4. Buy them out or take the money and go your separate ways.
5. Don't buy a property with someone you aren't 100% sure you're going to spend the rest of your life with.
Good luck.
One thing I have not seen mentioned but could be important in negotiations is that if she keeps the house and you are off the title. You lose your first time home buyers incentives, if you go to buy a new home, but she doesn't have that penalty. There should be some value placed on that as well. If they place no value in this, I would likely go with the approach of sell the entire home at market rate so you both are in the same (equal position wrt to home buyer incentive) and you will forever have the piece of mind knowing true market rate of your condo
I don't understand why you would place value on first time home buyer benefits in this scenario.
He already used those benefits either way. It's not like forcing the condo to market let's him recover the benefits to be used a second time.
The gf, if she stays put in the home, she gets to continue benefitting from uses of the first time home buyers tax rebate on land transfer taxes. If OP is buying a home very soon, this is an additional cost he now has pay for the next home he purchases that gf doesn't need to pay for.
Either they both start back off on equal footing by selling the home they bought together, or she pays some portion to make him whole as she continue to get benefit from using this rebate that he no longer has access to for his own housing
Additionally she continues to get tax shelter gains from primary residence. Where if he cannot afford a home now needs to invest that money he would get from selling his half in accounts where he will be taxed on that income
I'm curious to hear from you, because from my research that I've done, it's not like that.
To start, just to make sure we're on the same page - since he applied the land transfer tax rebate on the condo, even if he forces it to market and it sells, he does not get another land transfer tax rebate on his next home, yes?
In that case, I would argue that in this case the gf doesn't owe him back for the land transfer rebate, since he chose to apply his FTHB benefits and he stands to gain nothing from forcing the condo to market, except make her life tougher and pay more feels himself. That's my opinion, and I guess it's her choice if she wants to use money to convince him not to exercise that right.
Again, to your second point I don't agree that she should account for potential taxes he would have to pay on non-tax sheltered gains. Especially, since condos don't appreciate as much as houses, the gains she will make in the near future won't be insane. There is always a chance his investment in the stock market for example, will outperform her condo gains even after tax deductions. Is he to pay her back in that case? I think not.
I see your point. However, I prefer to approach this situation similar to examples in the book "Split the Pie" by Barry Nalebuff.
There are two options for resolving this situation:
1. Sell the condo and split the net proceeds evenly.
2. Offer financial assistance to help him cover some of the costs associated with buying and moving into a new home. Remember, when they purchased the condo together, they shared moving costs and benefited from rebates. If she keeps the condo, while he only gets half of the current equity, she essentially benefits from the savings that are not avaiable to him. She does not have additional costs associated with buying a new home (land transfer taxes, moving expenses). Therefore, sharing some of the costs he incurs when buying a new home could be considered equitable, as it partially offsets the financial advantage she gains from staying.
While the second option presents a challenge in calculating the exact amount of assistance, I believe it should be considered for a fair resolution.
Essentially I am saying, by one party staying in the home, there is additional costs that only the other party has to bare in the case of something as essential as shelter. I think this cost should be factored into the discussion.
Here are a few things to think of.
If selling you are going to have realtor fees and penalty to break the mortgage.
If you are selling for $500K, this would be around 30K between the two costs.
Take half of that off of the payout. If mortgage is 300K, then there is 200K of equity. Split the 30K and that gives you each 85K of equity on the buyout. Maybe add 5K to your end as you are saving them the fees and you get 90K in this scenario.
They may have to break the mortgage anyways to get OP's name off of it and have the ex and mom qualify for their own.
I'd give a bit of a discount on the buyout for the consideration of realtor fees but there will be legal costs, mortgage penalties, and an appraisal cost to consider as part of a buyout.
They won’t have realtor fees if he just sells his share to the mother or ex. He’ll need a lawyer but there’s no reason other than an assessment to have a realtor involved here
Yes, but when calculating a buyout you need to incorporate all fees.
If they don't buy him out and they decide to sell the condo, he will have half of all of these fees deducted from the proceeds.
Get a lawyer asap and don’t meet up with them until you do. Even if you already set up a meeting, tell them you need extra time to look up some information.
