Deed of Trust: how to be fair!!! Help please

grifferz

NervousHomeowner wrote: »

I am providing the deposit (Roughly 35%) and have covered all the fees. However, he will be paying the mortgage for the next 3 years. As such, we have arranged the following:

A. In the event that we make a loss after sale/fees, any equity will go entirely to me. Any debts will be paid 50/50.

B. In the event that we break even after sale/fees, I will recoup my deposit.

C. In the event that we make a profit, my deposit will be returned to me in full and then any profit will be split 60/40 to him.

If you haven't already had it stipulated then I would also add clauses that say:

• He will be responsible for all mortgage payments
• In the event that any mortgage payment is not paid in full for a period of three months, he agrees at your option to sell the property and pay all fees involved in sale

This way, should your partner refuse to pay the mortgage you have the ability to quickly put the house on the market without having to go to the trouble and expense of applying to court to force a sale.

(Note that if he's broke, nothing can stop the mortgage company coming after you and nothing and force him to pay for the sale, the above just formalises that it is his responsibility)

Instead of the 60/40 have you considered the following process on sale?:

1. Any outstanding mortgage is discharged
2. Fees of sale are paid
3. Your deposit/fees are returned
4. If there's any balance, his capital mortgage payments are returned
5. If there's any balance, split 50/50

That would mean that first priority (after lender and fees) is your deposit, second priority is what he's paid in capital on the mortgage, and the finally you get to share the rest.

The issue I would have with 60/40 is that if you imagine he does get as far as paying off all of the mortgage then the split should actually be 65/35 to him, as you have only ever put in 35%.

I appreciate that since for the vast majority of time there is still mortgage outstanding and you have put up all the money up front then you may feel you are due that 5% as consideration.

All I would say is that as you are both living there and the deed guarantees that you will be paid back first (after mortgage), do you actually need to shave that 5% off in your favour?

Ultimately this is personal and between you and your partner so if you are both happy with that, that is the main thing.

pinkshoes

Option 1 is the only fair option.

You should keep the deposit as a % of the property should you split up and need to sell.

As for the fees, she ought to try and pay for her half over time... (or agree to this being added to the % of the house price in your share)

The_Pixi

I have just done this with my partner,

We both agreed that the best thing to do was stipulate our deposit input 24k/34k/ we get that back if we split up and sell, the rest is 50/50 including any profit.

if the house made a loss (doubt it, but if it did) then thats the risks you take with investments.

You have to think about the time, effort and continuing expense of owning a home. Each partner will bring something, I'm the DIYer & interior designer in my house :rotfl:

I also organize bills and the dull paperwork stuff. So its not all about the £££ upfront. Though it does seem sensible to protect your initial investment.