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History: Home UK Divorce Forum
Topic:
Loan Deposit Question (6 Posts)
Started By:
Date:
04 October, 2017 02:42PM
Loan Deposit Question
Mystic - 04 October, 2017 02:42PM
Good afternoon all,

I have a question in relation to a loan that my father gave to myself & STBX wife for the deposit on our house which is now causing an issue with regards to the financial settlement.

In a nutshell, my father agreed to lend us the 10% deposit to purchase our home. Subsequent to that we have separated and are now going through the divorce process.

In an attempt to formalise the loan we typed up the agreement below which names the lender ( My father), the borrowers ( Myself and My STBX) the amount being lent, the terms of repayment ( upon future sale of the property), Interest (none) and governance.

THIS AGREEMENT is intended to formalise the agreement made between all parties on ( DATE OF VERBAL AGREEMENT) and is made on this (DATE OF AGREEMENT SIGNED) by and between:

[Lender], having his permanent residence at [Home address], hereinafter referred as the Lender.

AND

[Myself and STBX], having their permanent residence at [Home address], hereinafter referred as the Borrower.

1. AdvanceĀ¬
1.1 The Borrowers may at any time, on or after the date of this Agreement request the Lender to make, and the Lender shall subject to the terms of this Agreement and at its discretion make any advance to the Borrowers of LOAN AMOUNT which shall be repayable on the Repayment Date. The Lender shall make payment of the Advance to the account of the Borrowers, in accordance with the request of the Borrowers, in payment for deposit and expenses relating to the purchase of ( Former marital home)

2. Term
2.1 The Borrowers shall repay the loan in full upon the Sale of the Property ( Former Marital Home)

3. Interest
3.1 No Interest is due under the terms of this agreement.

4. Governance
4.1 This Agreement shall be governed by the laws of England and Wales.


4.2 Any dispute or difference arising out of or in connection with this Agreement shall be resolved by means of reference to arbitration by a sole arbitrator to be appointed by mutual consent of the Parties.

Borrower and Lender agree to the conditions above, and sign to that effect in the presence of a witness on the (DATE OF THE AGREEMENT)

Now we are separated and going through the process of trying to come to an agreement about the finances.

I wish to stay in the former marital home and buy out her share of the equity, excluding the amount of the loan which is to be repaid should i sell the house in the future.

My STBX is disputing this and is saying that she should get 50% of the equity and any repayment of the loan should come out of my half if i choose to sell the house in the future, to which i disagree as the loan was made to both of us so why should i have the sole burden and liability of paying it back as it was a joint liability loan.

I addition to this she has not paid one single penny towards the mortgage in more than 4 years so in effect has invested nothing in the property whatsoever apart from about ones years worth of her share of the mortgage payment for the year we lived in the house as a married couple. ( i should mention we were married for 6 years - Five of which we rented, one year in purchased property, and the house was bought as joint tenants, no children).

She is saying that she doesn't recall agreeing it was a loan and in spite of me having text messages and emails ( i saved them all) since 2014 where she discusses selling the house and acknowledges that we have to pay my father's money back out of the equity then split the difference, she is now saying that she doesn't acknowledge it was a loan.

The only part that concerns me is that I signed the loan agreement on our behalf ( her name is mentioned on the loan agreement) along with my father signing it and my mother was witness.

Does the fact that the loan agreement exists in writing with all parties names on it and she has acknowledged for nearly 4 years via
multiple texts and emails that the money is a loan and should be paid back ( a point which she and her solicitor are choosing to ignore), strengthen my case for insisting that the original 10% deposit loan amount should be excluded from the settlement amount?

Your advice / comments would be much appreciated!
Re: Loan Deposit Question
davidterry - 05 October, 2017 11:21AM
>>The only part that concerns me is that I signed the loan agreement on our behalf

You are very vague on dates.

1. On what date was the loan made?
2. On what date did you separate?
3. On what date was the loan agreement drawn up?
Re: Loan Deposit Question
Mystic - 05 October, 2017 12:59PM
Hi David, Thanks for taking the time to read my post.

Please see my responses below and sorry i didn't meant to be vague on the dates

1. On what date was the loan made? The loan was made on 7th June 2012, 7 days before completion on the property, we moved into the property on 15th June 2012
2. On what date did you separate? - We separated on 1st December 2013
3. On what date was the loan agreement drawn up?- The loan was agreed verbally on 26th December 2011 and the loan agreement was drawn up in 31st May 2012 and signed on that date to formalise the terms.

Thank you in advance
Re: Loan Deposit Question
davidterry - 05 October, 2017 01:17PM
You say the loan agreement was drawn up before the completion of the house purchase. If this was drawn up by the conveyancing solicitor there will be no problem about proving the chronology. However, if it was not done through the conveyancing solicitor but done privately between you and your parents you will face the problem of explaining why your wife should be bound by a document she did not sign and may not even know existed.

In any case the situation is basically that you want to keep the house and buy out your wife's interest. She can ask what price she wants for that interest. She is not bound to any formula because it is simple matter of who has the negotiating power.

Just as a matter of interest you should only pay your wife a lump sum in respect of her interest in the house within the context of divorce proceedings and a formal and final settlement reached in those divorce proceedings.
Re: Loan Deposit Question
Mystic - 05 October, 2017 01:31PM
Hi David,

Thank you for your response. It was drawn up privately. When we first separated we tried for 8 months to sell the house and couldn't get any buyer who was able to get a mortgage ( due to tough economic times), during the emails and texts going back and forth all along this process she acknowledged that when we sold the house we would pay back the money we owed my Dad and then split the equity left after costs, 50/50

Does the fact that she has acknowledged via email and texts that it was a loan that should be paid back to my father upon sale of the house not constitute proof that she knew it was a loan and that she had a joint liability to repay the funds to my father?

With regards to the payment of the lump sum. i won't be giving her a penny until a consent order has been signed and sealed by the court.

Many thanks
Re: Loan Deposit Question
davidterry - 06 October, 2017 09:57AM
>>Does the fact that she has acknowledged via email and texts that it was a loan that should be paid back to my father upon sale of the house not constitute proof that she knew it was a loan and that she had a joint liability to repay the funds to my father?

Whether it constitutes proof or not is not going to be determinative one way or the other. If you are going to stay in the house - presumably with the benefit of the loan provided by your parents as a deposits - then a court would have to decide whether the subsequent repayment of that loan (if there is ever a repayment) is a matter between you and your parents or whether your wife should indirectly contribute to the repayment of that loan. Personally I think your wife has a point and a court might think so too.
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