Own apt with friend - she wants one of us to buy other out

carrieb

Ok so 4 years ago myself and a good friend bought an apt together.

We payed €260k. 6 months later her sister bought one exactly the same with her boyfriend for €340 - we thought we were going to make a fortune when we sold.

There was never any agreements drawn up, we just always said that we'd probably sell after 4 or 5 years...

She rang me the other day to say that herself and her boyfriend - who owns an apt on his own - had applied for a mortgage and were refused simply because of these 2 apartments. I had no idea she was looking.

She did say a few months ago that she was going to move home and rent her room out for a year to save in order to buy. She asked me what my plans were, I said I had none re; the apt for now as I have no money! Just started a job today but it's a contract - 6 months.

She has not found anyone for the room yet.

We had a chat tonight and she said she doesn't want to sell the apt.


HOWEVER.......... she thinks that it's time only one of us owned it. As she said we're both nearly 30, obviously we thought we'd sell it now and be minted but that's not going to happen. Neither of us want to be living with our friend in our 30s...

She seems much more keen on idea of me (with my parents was her suggestion) buying her out. This obv because she wants to buy a house with her boyfriend. She said several times that she'd pack up her room and walk out the door tomor.

She also said that if I wanted she would buy me out.

We reckon the apt is prob worth 200k. We are going to get valuations next week.

We bought it for 260k.

We owe 228 so the person buying would be in negative equity of 28k.

She said if I want her to buy me out she will give me 3k to leave.

My head is melted, don't know what to think.

MagicMarker

Well do you want to stay or go?

helimachoptor

Take the 3k and run a fcuking mile!

The_Conductor

carrieb wrote: »

She said if I want her to buy me out she will give me 3k to leave.

I'd bite her hand off.......
Not only would you not have the negative equity hanging over your head, you'd have 3k into your hand into the bargain.
I don't know how she would fund it- as a bank would only give a max 85% of market value to her- aka- 170k- leaving her to find the other 50-60k elsewhere.....

Explore your options- but I don't see how it might be possible to buy the other person out in the current climate.

If I were in your position- I'd grab the 3k and run.......

D3PO

firstly dont screw yourself over here. shes your friend great but you shouldnt be out of pocket becasue she wants to buy a house

if she wants you to buy her share then it has to be on your terms. She will give you 3k to buy her out ? Is she having a laugh ? If she wants to be bought out then she needs to seel to you at the current market rate best so she needds to give you 30 grand not 3 grand !! Just becasue she wants to leave doesnt mean she gets to forget her share of the negative equity.


obviously you should have drawn up an agreement before buying but no point in crying over spilt milk. Dont let her walk all over you.

if you are going to buy her out dont screw yourself, if you dont want to leave dont let her screw you either (remember your debt will be crystalised and you will lose your FTB status)

D3PO

smccarrick wrote: »

I'd bite her hand off.......
Not only would you not have the negative equity hanging over your head, you'd have 3k into your hand into the bargain.
I don't know how she would fund it- as a bank would only give a max 85% of market value to her- aka- 170k- leaving her to find the other 50-60k elsewhere.....

Explore your options- but I don't see how it might be possible to buy the other person out in the current climate.

If I were in your position- I'd grab the 3k and run.......

oops i read the first post wrong. shes offering to buy you out straight up and give you 3 grand. then defo take it !!!!

carrieb

The 3k is her offer to buy me out!
I presume it's a type of "compensation".

I'm not really in a position to do anything.

I can't afford to and don't want to buy her out. HOWEVER, if she buys me out I am homeless!!

carrieb

That's what most people seem to be saying.

jam_mac_jam

Let her buy you out, there is no reason for you to buy her out, you would get another one cheaper than you will end up paying on the mortgage, I think she is crazy. Are you also sure that you will get 200 for it even if you did sell? I would take her hand off for it.

jam_mac_jam

carrieb wrote: »

The 3k is her offer to buy me out!
I presume it's a type of "compensation".

I'm not really in a position to do anything.

I can't afford to and don't want to buy her out. HOWEVER, if she buys me out I am homeless!!

you arent homeless,can you not rent? you will end up saving a fortune rather than being stuck with an appartment that you wouldnt be able to sell and might even be worth less in the future.

The_Conductor

carrieb wrote: »

The 3k is her offer to buy me out!
I presume it's a type of "compensation".

I'm not really in a position to do anything.

I can't afford to and don't want to buy her out. HOWEVER, if she buys me out I am homeless!!

Yes, you're homeless- however were you to share an apartment elsewhere, or houseshare- it would probably be for a fraction of the mortgage repayment.....?

Further- if you save the 3k- and augment it as you go along- you have a nice little nest egg, for that rainy day......

Ps- if you paid 260k in 2006- it seems almost wishful thinking to imagine the open market value of it is now ~200k......

You have significant negative equity hanging over your head at present- she is offering you an 'out'- I'd grab it if I were you.......

D3PO

carrieb wrote: »

. HOWEVER, if she buys me out I am homeless!!

rent, save the difference between your rent and current mortgage along with the 3k eventually when things turn you have a nice deposit to buy something else and you arent in negative equity

ntlbell

keep in mind if it is worth 200k

28k

that's the negative equity you'll be in _today_

you could be in a hell of a lot more of it 12 months down the road.

jam_mac_jam

I cant really understand why she is giving you money? should you not owe her money as she is taking over 28k negative eq. Should you not owe her 14K? I think you would be mad not to

AARRRGH

Agree with the others - take the 3k and run. It is a great offer.

Forget the "homeless" talk. There are plenty of apartments you can rent or share.

-K2-

I think that she'll need to re-apply to the bank for a new mortgage in order to take on the full mortgage debt on her own when your name is removed from the deeds. Otherwise you would still be legally responsible for the mortgage if your name was on it.

Would she get a full mortgage on her own with such a massive positive LTV?

Reason: you both owe €228k (jointly and severally). You think the apartment is worth €200k (only €60k fall since the market peak is generous, but let it go for now).

Your friend cannot simply walk into the bank and remove your name from the loan - I assume it was given to both of you based on joint income. Therefore she will need to apply for a new mortgage as she will be solely responsible for the repayments. Let's be generous again and assume she applies with her boyfriend (best case). The bank needs to perform a new evaluation of the ability to pay by the people taking the loan.

She still needs to apply for a mortgage of value €228k to cover the existing loan, unless she has some money set aside this is an application for a €228k loan on a €200k apartment: a LTV = 114%. Even during the madness of the Celtic Tiger banks would be reluctant to give a loan based on such an LTV. Any lower value on the apartment would make this situation worse.

If your friend does not remove your name from the loan and has a private agreement with you to take the loan on herself then this is a dangerous situation. If she defaults in the future then you are still liable for the full loan as your name is attached to it.