Deed of Trust - Calculations

steve_taylor_

Hello Everyone,

I am in the process of buying a new house and if it wasn't difficult enough I thought I would muddy the waters some more.

My current situation is that I am selling my house and will receive approx £100k profit. I intend to pump 90k into the new house and use the other 10k for stamp duty and fees etc ( ps I assume you don't pay VAT on stamp duty as well ? :mad: )

The new house will be purchased jointly with my partner, hence the deed of trust. All ongoing costs will be paid 50/50

The plan was , if we went our seperate ways ( who says romance is dead :rotfl: ) then I would extract the 100k from the house and then split any remaining profit 50/50 ( unless of course the market goes in freefall ).

But .....

I have two children ( from a previous relationship ) who I see on a regular basis :j . Therefore the new house has two bedrooms for them. Therefore my partner is effectively paying 50% of everything for these two rooms that she doesn't technically require. So is a 50 /50 split of the post 100k equity still fair ?

Any ideas on how I could resolve this, could I calculate the number of rooms and then assign an equity percentage to each one ?

Does anyone have any other ideas ?

Thanks for reading ! Hope it makes sense.

Steve

FTB83

Hi

Would it not be easier to speak to your partner and ask her what she would be happy with? She may be content with a 50/50 split and you're worrying about nothing. If she's not, then she may have an idea on how to split profit in a way that feels fair to her.

FTB83

steve_taylor_

Ah, I must have neglected to say that we have already had the conversation. She has already said that it didn't seem entirely fair !

She is independently thinking about this. But I thought I would ask the huge pool of resource we have on this site.

Thanks,

Steve

ChrissieI

I think this is fair. You get your money back and then 50/50 of whats left.
I don't think the fact that your children stay with you sometimes has anything to do with it. What would you have done if the bedrooms had just been spare rooms.(Iyswim)
Also when you take on the deed of trust the amount you put in should be shown as a percentage of the total house cost not a set amount. Hope this makes sense.
You already have children so you know relationships can break down.
Please do not give up on this idea. If you are still together when you are old and grey you can look back and laugh at this.
If you do not get that far you will be glad you took this document out.
Your next problem is making a will which gets complicated once the deed of trust is done. (you then own the largest share of the property and have to cover your childrens side of it)

steve_taylor_

Excellent. Thanks for that.

My partner is thinking more about the uses of the room. Ie the overhead that having the children there costs. Ie TV, playstation, heat, light, water etc.

Re-reading this it appears I am making her out as an ogre ( but that is far from it ) .

We are both adults who have been through the mill before and are trying to make it as fair as possible for both of us should the unmentionable occur !

Perhaps tackling it in a way that offsets the bills may be easier, that way the house sale percentages should be relatively simple.

Thanks for the advice on the wills, I shall be making a new one once the move has happened ( if it doesn't kill me first ! ) and will ensure that the DoT is catered for.

Cheers,

Steve

Worried

With a deed of trust, if the amount one party puts in is shown as a percentage, how does it work if the house is sold relatively quickly after purchase? Say my OH and I buy a property and I put down the deposit, say a 10% deposit of £20,000. Would it be that I own 10% of the property and the remaining 90% is split between us, so I am entilted to a 55% share and him a 45% share? If we split up relatively soon after we brought the property and only made a small profit when we resold and had only paid off a minimal bit of capital, say we sold, paid off the mortgage and got my £20,000 back and a further £10,000 profit just to make the sums easier... how would this £30,000 be split?

Debt_Free_Chick

steve_taylor_ wrote:

My partner is thinking more about the uses of the room. Ie the overhead that having the children there costs. Ie TV, playstation, heat, light, water etc.

Charge the kids rent :rotfl:

Seriously though .... are they really going to use that much light, water (metered) & electricity? Heating should be pretty much nil as presumably there would be some heating on when the rooms are unused?

I think you're the one being generous, already. You only want your initial £100k deposit back, with no allowance for inflation, lack of savings interest, or the increase in that portion of the value of the house. On that basis, could you not agree to "call it quits" in the interests of keeping things simple?

ChrissieI

Worried wrote:

With a deed of trust, if the amount one party puts in is shown as a percentage, how does it work if the house is sold relatively quickly after purchase? Say my OH and I buy a property and I put down the deposit, say a 10% deposit of £20,000. Would it be that I own 10% of the property and the remaining 90% is split between us, so I am entilted to a 55% share and him a 45% share? If we split up relatively soon after we brought the property and only made a small profit when we resold and had only paid off a minimal bit of capital, say we sold, paid off the mortgage and got my £20,000 back and a further £10,000 profit just to make the sums easier... how would this £30,000 be split?

I will try to keep this simple if you brought a house costing £150,000 and you put down £50,000 you are putting down one third of the house.
When you come to sale you take the price the house sells at, and work out one third of the amount. This is your money.Then the selling fees are taken out of whats left and the remaining figure is split 50/50.
If the equity in the house is less than your third then all the money is yours.
You are paid first and its only 50/50 on any money remaining.
If there is negative equity then you are responible for 50/50 of the short fall.

steve_taylor_

Ok, I'm the partner and I thought I'd put my view on here too.

The kids spend every other weekend at the house as well as one evening per week. This over the year is 28%, preferably in an ideal world for me there wouldn't be any kids, but I have accepted that with Steve comes 2. This really isn't an issue for us, so please don't think this is the root cause of this debate.

What I don't agree with is that I should pay 50/50. My argument is if it all goes horribly wrong then Steve is no worse off because he takes back his 90K (this wouldn't be available to make interest if we weren't buying a house) and a 50/50 split on any profit we may make. Me, I have to contribute 50% to everything when really I am not enjoying 50% of the benefits. The 2 rooms which will be used for the children will be no go areas for me, so out goes my spare room / walk in wardrobe With the children there are additionally expenses, the constant stream of dirty washing, the playstation, the computer, the tv etc. Things that on the surface do not amount to a great deal, however over the next 10 years the amount becomes quite significant. You may mock at what would look like charging the children rent, but they are not my children so why is this such a ludicrous request ? I'm sure Steve would have some complaints if I arranged for my mother to come and live with us for 28% of the time ....

ChrissieI

steve_taylor_ wrote:

The 2 rooms which will be used for the children will be no go areas for me, so out goes my spare room / walk in wardrobe I think you should have your walk in wardrobe if you want it, it is your house as well. Could the children not share a room so you can have one for you?:
( With the children there are additionally expenses, the constant stream of dirty washing, why cant the children take their washing home. My son always came back from his dads with a bag of washing even if he had stayed all week
the playstation, the computer, the tv etc. Things that on the surface do not amount to a great deal, however over the next 10 years the amount becomes quite significant. maybe there could be a 60/40 split on the electric bill or what ever feels fair to you?
You may mock at what would look like charging the children rent, but they are not my children so why is this such a ludicrous request ? I'm sure Steve would have some complaints if I arranged for my mother to come and live with us for 28% of the time ....

but if your mother did come to stay do you think steve would be asking you to pay extra for the electric she uses.

Mrs_pbradley936

Steve's partner if you expect half of any equity you ought to commit to half of any expenses, but if you would be happy with 60/40 or something else say so and discuss it between you. How much are you talking about per month anyway? Will you be paying council tax, other bills and food? Filling the car up? If I were you I would pay half the mortgage and less of the other stuff because if it all goes wrong at least you will be able to show you are paying half and so deserve half of any equity.