Party "A" & Party "B" were in a relationship and purchased a $218,000
home together in Nov. 2002. Party "A" contributed $3,000 towards the
down payment and Party "B" contributed $8,000 towards the down
payment. Thereafter Party "A" was responsible for 25% of the house
payment and utilities & Party "B" was responsible for 75% of the house
payment and utilities.  Party "A" did renovations to the home such as
painting, remodeling etc. without help from Party "B".  Costs for
items needed to do renovations was split between the two parties
50/50. Party "B" now wants Party "A" to move out. Party "A" wants to
know how to fairly calculate how much Party "B" owes to them keeping
in mind the labor involved in house renovations that were performed.
Questions I need answers to: How do I come up with a dollar amount for
the labor that Party "A" performed?  In addition to the $3,000 down
payment that will be refunded should there also be more money owed to
Party "A" now that the house is worth more thanks to the effort put
forth by Party "A" e.g. time/labor?  Should a real estate appraiser be
hired to determine the new value of the house? If so, how do you
calculate what is owed to Party "A"?  Do you take the purchase price
and subtract it from the current value? When you come up with a total
should Party "A" get half or 25% of the difference?  Thanks very much!
I'm in a bind and time is running out- please hurry.

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Clarification of Question by squirrel24-ga on 07 May 2004 12:48 PDT

Could you clarify more for more regarding the capital gains comment. 
I'm not sure that I follow. Thanks.

Just FYI: Your question might require some extensive legal research
that would be a much more appealing project to a researcher if the
qestion price was a bit higher.

In the meantime, it might help to know the answers to the following
questions: How long were the parties married? How old are the parties?
Are there any children? In what state are we discussing the laws?

Regards;
tutuzdad-ga

The parties are not married- simply in a relationship that ended. No
children involved and we are in North Carolina.  I felt my question
was more oriented towards coming up with a solution that works fairly
for both parties.  Not so much a legal issue I suppose since we are
attempting to work it out between us and felt that a third party could
come up with an impartial answer. Thanks in advance.

Pick a number for the labor that was expended.  $20/hour? $40/hour?  I
have no idea what the rates are in your area, but it shouldn't be too
hard to get an estimate. Also, you have to factor in the skill level
of "A".  Was he/she an apprentice level?  expert? Pick a skill level,
and estimate what you would pay for that type of person to come in and
do the work.
Now you have a value for that work.   THen, add in all the actual
money contributed over the years/months by each party.  Now you have a
relative contribution for each party.
Get an appraisal of the house value, subtract the mortgage, and now
you have the equity.  Take the relative contribution of each person,
and divide up the equity accordingly. So, if one person contributed a
total of twice the other person, then that person gets 2/3 of the
equity.  For the person leaving, give them that amount.
I could have missed something, but I think that's a reasonable way to approach it.
(I'm also a native TarHeel!)

comment on my comment above:  I am ingnoring any tax implications of
one person buying the other one out.  For example, if B has to pay
capital gains later on the gain on the house, then it's not fair to
just give A a lump sum payment for his/her contribution.  In this
case, tax implications need to be factored in, which is not a simple
calculation.

Could you please elaborate on the capital gains comment?  I'm not sure
I follow?  Who would it effect negatively and under what
circumstances? Thanks.

I'd be curious to know how you end up deciding how to do this...;-)