Legal Agreement to protect my money in joint buy

Toki

I am going to be selling my house and buying a larger house with my girlfriend.


I expect to make around £120,000 on my house which I intend to put into our new property. She only has around £10,000 to put in. Is it possible to get a legal agreement drawn up to ensure I get this back should we split up in the future? She is fine with getting an agreement drawn up. Call me cynical but I have seen so many friends and family split up and everything gets split 50/50 so I wouldn’t want to lose £60,000 if the worst happened.


My next question would be, how much would this cost approximately? Does any solicitor do this?


If you need any more info or clarification then just ask. Thanks in advance

nervousftb_3

it is possible to have a 'declaration of trust' written by your solicitor, stating that upon sale of the house you would get the first £120,000, she would get the next £10,000 and the rest would be split equally (or whatever arrangement you wanted!). the solicitor who is acting for you in your house purchase will probably be able to do this for you.

nervousftb_3

forgot to add, it will be pretty inexpensive (less than £100 in my experience)

zzzLazyDaisy

When you buy the new house, you have a choice of having it registered as 'joint tenants' or 'tenants in common'.

Joint Tenants means that you each own all the house, and if one dies the house automatically passes to the survivor, it doesn't fall into the deceased person's estate and their 'share' cannot be gifted away in their will.

Tenants in Common means that each person owns the share that is stipulated in the title deed registered at the land registry. This can be any share you like. So if you are buying a house for cash and one of you is putting in 75% of the money, you may choose to register the house 75/25. If you also have a mortgage it may be more complicated - no matter how the house is registered, or who pays what contribution to the mortgage, you are both legally liable for the full amount of the debt. So you may choose to adjust the shares to account for both of you being equally liable for the mortgage.

EDIT - or you can have a declaration of trust as stated above, which would still involve registering title as tenants in common.

If you register the house as tenants in common, that person's share will pass under their will or intestancy and could leave the other person homeless, so it is important that you each make a will leaving your share to the other, or leaving it in trust with the other having a right to live in the house (if that is your intention).

Please note, the above is only a summary - you need to speak to your solicitor and get advice tailored to your own specific circumstances.

suavekc

nervousftb wrote: »

it is possible to have a 'declaration of trust' written by your solicitor, stating that upon sale of the house you would get the first £120,000, she would get the next £10,000 and the rest would be split equally (or whatever arrangement you wanted!). the solicitor who is acting for you in your house purchase will probably be able to do this for you.

'nervousftb' is right. I did this when my OH and I bought our house 2 years ago. I just asked my solicitor to draw up a document (can't remember what it's called) to state that upon sale I would get £xxx (the amount of deposit I put in) first then any monies remaining would be split equally. OH would have to sign the document and get someone else to counter sign and return it to our solicitor.

simples!

gemstars

You will need to buy the house as 'tenants in common' rather than 'joint tenants' in order for the property not to be split 50/50 for the reasons explained above.

Instead of setting up a declaration of trust (and paying for this) my solicitor suggested I write to my partner explaining how the split would work (I paid the £12,000 deposit) he signed this and then wrote back agreeing to it and I signed that. Although these documents aren't legally binding they are looked on favourably by the courts should it come to that.

Richard_Webster

upon sale I would get £xxx (the amount of deposit I put in) first then any monies remaining would be split equally.

Good way to start an argument if the sale produces less than the amount you put in!

Did you also agree what would happen in that eventuality? Was is that the person who put in the lump sum would get whatever was left or that the other one would have to make up the difference or half the difference?

And given that you might want to sell to avoid prices going down further or losing out because the other one wasn't paying his or her share of the mortgage, do you really believe that the other one would happily find the shortfall in order to enable a sale to proceed. In practice they would probably dig their heels in and say that if you wanted a sale they would only sign if they didn't have to pay anything more!

Sorry but I don't start thinking about doing these agreements for anything less than £250 plus VAT because I want to make sure that both parties have really thought through what they would do and how the agreement would work in various possible future scenarios.

Also if one puts in much larger sum than the other but they pay the mortgage equally, over the years the equal payment of the mortgage will make the one with the smaller lump sum's total contribution gradually nearer to 50% so it might be fairer to have something in the agreement to reflect that factor.

A quick deed of trust is seen as a great panacea, but not when later there is an argument about what it means, because the terms have not really been thought through!

Having an agreement/deed of trust is better than not having one but any agreement has to be enforced.

Legal arguments cost a lot of money, so if the eventual difference between the respective parties' positions on on an argument is less than about £5,000 it is scarcely worth going to court over it.

Therefore regardless of the rights and wrongs the person who at the time is in the weaker negotiating position may have to accept they will be a few thousand worse off than they expected.

Toki

Thanks everyone, I will ask my solicitor one I get that far.

I forgot to mention I am in Scotland, not sure if that makes any difference or not due to the different laws?