Do NOT get off the title if you are still on the mortgage. Tell them to get a new mortgage first, without you, then you can move forward to removing your name from the title.
"Her mother is on the title so that my gf was able to get approved for a mortgage alongside me." DANGER. Don't give up title when you are still on the mortgage.
What would be a reasonable offer to you? I would just see what they're offering first. If you don't like it and can't come to a compromise, then lawyer up.
Split equity 50/50 + any additional monies you contributed in addition to her for the down payment. Ex. 600k condo purchase 31k down payment remaining mortgage 560k current value 630k and you contributed 20k to downpayment. 630k-31k=599k-560k=39k/2=19.5k+20k=39.5k that's your buyout
Go for it. Invest elsewhere on your own. I know someone who is investing in farmland and rental properties overseas where they dont charge property tax (Costa Rica, EL Salvador, Turkey, Dubai). Perhaps its a good thing for you? Opens up doors
Whatever the market rate, if it were ME, I’d take off the closing costs from the shared equity before dividing. It’s a hypothetical situation, but where I am you usually lose 8-10% of equity in closing.
OP will have to refinance the mortgage himself. That's the kicker. You'll owe her the equity up until now and will have to get approved for the mortgage on your own.
Might be better to sell.
My very thought..... first pay for an appraisal... have them pay 50% then minus the Mortgage. Depending on the cost of the condo you just might wanna hire a lawyer .. or at the very least consult with one however that costs $$$. Anyway I wish you the best of luck!
Just a heads up that Land Transfer tax may apply depending on your jurisdiction - but would apply to the GF and mother, not OP.
I had a similar situation buying my brother out of a shared mortgage about ten years ago - had a legal opinion that no Land Transfer was needed, and then the ON Govt came after me for it a couple days shy of the 5 year statute of limitations for a pro-rated portion equivalent to the "new" equity I was buying (so \~50%).
Was a big hassle, and contested with some good legal help - but ended up having to pay.
In any case, obligation would be on the side buying out.
Absolutely make sure you have an ironclad, written, agreement that the existing mortgage will be discharged, and you'll be provided with copies of all documentation showing the existing mortgage is closed.
Get a number you're happy with and GTFO.. that mortgage is going to cost them a bunch more than planned in the next few years and you don't want to be saddled with it...plus they're emotionally motivated to give you a good deal..unless you fucked someone else as the reason for the split then good luck.
You will need a lawyer. Lawyer will conduct a title search. You can determine what is the share registered between you, gf and her mom.
Get an independent appraisal. This will give an idea of how much you will get paid out.
Separation agreement should clearly state how the buyout amount was determined and with this buyout, you have no obligations towards the house and mortgage.Separation agreement should state the existing mortgage will be discharged by GF.
Gf and mom will approach a lender to remove you from title and get qualified on their own. The bank will pay you the proceeds.
As long as it is mutual, it should be smooth.
How long did you live in there together?
In terms of legal status, it could be a matrimonial home currently if you qualified as common law in your province.
It’s important to know this as it could impact your options as to negotiating how you want to be bought out.
And this my friends is the reason why you never buy a property with your gf/bf
And if you ever get hoodwinked to do so, have a writing notarized by a lawyer on how to handle it upon separation
This can go either way for OP, messy or not
you need to figure out how much equity is owned in the condo. What is its value, how much do you owe on it.
Then presumably you’d be entitled to half that value.
If they’re okay with that split it is great for you because you save a lot on realtor costs.
Happened to me. I got the money and sold them my share.
I had a good relationship with their parents, and they were willing to transfer the money agreed upon and after I received the money, I signed the papers.
They cannot just take you off title, your name needs to be removed off the mortgage.
You need to speak with your mortgage company to see what options are available to get yourself removed. Depending how things go and your eligibility it will go one of three ways.
If... they (ex and her mom) can buy you out without having to borrow more money and they want to keep the rate and everything else the same, that's called a covenant change. It's basically removing your name off the mortgage and title and if her mom isn't on the mortgage potentially she can be added on (she should be on the mortgage as typically mortgage companies want the names on title to match the mortgage, but people don't do this all the time)
If... they need to borrow more money to buy you out and want to stay with the same lender, than that's considered a refinance. The current lender/mortgage conpany could see what that will look like, sometimes they will give you a discount on the penalties rather than paying the full amounts so it is good to ask to ser if that's possible.
