Joint tenancy or TIC (long-time couple, unmarried)?

xsjdx

Hi there,

My partner and I (11 yrs happily unmarried) are about to buy a house together.

I will be putting in 100% of the desposit (fairly sizeable, we're talking 40k+ here), and he will be taking care of the legal cost/purchasing fees (around £8k)

We've agreed that we want to treat his half of the deposit (minus his purchasing costs) as an interestless debt, not as a share of the property if we split. (i.e. I'd never get my money back if we stay together, as I'd only get the larger share released if we split)

So - I'm thinking we go for Joint Tenancy, and have a separate 'repayment scheme' drafted up.

Otherwise, as I understand it, if we go for TIC, we'd have to get a will drafted stating we leave the property to each other, then get a Trust Deed drafted...but we don't want to deal in 'shares' so I don't know if that's even relevant)

Thoughts?

halfabee

I would like to ask the exact same thing, so will be very interested in seeing replies to this one! My circumstance is just the same as yours. We thought we could get a Joint Tenancy with a Declaration of Trust but the solicitor says you cannot do that. TIC, plus DoC, plus wills seems overkill, surely there is a simpler way!

LottieLou

So in effect, you are looking at that he owes you 14k?

I will be interested to see what people advise you, I am in a similar situation which I posted about on Sunday.

What happens if you go for a joint tenancy, with a repayment scheme drafted but then the worst happens you split up and it turns nasty? would he be entitled to half the deposit and able to wiggle out of the repayment somehow?

After talking with my OH over the weekend, we agreed for him to open a savers specifically putting in money for him to put in the house (i.e to give to me as a portion of the deposit) so similar to what you suggested above. However, we are going to be TIC and revisit the agreement if or when he contributes any money to the 'pot'.

Edit: can I change that to 16k, I clearly cant do simple maths today !!

getmore4less

THis is in effect an interest free loan so that is one way to deal with it,

The monyey is lent and then put down as a deposit.

if you split the mortgage 50:50 then it is just 1/2 of whats left after the debt is paid.

Enforcing the debt repayment is the issue.


Joint tenancy sorts out the survivorship issue BUT does expose you to IHT tax issues as not married. the asset moves to the survivor without the relevent tax relief(if spouse) so uses up nil rate band.

getmore4less

xsjdx wrote: »

I will be putting in 100% of the desposit (fairly sizeable, we're talking 40k+ here), and he will be taking care of the legal cost/purchasing fees (around £8k)

You lend each other 1/2 what you spend

so if you pay £40k they pay £8k the loan(from you to him) is £16k

hohum

I spoke with our solicitors about this as we have a similar kind of situation. Boyfriend is putting down the deposit, which is £22k. I am paying for legal fees/surveys etc and refurb on purchasing the house which is £10ishk. Our finances are joint. It is likely that over the next 5 years I will be putting a further £10k of inherited money into improvements (will need new kitchen and bathroom plus potential boiler replacement in that timeframe)

He is completely relaxed about the whole thing. Originally I wanted to protect his deposit, and he said he figured it would even out over time. However as we are not married, I worry about if we split one of us getting 'stuck' on the mortgage. I suppose this can happen anyway. Our split of the house would be 50/50 if we were to be tenants in common.

The solicitor said that we could write the Deed of Trust to be that he recoups the deposit then we split equity 50/50, but said also in our case we could go either way as I expect to be matching the deposited sum. It's a bit up to us really. In this case it would be my boyfriend's investment that needs protecting and he's not too bothered so at the moment I am wondering whether to do a simple tenants in common with 50/50 split. We * could* do this without a deed of trust and do that at a later point is my understanding.

My understanding is that with a joint tenancy we will still need wills if we are unmarried as asset will pass to next of kin rather than partner without a will.

However I had not thought about inheritance tax. Hm. Need to go and have a look at inheritance tax bands.

hohum

Checked out IHT. No issues with that, lol. I can't see our house tripling in value.

xsjdx

Ah - our finances are not joint (although we'll be opening a joint account for the mortgage/bills etc); we have no kids either.

I have no qualms with him getting the whole place if anything happens to me - so really it's just a case of me not wanting to sink my entire life savings and not seeing half of it back.

If we were to split, then I could just recoup the remainder of his 'debt' once we sell the house.

Pixie5740

hohum wrote: »

My understanding is that with a joint tenancy we will still need wills if we are unmarried as asset will pass to next of kin rather than partner without a will.

If you own a property as joint tenants then the property automatically goes to the other joint tenant(s) if you die, regardless of whether you're married or not.

It's all the other assets and finances you need to sort out with wills.

Pixie5740

xsjdx wrote: »

So - I'm thinking we go for Joint Tenancy, and have a separate 'repayment scheme' drafted up.

Is this "repayment scheme" document going to be more or less the same as a Deed of Trust?

It sounds as though Tenants in Common, unequal shares, a Deed of Trust and wills are designed for your situation. As an unmarried couple you'll need wills drawn up anyway if you have savings, other assets and life insurance when one of you shuffles off this mortal coil anyway.

You'd need to speak with a solicitor but I don't know how a "repayment scheme" when there's no repayment schedule or term would work.

halfabee

Our conveyencer seems to think you can't have a tenants in common agreement at 50/50 with a declaration of trust for a set amount. I didn't have much to say to that as I don't think it's correct... they are asking someone else to assist.