My friend and I bought a property and split the mortgage 50:50, now he wants more of the profits because he put in bigger deposit
A friend and I bought a property ten years ago when we first moved to London for work. We lived there for five years and then both moved out to live with our partners, who we have since both bought homes with and married.
We kept the flat and let it out over the past five years but have now decided that it’s time to sell up.
It currently has a £300,000 interest-only mortgage on it that we are both named on and have split the payments 50:50 over the years.
Disputing ownership: Unless there is a contract in place to say otherwise, it's a 50:50 split
When we bought the flat for £300,000 in 2006, we got a £200,000 mortgage and my friend put down most of the deposit, at £80,000, while I put down £20,000.
After we moved out in 2011 we remortgaged onto a buy-to-let mortgage of £300,000 with the flat valued at £400,000 and he took his £80,000 back and I got my £20,000.
Now that we have decided to sell for £600,000, how should we split the £300,000 in profit that we will make after the mortgage is paid off?
My friend is claiming that he should get more of it, as he put down a larger deposit. However, we never agreed that would be the case and have always split all mortgage and maintenance costs 50-50, so that seems unfair, especially as he got his £80,000 back five years ago.
James Teagle, of Blacks Solicitors LLP, replies: There is a presumption that properties purchased in joint names will be owned in equal shares unless there is evidence to demonstrate that the parties had a different common intention.
You say that there was never any agreement to own the property in unequal shares, so the fact that your friend provided a greater share of the deposit in 2006 is certainly not conclusive.
It would appear that even if there had been a common intention to own the property in unequal shares in 2006, remortgaging in 2011 is likely to have created a new arrangement which superseded the previous one.
That is because, when you remortgaged, you both withdrew the money that had constituted the deposit and that then put you and your friend on an equal footing.
In any event, the two of you have split the mortgage payments, maintenance costs and other outgoings equally since the outset – which is inconsistent with your friend’s suggestion that he would only ever be entitled to receive a greater share of the net sale proceeds - the profit in other words.
Indeed, it is difficult to conceive of a scenario in which you, or indeed anyone, would have agreed to pay half of the outgoings in such circumstances.
The burden of proof lies with your friend to persuade the court that it is appropriate to disregard the presumption of equal ownership.
I believe he would have difficulties on these facts and that a court would find that you are entitled to half of the net sale proceeds, which equates to approximately £150,000.
Invariably, courts treat disputes of this nature on a case-by-case basis because they turn on their own facts, so I would urge anyone in a similar situation to seek legal advice.