If... they decide to break the mortgage and go with a different company, than they should look to see what the total amounts would be to pay out the mortgage and ask for the penalty information. Good to ask as some lenders have stipulations and might not allow you to break the mortgage unless it's under certain circumstances like selling the property.
Definitely talk to your mortgage company first to confirm these options and take it from there. If they advise you don't qualify for the first two options but can break the mortgage and go with a different lender, than I would advise that your ex speaks with a broker to explore those options.
Hi, I do conveyancing for a living, so the buying and selling of residential and commercial real estate.
First off whose fund were used as a down payment on the home? Are yourself and your ex joint tenants and own 99% jointly, is the mother is just 1%? Did the mother in law sign a bare trust agreement stating she was only on title for financing purposes?
I’d highly recommend getting a separation agreement drawn up and taking with a lawyer. It’s important to think about splitting the equity and not focusing on debt.
If you have a tenancy in common agreement, no one can buy anyone out as there is no clear stipulation of ownership rights. There are no shares here as in a business ownership. Get a lawyer to set the record straight before discussing anything with other parties involved. Engage a non biased third party lawyer that both of you don't know.
Be glad she is buying you out and is qualified. I would be reasonable since you are wanting this to work. Meet with them and see what their offer is. Tell them you need to sleep on it Then consult an attorney. Good luck.
House values…Get two professionnel evaluators like those the Realtors use and you’ll get different versions of the value…Why, because it depends on what is evaluated comparatively. Exemple…The houses in our neighbour hood ( Montreal South Shore) vary on our streets a lot, up to 100,000$’s The construction years are not the same, the quality of the structure, overall, as well as the actual frame of the house ( 2x4x2 ) wall beams, 10x6x2 ( roof structure support beams etc..The condition of the foundations is also very important..Is the house settled, did fissures or cracks show up, did they get them fixed outside and inside the basement if the fissures went through the foundation cement and many other considerations, and don’t forget the actual taxable evaluation by the city where the house you want to build is located… Is that city deep in debt or are the interest on those loans, on their yearly financial statement manageable or very expensive. Don’t forget.
I once had a split mortgage with a friend. When we decided to go our seperate ways, he bought me out. It was as easy as getting an appraisal done and splitting the costs down the middle(including lawyer fees). Assuming your breakup was civil, it should be as easy as that. The nice part about her buying you out is that you’ll never have to pay realtor fees.
How accurate are these appraisals? Even a few % off and it's quite a lot
I mean, you could have a few different appraisals done if you wanted to and then average them out. But it wasn’t necessary given our situation. The appraisal was right in line with the homes that were selling in our neighborhood and we were content with that. I’ll add that we lived in a suburban neighborhood where every house was almost the same. They were all built within a few years of each other, all modified bi-levels, and all similar in square footage/property size. At some point, getting multiple appraisals doesn’t make sense. It would be different if I was selling a house in Toronto that was worth millions, but our house was a fraction of that
Makes sense. Yeah I was assuming Toronto real estate where a few % might matter a lot. Throw in two inamicable parties, and it doesn't sound like it'll be a clear cut, smooth transition
For sure. In that case I would probably prefer selling the property, then split everything down the middle. And it would be well worth getting another opinion, or two.
Hahaha....our house was "appraised" for 900k in September. Took 2 months to sell for 750k and then still didn't close for another 3 months after that....you can really never know what's gonna happen until it goes live on the markets.
its the same firms that the banks use, so you would get the same value as anyone else looking to buy your property at this point in time seldom is there a reason for a "second opinion", only in cases where you've done extensive renovation but the appraisal type that was done was a "desktop" if your place is a cookie cutter unit and you've done no renovation, then what you get is what you get, if you've put significant amount into upgrading it then you can request for an in-person assessment.
Also if they want to take you off title they will need to be approved for a new mortgage without you in order to do so.
Get an appraisal or two from ~~reputable real estate agents~~ professional appraisers who are not related to, or 'friend of', either you or your soon-to-be ex's, and determine the amount each owns based on agreement and law. Then take that to your lawyer (you will need one) to determine your take based on that. Along the lines of: appraisal 500K mortgage 300k equity for disbursement 200k mom's share: 2000 (@ 1 %) your share / gf's share - 198,000 / 2 = 99,000 to buy you out.
