House heavily in debt, 50:50 shares - separation

Hi,
any models involving one party taking over shares from the other first require agreement on the current value of the house. Otherwise, paying out becomes difficult....
We are currently experiencing this in the neighborhood. A couple is separating; she now wants to buy him out (the money is available). But she only wants to give him 50% of what they both paid for the house five years ago. He, however, wants 50% of the current value. Since he contributed a great deal of personal effort and house prices here have easily increased by one third over the last five years, their price expectations naturally differ significantly. Both are right and wrong, but especially for her, the word "compromise" is foreign.
The expert appraisal battle is now in its third round while the house value keeps rising.... outcome open.

Best regards,
Andreas

... and who profits from this are all the others. The two themselves become even more dissatisfied and feel exploited by the other side.
Instead of both easing up and making compromises...

Best regards in brief

Both sides have right and wrong, but above all, for them, the word "compromise" is a foreign term. The battle between the experts is now entering the third round while the house value keeps rising.... outcome uncertain.

Best regards,
Andreas

No, the matter is relatively clear, because the personal contribution naturally factors into the current, real house value, ergo only the current market value including appreciation minus any defects and wear should be considered. If she does not agree to that, the house is simply sold at the real market price and the amount divided by two – under the conditions described, the house will not be sold at the price of 5 years ago without personal contribution.

... and those who profit are all the others. The two themselves will become even more dissatisfied and feel exploited by the other side. Instead of both stepping back a bit and making compromises...

If the description is correct, only one side is being exploited, and quite blatantly. I sometimes hear the argument that my clients want the fee schedule to be based only on the "shell construction value" and believe that their personal contribution should not be included in the cost calculation. I then always ask them if they would sell me their construction project at that price or build it for me and provide their own contribution for free. Then there is silence on the phone and the matter is closed.

Best regards
Dirk Grafe

any models involving the takeover of shares from one party by the other first assume that there is an agreement on the current value of the house.

My point exactly! It's like an advance inheritance and paying out siblings ... but often no one wants to admit it. And admittedly: it is also not so easy to determine the value, especially when no one is willing to pay money for it.

This here....

The matter is relatively clear, because the personal contribution naturally goes into the current, real house value, ergo only the current market value including appreciation minus any defects and wear should be applied.

.... the esteemed lady sees completely differently!
"The lousy bastard left her, so he should damn well pay now..."
She herself says she can only attack, she would not give in on principle. Whether that is very clever, I will not comment on here...

Best regards,

Andreas

It is also not that easy to determine the value, especially when no one is willing to pay money for it.

She says herself that she can only attack; she would not give in on principle. Whether that is very smart, I will not comment on here...

That is the main reason why communities of heirs burn money. If information about internal disputes and/or a possible "distress sale" leaves the internal circle, it noticeably lowers the short-term achievable purchase price, especially if the property is not really in demand.

Regards
Dirk Grafe

In this case, they already agree. She gets nothing paid out, he takes over the entire house and all debts.

For him, there are thus 2 things:
1.) theoretically got a whole house cheaply, since she "put in" well (but not involving five-figure amounts of equity)
2.) he has to bear the financing alone, which always represents a certain challenge for any employee

For her:
1.) she waives her spent money and sees it as rent.
2.) in return, she gets out of the contract and can close the capital

Basically ideal for both, since everyone gets what they wanted (except, of course, that he would still like her as a partner...). The bank just has to cooperate. Both would agree to that.