Welcome to our Alphabet Information Series.  Today’s topic is Equity and Equitable Accounting. 

What is equity?  Most people would answer it's how much your house is worth. Equity actually has several meanings. In Accountancy, ‘Equity’ is the difference between the value of the assets and the value of the liabilities of something that is owned. ’Equity’ is also a name given to an area of law.

Most commonly, when using the word ’equity’ in family & matrimonial law and cohabitation cases, we are using it to work out the beneficial interest in an asset, such as the family home. If, for example, there is to be a transfer of the family home, or indeed any property, to one party then the solicitors will need to calculate the transferring parties equitable interest in that property.  

"Equitable accounting" is also another common phrase that is used to determine whether or not there should be some further re-adjustment of any sums payable, this is done after it has been determined whether or not a party has a share in the property and if so what that share is. This normally takes into account the fact that one person has continued to live in the property and possibly continued to pay the mortgage on his or her own. Such adjustments can make a significant difference to the outcome of these types of disputes. There are three different matters that are usually or more commonly looked at:

• Occupation rent: Should the person who has remained in the property pay to the other a contribution having regard to the fact that he or she has had sole occupation of the property?
• Mortgage installments: If one person has continued to pay a greater sum to the mortgage than the other, is he or she entitled to repayment of that contribution?
• Improvements: If the person who has remained in the property has improved the property after the other has left should that party receive some additional contribution in respect of those costs or the equity the improvements may have created?

If you have any queries regarding the above information or would like any further advice remember obtaining accurate legal information from the outset can be vital in the resolution of your matter and can make the process less stressful. Call 01246 555 610 to arrange a free, no obligation consultation with one of our experienced solicitors.