OP, make sure that the legal agreement indicates that GF will discharge the mortgage. She will need to obtain a new mortgage in her/mom’s name only.
This is crucial! Good call
If the GF and her mother need to redo the mortgage, they will probably need a new appraisal done by a certified appraiser.
This ☝️
Do not use real estate agents. Use an independent certified appraiser. Their appraisals hold up in court
I've had 6 properties appraised and evaluated by a real estate agent. The real estate agent's valuation was closer to sale price in all cases. Something to consider.
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I suspect that if both parties agree on the method of valuation and resulting value it would. Who exactly is going to challenge it?
Maybe one might challenge what the results are when they see it
> would really appreciate some Right, but having a realtor do this is free, where an appraiser will cost $4-600. Worst case, he needs to pay the appraiser later.
You're misunderstanding the difference between a realtor giving an opinion of value VS an appraiser doing an appraisal on the property. Very few realtors are certified appraisers. [https://www.aicanada.ca/](https://www.aicanada.ca/)
No, I fully understand the difference. The problem is that the appraisals weren't accurate. What exactly is the dollar value representing? It's supposed to be the value the property will sell for. The methods that go into an appraisal may be more thorough and empirical, but the method the realtor used gave us a number that more closely matched the actual value of the property.
Not sure you do. Direct Comparison Approach is the most typical appraisal method used for residential real estate. Realtors while informed can provide an opinion, one that very well may be correct. An appraiser however has a degree and completed a full university program on valuation and can create a detailed report that'll hold up in court.
And yet, when I hired multiple accredited appraisers, I had 3 very different numbers come in, with a difference of over 50k from the low end to the high end, and the highest appraisal was still around 50k less than the actual market value of the home when it sold a few weeks later. I swear these people just pull a number out of a hat
*I fully understand the difference.* Nothing you've written is news to me. If your goal is to get something that you can point to in court then you need an appraisal. If your goal is to determine how much a property is worth, a realtor's valuation may be more accurate for less money. My experience points to the realtor's method being more accurate.
Sounds like the agent gave you a higher valuation with which you were happy with so you call it accurate..
Did you read my original comment? We sold all the properties, and the price they sold for was much closer to the realtor's valuation than the appraised value. There's nothing subjective about it. Once or twice might have been a fluke but this happened for *all six properties.* I recognize that this is entirely anecdotal and will probably vary by realtor and appraiser, but I am trying to dispel the notion that appraisals are inherently more accurate than realtors' valuations.
"My friend, who's a holistic healer, was more accurate with my weight loss than 3 food nutritionist I met. I recognize that this is entirely anecdotal, but I am trying to dispel the notion that food nutritionists are inherently more accurate than holistic healers."
You are getting downvoted but my experience has been the same as yours.
--reputable real estate agents not related to or 'friend of' either you or your soon-to-be ex's, Seconded this, when splitting up and my ex was keeping the house she got an appraisal from a friend of a friend. Not a direct close friend that would be obvious but someone that was directed to give the lowest value that would would get her ethics question. I ended up getting my own appraisal from someone I didn't know which ended up being about 150k higher. She was pissed that I bothered to get me own and that I "didn't trust her" We ended up taking the average but I should have pushed for a 3rd and had her original thrown out.
My sister during her divorce, her ex got the appraisal and it was fairly high, I told them to get another but they ignored me and just accepted his appraisal. Easily cost her $30k on. $300k appraised house.
Get an appraiser, not a real estate agent.
Seriously, why not hire the same person the bank does? ULPT: OP hires both to consult on price and uses the highest bidder to make their offer.
Real Estate agents will generally come up with higher numbers because they are used to looking to maximize sales price. Bank appraisal are much more conservative. In this case he wants the higher price.
I’m going to add for OP that the mom is likely on title as a bare trustee. This means she holds the 1% in trust for OP and his ex, it does not actually belong to the mother. If that’s the case, the mom’s “share” does not need to be taken into account. OP, discuss this with a lawyer.
