Tenants in Common (unequal shares) and Declaration of trust

Leozam_2

Hi,

I am buying a house with my boyfriend (first time) - tenants in common unequal shares 70/30. My boyfriend is giving all the deposit therefore he will have more in equity than me in the house. However we will have a mortgage which will pay 50/50. I have several questions about tenants in common and declaration of trust.
1. How stamp duty need to be paid? 50/50 or 70/30
2. How fees and solicitors to buy the house need to be paid? 50/50 or 70/30
3. In declaration of trust, in case we want to sell the house my boyfriend wants: a) to sell the house deducting legal fees, estate agents commission and valuers fees (equal) "first", b) the net sale will be divided in the shares proportion (70/30) second c) then pay the mortgage in equal shares third. Does it sound right?
4. My boyfriend also add in the declaration of trust "bills" (electricity water, ...) will be paid by both parties in equal shares 50/50. Is this necessary in a declaration of trust?
5. My boyfriend also add structural improvements will be paid 70/30 - however it will apply for conversions and extension only. It wont apply to buy a new kitchen, put down a wall to make a room look bigger, fireplaces, new roof and new windows. Is this fair?

We have done the exchange for the house; however we have not done the completion yet. He wants me to sign the declaration of trust before doing the completion but I want to make sure that what he wants, is fair for both of us.

Although he will put the whole deposit - I have being paying solicitors, surveyors all fees 50/50 and I want to make sure this is right.

I would really appreciate any comment.

Thank you

br3nnan

When me and my girlfriend bought our first house we were in a similar situation to you. I had all the deposit and she had none (due to going to uni)

What we decided was to have an equal 50/50 share in everything but that she paid more of the mortgage repayments until the deposit was payed off. I.e. £600 a month mortgage was split £400/£200 for 3 or so years.

Might not work for everyone but we were happy with this situation and it saved any awkward arguments over money

monty-doggy

It sounds far too complicated.

Surely if the house is sold you give him the deposit back first out of the proceeds then split the rest 50/50 as you are paying 50% of the mortgage.

How have you decided 70/30?

Annie1960

How romantic!

Presumably you are the person who will have 30%?

What you are suggesting sounds unfair to me. Either:

1. Your boyfriend pays the deposit, and you share everything else 50/50. If you sell, then he gets back his deposit first (maybe with some uplift or down lift to reflect the change in house prices in your area), then you split everything else 50/50. This seems by far the fairest and simplest solution to me.

or,

2. Boyfriend pays deposit (presumably this is a huge deposit, to reflect the 70/30 proportions). Then all other bills are paid 70/30 (especially the mortgage!) so when you sell you split it 70/30. This includes selling cost at 70/30. Living expenses (such as utility bills, council tax etc) should be paid 50/50.

Sounds like he's trying to get too much in your original post.

Kynthia

You really should have discussed and agreed all this before even house hunting. Both of you should be happy and comfortable with the terms and now you have to do this with the completion deadline looming.

I agree it seems to complicated. As you will be paying the mortgage and bills 50:50 and the only uneven amount is the deposit then I would do it differently. Are you putting down any deposit? If not I would have the trust deed state that everything including ownership is 50:50, but in the event of a sale, after fees your boyfriend would get his deposit back (or perhaps a little more equivalent to interest fir each year of ownership) then split any remaining equity equally.

If you are paying some deposit then make it 30% of the deposit if you can. Then have all property expenses, fees, mortgage, improvements and ownership split 70:30, and living costs such as council tax, utilities, food, decorating and furniture at 50:50. This in a way is fairer should property prices fall as then you both have deposit money at risk but only work if you have enough money to put down as a deposit. However this way only work if your boyfriend can afford to pay more of the mortgage repayments each month and us happy to do so.

As you can see there isn't one right answer, you need to discuss it and come to an agreement. Does the trust deed specify what happens if you split up? Will one of you move out, will the other buy them out or sell the property if they can't afford it, how will you agree the value to sell, etc?

ermine

My boyfriend is giving all the deposit therefore he will have more in equity than me in the house.

No, that's not right, though he has a point

Br3nnan's way is a good way to look at it - and it depends how much of the equity the deposit is. You can either look at it that the BF has the first claim on the sale proceeds up until his extra deposit is paid back. But unless the deposit is very large most of the equity will be built up over the years of paying the mortgage, so it is how you split that which determines how much of the equity is each parties. If you pay an equal share of the mortgage then over time you will acquire a more equal part of the proceeds.

The parasitic costs (stamp duty and conveyancing) are part of the cost of buying a house. Wanting to split them 50:50 but take 70% share of the equity seems a bit rough IMO. When you come to sell the asset, if the 70:30 split still held, again, these parasitic costs should be split in that proportion. Say you owned £1000 of the equity and he £199,000 - would it still be right that you eat 50% of the fees? I don't think so.

He's probably not trying to do you over, but is fearful. Open and frank discussion of what both of you believe to be fair is the only way to make that work.

As for the bills, is he really ready to start life with you? There is ebb and flow in a relationship. What happens if kids come along? what happens if one of you loses your job? It's understandable that he's fearful, but that sort of control-freakery is taking it a little bit far.

Oh yes, and one thing you need to determine is what do you do if the demon of negative equity turns up. It's been off the scene for the last twenty-five years, but it did happen. The prices of houses does not always go up, as I found to my cost, as did a million other Britons in the 1990s. How would you allocate the losses? and if there's an asymmetry in that compared to how you'd allocate the gains, who is getting the one-way bet and why?

CLAPTON

without the actual number it's difficult to say but at first sight he gets a very good deal and you a poor one.


try out what would happen in say

10 years of you splitting all bill including the mortgage 50-50

how much would you have paid in total; how much would he have paid in total?

would 70-30 be fair if you split ? almost certainly not.

yes he should have first call on his deposit (plus an uplift if applicable) but then everything 50-50

KMMT

I have a declaration of trust with my ex boyfriend & we are in the process of selling - we complete next week.

I initially put in £11k more than him into the deposit, & then everything else was 50/50. We saved the rest of the deposit together. & all fees/mortgage/bills were split 50/50 when living together. Roll on 10 years & 2 houses later (we completed another declaration of trust when we moved which said the same thing) & we are selling after going our separate ways.

We are now paying all our selling fees 50/50, I walk away with my £11k & all other profit is 50/50.

Someone said to me once that I should of got a % more than him as we would never of been able to buy and therefore made any money on the property if it wasn't for me , but seeing as everything else we did was 50/50 then I don't see that as important. I walk away with the money I put in, & originally we did not buy the houses as an investment, we brought them as our homes to live in.

monty-doggy

KMMT wrote: »

I have a declaration of trust with my ex boyfriend & we are in the process of selling - we complete next week.

I initially put in £11k more than him into the deposit, & then everything else was 50/50. We saved the rest of the deposit together. & all fees/mortgage/bills were split 50/50 when living together. Roll on 10 years & 2 houses later (we completed another declaration of trust when we moved which said the same thing) & we are selling after going our separate ways.

We are now paying all our selling fees 50/50, I walk away with my £11k & all other profit is 50/50.

Someone said to me once that I should of got a % more than him as we would never of been able to buy and therefore made any money on the property if it wasn't for me , but seeing as everything else we did was 50/50 then I don't see that as important. I walk away with the money I put in, & originally we did not buy the houses as an investment, we brought them as our homes to live in.

We'll done for being sensible and amicable! If only more people had your sense!