Clitheroekid wrote:Thanks for the further explanation. However, although you made it clear that you were not seeking advice on what to do about the property the more I read your post the more convinced I became that the only sensible solution is to sell it.
Although, as I said in my previous post, it's technically possible to enter into a contract with M in the terms set out I would foresee considerable problems. For a start, M would need to be separately represented - one solicitor could not possibly act for both B and M due to the conflict of interest. This would mean that she would be advised of the inherent problems in this type of agreement, not least that she is effectively unable to buy any other property while she's tied into this one.
She would also be advised that she would be legally obliged to tell the mortgage lender that she had permanently vacated the property, which could cause problems for B.
If you were planning to rent the property out there would be tax issues for M, as the rent received would, on the face of it, be 50% hers. Although you could get round this she would have to satisfy HMRC that she had no entitlement to it, which is yet more hassle.
There are also potential insurance issues that would need to be addressed if she’s no longer going to be living in the property.
All things considered, the likelihood is that she would be advised not to agree to the proposal.
Even if she insisted that she was happy to proceed, such comprehensive advice won’t be cheap. As the proposed cash sweetener isn't going to be a substantial amount B would probably also have to agree to pay M's legal fees, otherwise they'd probably absorb too large a chunk of the sweetener.
You say that a sale would be "unlikely to yield much, if anything, in the way of gain". However, depending on where the property is and the strong possibility of a post-Brexit decline in value, particularly if it's in London or the south east, it may well be better to get out now on a neutral basis than in a year’s time at a loss. Admittedly, this is purely a matter of opinion as to how the market will move, but it's a factor to be considered.
Taking everything into account it's difficult to see any argument for not selling. Is there a particular reason why B wants to retain ownership?
Thank you for your very clear and well-reasoned answer. I was aware that the type of agreement I had in mind would impact M's ability to buy another property. I even thought that in the interests of fairness I should make M aware of this.
My thinking, possibly naive, was to get a suitable document drafted and then to put it to B and M to sign, leaving it up to M as to whether or not she sought her own legal advice about it. My suspicion is that she would not seek such advice purely on cost grounds.
I hasten to add that my intentions are not about cynically exploiting M's lack of awareness but about trying to develop a solution that is fair to both B and M and gets them to something that is workable for both of them. I would be happy to set out for both B and M the issues you raise about insurance, taxes and mortgage conditions. I accept that a legal adviser acting on M's behalf would probably nuance these issues differently to the way I might present them.
If we go for a sale and forget my ideas about an agreement M will not get any cash until any sale is completed. The amount of cash may well be very little compared to what she is currently looking for. I suspect M is wanting her money as she leaves in a few weeks time. As to B, retaining the property would solve a problem of where to live when she returns to the UK. For both B and M it also solves a problem of what to do about the current contents of a 2 bed property, contents which neither currently have anywhere to home.
Your post has given me cause to stop and think long and hard about what I'm doing and, perhaps more importantly, why I'm doing it. For that you have my sincere thanks.
Chrysalis wrote:It’s a cautionary tale for sure. What would you do differently with the benefit of hindsight? (Genuine question.I think many of us can imagine ending up in a similar situation).
Rather than giving B quite a substantial lump of cash to facilitate the property purchase, I would delay doing that and advise renting together instead. The cracks that showed up in their relationship and ultimately ended it, would then have emerged earlier, no property would have been bought and the present mess would never have arisen. The road to hell...