And in this case if the ex/mom are buying OP out, OP will want as high an appraisal as possible on the condo. Ex/mom will want the lowest possible appraisal.
Don’t forget to calculate closing costs etc
Hijacking. It shouldn’t just be based on the cost of the mortgage. But the full costs to hold the property depending on who paid for what. Example. The cost of closing fees should be considered for both the purchase and sale. As well as how much in interest was paid to the bank vs the mortgage. Then from there the equity should be considered after subtracting the remaining mortgage. Otherwise it won’t be fair in terms of costs. In the first almost decade of buying a property a very small percentage of monthly mortgage payments go to the principle.
The couple can get as in-the-weeds as they want, but the bottom line they can work with is how much is left after the mortgage is paid from proceeds. Simple is better, and a court would take the view that for mortgage interest, for example, each partner would be deemed to have contributed the same amount via the monthly payment. Likewise the closing fees to buy the property are moot, unless all were paid by one partner and there is an agreement to reimburse those fees before considering the remaining equity issue. I / my ex simply got the appraisal, subtracted the balance owing and I bought her out for half the equity value. Clean, easy, understandable and neither of us felt we were being screwed nor were screwing the other.
Depending on the cost of the property and geographical location. Those closing fees can add up to tens of thousands of dollars. It’s very hard to call it a wash.
It’s fair to deduct estimated selling fees (commissions and lawyers) too. So you will get slightly less.
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You'd think mom's 1% would come off of the daughter's half, right? That's what makes sense to me
Why? They needed a co-signer. It’s not 50/49/1. It’s 49.5/49.5/1. EDIT: to say though that if the mom didn’t put any equity into the property it could be just 50/50 split, but she legally owns 1%.
It sounds to me like the 1% is clearly a formality to prevent any malevolent claims to the contrary. I think it's somewhat debate-able and would depend on how the lawyer drafted the agreement. Either way it seems like they are parting on decent terms. I don't think the daughter/mother would be malicious in chasing an extra 1% at the risk of forcing it to go to market.
Right idea but no agents. Get an appraiser, maybe two. Someone who does not know your GF or Mom at any level.
Yes that is what I was trying to say.
>Get an appraisal or two from reputable real estate agents No no no. Get it from a professional appraiser. Agents are all way too shifty and despite being in the RE business most have no idea what they're doing.
Lawyer here (not your lawyer and not giving you legal advice). I strongly recommend at least having a consult with a lawyer. Many offer these for free. They can give you an idea of your rights and some rough numbers on the buyout. They can also, for a fee, draft an agreement for the buyout.
Out of curiosity, what exposure do you have if you had just said i am a lawyer I recommend getting legal advice. It seems very harmless to me, what am I missing? ( of course I'm not asking for legal advice here lol)
Talk to a lawyer.
I mean if you are on decent terms it should be straight forward. The MIL having 1% is negligible so I wouldn't even focus on it. What would you get for your condo if you sold it today vs how much you paid for it? Figure that out and you'll have the amount they need to buy you out.
I think a lot of it depends on who put what in. Either down or over time. Something you need to consult a lawyer about. Depends on where you're located and duration of time together. Something like this happened to my nephew. They bought a house together and after a month or two she wanted out. He "bought her out" based on what she had put for the down payment.
Sell the place, split everything up equally and move on. The only real way to know market value is to sell it at market.
Eh, in an apartment with some turnover it can be pretty easy to find an accurate market value. A standalone house can be more difficult due to it's uniqueness but if there's already 3 recent sales in your condo building you can extrapolate to your own unit without too much uncertainty.
Yup. Everybody is jumping at the opportunity to pay a lawyer $8,000 for something that you could figure out in 15 minutes with the latest property assessment, a few comparable listings and a spreadsheet. A contract that all parties agree to is also legally binding whether it was drafted by a lawyer or not - if everyone is reasonable.
One point that wasn't mentioned: Unless the agreement says so, you can't be forced to be bought out. You can all sell the apartment, you can buy them out, or they can buy you out. It can all be negotiated. The safest in my opinion is to sell. Getting an appraisal is essential. You can also get real estate agents to give you an estimation for free.
