Declaration of trust

clearing_out_my_pockets

I'm not sure if this is the right forum for this, but hopefully some of you might be able to help anyway.

I am a first time buyer with no intention of moving until next year. I am clearing debts and saving for a deposit whilst living with my parents. My OH is clearing debts and putting money to one side either to use as a deposit or to overpay his loan in one lump sum.

My parents have (very kindly) offered £10,000 as a long term loan / gift. OH's parents have offered £3,000.

In a year's time (if OH keeps savings rather than pays off the loan), the finances will be as follows:

Me: £19,400
My parents: £10,000
OH: £3,600
OH parents: £3,000
Total: £36,000

As there is a large chunk coming from my parents, they would like a way to safeguard their investment. For example, if OH & I were to split up, theoretically the equity would normally be split 50/50 and without anything in writing, I'd be paying my parents back out of my equity. I know it's very easy for OH to say that he'd be honest enough to acknowledge my parents' contribution but it's difficult to guess how you would react in a hypothetical split :rotfl:

Anyway, do any of you fine people know how difficult it can be to get a declaration of trust and can you normally get your conveyancing solicitor to do it for you? For the avoidance of doubt, we wouldn't list everyone, we'd probably just say something like "Clearing out my pockets: £29,400 OH: £6,600"

AnnaMonkey

Hello!

My convayencing solicitor drew my Trust Deed up for me, it came in at £100 + VAT (no idea if that's good or not). She said it was a very good idea to have it and it was straight forward to draw up. I'm in the same situ in that I'm putting more than my O/H so mine says that I'll get back the extra that I put in should we sell, and after that any profits would be split between us.

Easy!

Troubled_Joe

It's dead straight forward. I'm pretty sure our conveyancing dept doesn't even charge any extra on top of our fixed fees.

clearing_out_my_pockets

Thanks.

If the numbers were a little closer, I probably wouldn't bother, but the amounts being put in by either party (be it via our own savings or parents help) are so different, I would be mad not to protect my parents' money.

babyhead

A friend of mine recently did this when her parents gave her 70k towards her and her OH's house purchase. I would say is reasonably straight forward to do and very sensible!

clearing_out_my_pockets

babyhead wrote: »

A friend of mine recently did this when her parents gave her 70k towards her and her OH's house purchase. I would say is reasonably straight forward to do and very sensible!

Wow - £70k! wish my parents could be so generous...

puddy

yes, ive just been asking about this on someone elses thread above, i need a declaration of trust which ive been told my conveyancing solicitor will do for 100 plus vat, however my problem is that i cannot for the life of me make head nor tail of the calculations involved. yours is similar to mine in that you are making a much bigger contribution in deposit terms to your partner.

someone has provided me with an outline that mine is 2/3 of the asset, so thats fine if we sell when we split up, but how would i buy him out? dont understand the calculations if its halfway through a mortgage life??

Richard_Webster

The couple could open a joint account and each pay in an agreed amount in each month to cover Council Tax, electricity, gas, water, telephone and the mortgage. these amounts could be recorded by the couple. They will know how much the lump sums that were contributed by them and the parents are so say every three months a note can be signed by all concerned which sets out the total amounts contributed by everybody. The parents' contributions won't alter but those by each of the couple will because of the mortgage and other payments. When the house is eventually sold the mortgage is paid off and the legal and estate agents costs taken out and what is left is then divided in the proportions of the total contributions made by each person.

The longer the couple have the mortgage the greater effect that will have and the smaller proportion would be repayable to the parents, although hopefully the equity will increase as the mortgage is paid off, and hopefully over say 10 years, the property will go up in value too.

nesss

Just a idea which i found to my disadvantage. A declaration of trust will not be upheld in court if the couple are married so it's worth looking into it more seriously than just getting a trust as marriage overrides it.

puddy

well i dont know about the OP but i dont plan on getting married which is why we want the declaration