Deciphering a trust deed

nLinked

I know the MSE forums are not a substitute for actual legal advice, but as a preliminary, I would to try and make sense of a deed of trust I am currently on.

The story basically goes:
Mum and dad buy a house in a joint mortgage
As their only child, I also sign their trust deed document
As I was 18 at the time, I really had no idea what it all meant other than it being part of the process to help my parents buy their first property

I have a copy of the deed below with personal stuff removed, but would like to know its implications in general, including:

1. If I am not currently paying any mortgage or owning any home, will it affect me getting my first mortgage as a first-time buyer of my own home one day? In other words, does it mean I am currently a home owner, or does it mean I will in-effect become the home owner?

2. Do I have the right to opt-out of the deed (it seems to favour me doing this if I am correct)?


The deed:

This TRUST DEED is made the [date] 2005 between Mr [Husband] and Mrs [Wife], both of [Address] (Hereinafter jointly called "The Trustees") one part and
1) Mr [Son] of [Address] (Hereinafter jointly called "The Owner"]

Whereas
1) This declaration is supplemental to a Transfer registered on 12th July 2005 of the freehold of the property known as {Address] registered at H M Land Registry under Title No [number] to the Trustees and the Owner of the legal estate in consideration of [£property value].

2) Save for a mortgage advance of [£property value] from [Building Society] secured on the property, the Owner out of money here by gifted by the trustees, exclusively provided the said sum, as the Trustees hereby acknowledges.

NOW THIS DEED WITNESSETH as follows: -
1) The Trustees hereby declares that they hold such interest as they have in the said property in trust for The Owner in fee simple and hereby agrees that they will at the request and cost of The Owner transfer the said property to such person or persons at such time or times and in such manner or otherwise deal with the same as The Owner shall direct or appoint and will at all times execute and do all such documents acts and things as may be necessary to procure the appropriate registration or entry in the register of the aforesaid title to give effect to any such transfer or dealing if so required to protect the interest of The Owner.



Thank you for any advice.

stator

So they wanted to avoid inheritence tax and gift the house to you, by making you the owner and them the trustees?

nLinked

I believe this may be the case and the deed was approved by a solicitor at the time. Unfortunately, due to instability now in our family, it is hard for me to get advice from my parents. I am OK talking to one of my parents but we both need clarification. Legal advice may be the best source but wanted get a general idea here how the possible future transfer (when the deed comes into effect) may affect me buying my own property.

If was to apply for a mortgage now, is this deed of trust already in-effect? Will the mortgage lender assume I have future possession of a property already?

I was hoping to keep things simple. I have enough for a deposit, but now that the deed has come to my attention, I don't know how it will affect me.

macca1974

So, just to clarify, the trust deed seems to have placed the ownership of the property (minus whatever is owed on the mortgage) into trust with you as the owner. Firstly, this looks a bit odd to me as I thought that mortgage companies were very reluctant to allow properties that they had a stake in to be owned by people who weren't responsible for the mortgage. Is there still a mortgage owed on the property.

If there is not, then it would seem to me (based on the details of the trust) that you are the owner of the property. This again would be a very odd thing for your parents to do, as if you own the property and there aren't any other restrictions on it, then you could presumably charge them rent, chuck them out or if you were divorced or made bankrupt, the the value of the property would form part of your assets. Again quite odd. It would also suggest that you wouldn't be able to claim any means tested benefits as you own an asset.

I would probably take the entire trust deed to a solicitor and pay for an hour of their time to run through the deed and find out what it means and what the implications are.

I would also spend £3 on the land registry website to see whether or not you are included on there as the owner of the property, just to see how official the whole thing is.

nLinked

That is very helpful, thank you, macca.

I did check the Land Register and only my parents are listed as the owners. But is that because the deed only needs to be presented to the Land Registry when the time comes to transfer the property to me? Or have I assumed wrong?

There is still a mortgage remaining which should be payoff-able while they are still with me - or if not, I guess it gets thrown onto me?

It's fair-enough if they were considering my future at the time and I respect them for that, but I do wonder now if the deed was the only way for them to get a mortgage as they were over 40 as first-time buyers. Perhaps they included me so that I could 'help' with the remaining mortgage if they weren't around for the full term. This happened in 2005 so I don't know how stringent the lender's checks were back then.

I agree, thank you, I will seek solicitor advice.

Land_Registry

nLinked - the Trust Deed is in essence 'off the register' as it relates to the beneficial ownership between the three of you.

The legal ownership rests with your parents it seems so the Trust Deed would not enable you to transfer the legal ownership

When the time comes to transfer to you they would have to transfer the ownership to you or, if they passed away, the executor would have to obtain probate and transfer to you as the beneficiary.

nLinked

This is a huge weight off my shoulders to know this. Thank you very much for clarifying its process for me.

stator

It might affect whether you qualify for certain schemes, like Help to Buy (not all of them though) if you have an interest in another property, I'm not sure if this qualifies.