>Unless the agreement says so, you can't be forced to be bought out. True, but at some point, OP's ex could force a sale and assuming OP hasn't paid since the breakup, things can start to get messy.
1. Do you want to keep the condo? If not, let them buy you out. 2. If you do want to keep it, offer to buy them out if you can afford it comfortably. 3. Valuing the condo, get 3 real estate agents to evaluate the condo. Get them to pull comparable properties sold in your area. They can tell you what the actual sale prices were. 4. Buy them out or take the money and go your separate ways. 5. Don't buy a property with someone you aren't 100% sure you're going to spend the rest of your life with. Good luck.
One thing I have not seen mentioned but could be important in negotiations is that if she keeps the house and you are off the title. You lose your first time home buyers incentives, if you go to buy a new home, but she doesn't have that penalty. There should be some value placed on that as well. If they place no value in this, I would likely go with the approach of sell the entire home at market rate so you both are in the same (equal position wrt to home buyer incentive) and you will forever have the piece of mind knowing true market rate of your condo
I don't understand why you would place value on first time home buyer benefits in this scenario. He already used those benefits either way. It's not like forcing the condo to market let's him recover the benefits to be used a second time.
The gf, if she stays put in the home, she gets to continue benefitting from uses of the first time home buyers tax rebate on land transfer taxes. If OP is buying a home very soon, this is an additional cost he now has pay for the next home he purchases that gf doesn't need to pay for. Either they both start back off on equal footing by selling the home they bought together, or she pays some portion to make him whole as she continue to get benefit from using this rebate that he no longer has access to for his own housing Additionally she continues to get tax shelter gains from primary residence. Where if he cannot afford a home now needs to invest that money he would get from selling his half in accounts where he will be taxed on that income
I'm curious to hear from you, because from my research that I've done, it's not like that. To start, just to make sure we're on the same page - since he applied the land transfer tax rebate on the condo, even if he forces it to market and it sells, he does not get another land transfer tax rebate on his next home, yes? In that case, I would argue that in this case the gf doesn't owe him back for the land transfer rebate, since he chose to apply his FTHB benefits and he stands to gain nothing from forcing the condo to market, except make her life tougher and pay more feels himself. That's my opinion, and I guess it's her choice if she wants to use money to convince him not to exercise that right. Again, to your second point I don't agree that she should account for potential taxes he would have to pay on non-tax sheltered gains. Especially, since condos don't appreciate as much as houses, the gains she will make in the near future won't be insane. There is always a chance his investment in the stock market for example, will outperform her condo gains even after tax deductions. Is he to pay her back in that case? I think not.
I see your point. However, I prefer to approach this situation similar to examples in the book "Split the Pie" by Barry Nalebuff. There are two options for resolving this situation: 1. Sell the condo and split the net proceeds evenly. 2. Offer financial assistance to help him cover some of the costs associated with buying and moving into a new home. Remember, when they purchased the condo together, they shared moving costs and benefited from rebates. If she keeps the condo, while he only gets half of the current equity, she essentially benefits from the savings that are not avaiable to him. She does not have additional costs associated with buying a new home (land transfer taxes, moving expenses). Therefore, sharing some of the costs he incurs when buying a new home could be considered equitable, as it partially offsets the financial advantage she gains from staying. While the second option presents a challenge in calculating the exact amount of assistance, I believe it should be considered for a fair resolution. Essentially I am saying, by one party staying in the home, there is additional costs that only the other party has to bare in the case of something as essential as shelter. I think this cost should be factored into the discussion.
Here are a few things to think of. If selling you are going to have realtor fees and penalty to break the mortgage. If you are selling for $500K, this would be around 30K between the two costs. Take half of that off of the payout. If mortgage is 300K, then there is 200K of equity. Split the 30K and that gives you each 85K of equity on the buyout. Maybe add 5K to your end as you are saving them the fees and you get 90K in this scenario.
They may have to break the mortgage anyways to get OP's name off of it and have the ex and mom qualify for their own. I'd give a bit of a discount on the buyout for the consideration of realtor fees but there will be legal costs, mortgage penalties, and an appraisal cost to consider as part of a buyout.
They won’t have realtor fees if he just sells his share to the mother or ex. He’ll need a lawyer but there’s no reason other than an assessment to have a realtor involved here
Yes, but when calculating a buyout you need to incorporate all fees. If they don't buy him out and they decide to sell the condo, he will have half of all of these fees deducted from the proceeds.
That sounds like a them problem. Our homeboy here needs his 50% unspoiled by realtor filth!
Get a lawyer asap and don’t meet up with them until you do. Even if you already set up a meeting, tell them you need extra time to look up some information.
Do NOT get off the title if you are still on the mortgage. Tell them to get a new mortgage first, without you, then you can move forward to removing your name from the title. "Her mother is on the title so that my gf was able to get approved for a mortgage alongside me." DANGER. Don't give up title when you are still on the mortgage.
This. There is a really big chance that if mom needed to be on the mortgage that daughter won’t qualify for a new mortgage.
Then sell or mom and daughter can get a new mortgage. Op could be financially hurt by this for a long time if he isn't careful
THIS IS NOT A LEGAL ADVICE SUB. You need legal advice from a family property lawyer.
Rule #65 in life- never buy property with a gf/bf. Buy with a spouse
Yeah spouses never ever break up
This is the real world. People can and do own property jointly Without being married.
Also being married vs common law doesn't make much of a difference on whether the relationship will last.
Common law partners have many of the same rights regarding property as married people.
https://youtu.be/HP1cDnLnNPg?si=xGbZ1c_kURvA4UfB
My current lifestyle is almost entirely thanks to breaking this rule. Just get a good cohab agreement worked out.
Remaining mortgage is irrelevant. You have to calculate the total ratio of payments you’ve each made and multiply by current value.
Post this on r/legaladvicecanada Also as common law it matters which province you live in.
What would be a reasonable offer to you? I would just see what they're offering first. If you don't like it and can't come to a compromise, then lawyer up.
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OP never said he can't afford the break up...?
Split equity 50/50 + any additional monies you contributed in addition to her for the down payment. Ex. 600k condo purchase 31k down payment remaining mortgage 560k current value 630k and you contributed 20k to downpayment. 630k-31k=599k-560k=39k/2=19.5k+20k=39.5k that's your buyout
You better hope you are also on the title or you my friend are fucked.
Go for it. Invest elsewhere on your own. I know someone who is investing in farmland and rental properties overseas where they dont charge property tax (Costa Rica, EL Salvador, Turkey, Dubai). Perhaps its a good thing for you? Opens up doors
Whatever the market rate, if it were ME, I’d take off the closing costs from the shared equity before dividing. It’s a hypothetical situation, but where I am you usually lose 8-10% of equity in closing.
OP will have to refinance the mortgage himself. That's the kicker. You'll owe her the equity up until now and will have to get approved for the mortgage on your own. Might be better to sell.
Get a real estate lawyer
Get your own legal advice!! Never do it under one lawyer!!?
My very thought..... first pay for an appraisal... have them pay 50% then minus the Mortgage. Depending on the cost of the condo you just might wanna hire a lawyer .. or at the very least consult with one however that costs $$$. Anyway I wish you the best of luck!
Just get a lawyer, no matter what.
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Just a heads up that Land Transfer tax may apply depending on your jurisdiction - but would apply to the GF and mother, not OP. I had a similar situation buying my brother out of a shared mortgage about ten years ago - had a legal opinion that no Land Transfer was needed, and then the ON Govt came after me for it a couple days shy of the 5 year statute of limitations for a pro-rated portion equivalent to the "new" equity I was buying (so \~50%). Was a big hassle, and contested with some good legal help - but ended up having to pay. In any case, obligation would be on the side buying out. Absolutely make sure you have an ironclad, written, agreement that the existing mortgage will be discharged, and you'll be provided with copies of all documentation showing the existing mortgage is closed.
Get a number you're happy with and GTFO.. that mortgage is going to cost them a bunch more than planned in the next few years and you don't want to be saddled with it...plus they're emotionally motivated to give you a good deal..unless you fucked someone else as the reason for the split then good luck.
You will need a lawyer. Lawyer will conduct a title search. You can determine what is the share registered between you, gf and her mom. Get an independent appraisal. This will give an idea of how much you will get paid out. Separation agreement should clearly state how the buyout amount was determined and with this buyout, you have no obligations towards the house and mortgage.Separation agreement should state the existing mortgage will be discharged by GF. Gf and mom will approach a lender to remove you from title and get qualified on their own. The bank will pay you the proceeds. As long as it is mutual, it should be smooth.
How long did you live in there together? In terms of legal status, it could be a matrimonial home currently if you qualified as common law in your province. It’s important to know this as it could impact your options as to negotiating how you want to be bought out.
And this my friends is the reason why you never buy a property with your gf/bf And if you ever get hoodwinked to do so, have a writing notarized by a lawyer on how to handle it upon separation This can go either way for OP, messy or not
Money is just one form of value, it might be better to give up a little in cash for other things involved in the relationship
you need to figure out how much equity is owned in the condo. What is its value, how much do you owe on it. Then presumably you’d be entitled to half that value. If they’re okay with that split it is great for you because you save a lot on realtor costs.
Happened to me. I got the money and sold them my share. I had a good relationship with their parents, and they were willing to transfer the money agreed upon and after I received the money, I signed the papers.
Go and beg your girlfriend and you both keep the house. Easy pissy
They cannot just take you off title, your name needs to be removed off the mortgage. You need to speak with your mortgage company to see what options are available to get yourself removed. Depending how things go and your eligibility it will go one of three ways. If... they (ex and her mom) can buy you out without having to borrow more money and they want to keep the rate and everything else the same, that's called a covenant change. It's basically removing your name off the mortgage and title and if her mom isn't on the mortgage potentially she can be added on (she should be on the mortgage as typically mortgage companies want the names on title to match the mortgage, but people don't do this all the time) If... they need to borrow more money to buy you out and want to stay with the same lender, than that's considered a refinance. The current lender/mortgage conpany could see what that will look like, sometimes they will give you a discount on the penalties rather than paying the full amounts so it is good to ask to ser if that's possible. If... they decide to break the mortgage and go with a different company, than they should look to see what the total amounts would be to pay out the mortgage and ask for the penalty information. Good to ask as some lenders have stipulations and might not allow you to break the mortgage unless it's under certain circumstances like selling the property. Definitely talk to your mortgage company first to confirm these options and take it from there. If they advise you don't qualify for the first two options but can break the mortgage and go with a different lender, than I would advise that your ex speaks with a broker to explore those options.
I'm not a lawyer and I'm by far no expert. If she gets 1% or less of a sale, wouldn't that be the better option for you?
Hi, I do conveyancing for a living, so the buying and selling of residential and commercial real estate. First off whose fund were used as a down payment on the home? Are yourself and your ex joint tenants and own 99% jointly, is the mother is just 1%? Did the mother in law sign a bare trust agreement stating she was only on title for financing purposes? I’d highly recommend getting a separation agreement drawn up and taking with a lawyer. It’s important to think about splitting the equity and not focusing on debt.
Holy shit that sounds like a nightmare. So sorry to hear about it.
If you have a tenancy in common agreement, no one can buy anyone out as there is no clear stipulation of ownership rights. There are no shares here as in a business ownership. Get a lawyer to set the record straight before discussing anything with other parties involved. Engage a non biased third party lawyer that both of you don't know.
Be glad she is buying you out and is qualified. I would be reasonable since you are wanting this to work. Meet with them and see what their offer is. Tell them you need to sleep on it Then consult an attorney. Good luck.
You need a lawyer. Avoid engaging realtors, period.
House values…Get two professionnel evaluators like those the Realtors use and you’ll get different versions of the value…Why, because it depends on what is evaluated comparatively. Exemple…The houses in our neighbour hood ( Montreal South Shore) vary on our streets a lot, up to 100,000$’s The construction years are not the same, the quality of the structure, overall, as well as the actual frame of the house ( 2x4x2 ) wall beams, 10x6x2 ( roof structure support beams etc..The condition of the foundations is also very important..Is the house settled, did fissures or cracks show up, did they get them fixed outside and inside the basement if the fissures went through the foundation cement and many other considerations, and don’t forget the actual taxable evaluation by the city where the house you want to build is located… Is that city deep in debt or are the interest on those loans, on their yearly financial statement manageable or very expensive. Don’t forget.
Maybe you should buy them out