Deed of trust - legally enforceable?

westernpromise

pph wrote: »

Our situation is a 50/50 split of a two bedroom flat. One of us could move to another city in years to come for a job or something, you never know. We'd either need to rent out the spare room to a friend for the one that remains, or sell up (not something I want to do really as we've got our hands on the greasy London property ladder). I'd rather rent it to a London family and move out to the sticks.

The conveyancer is obviously saying they are legally binding but I trust the MSE gurus for a second opinion

So the upshot seems to be to go for it and sign one. The conveyancer has a blank document where we fill in the split of equity and monthly mortgage payments we'll pay. So it show's everything 50/50 if we are forced to sell.

I would check on whether and to what extent the deed of mistrust is undermined if the mortgage payments or anything else vary in actuality from what it sets forth.

For example, say one of you loses your job or becomes pregnant leaving the other to pay everything for two years out of three that you have lived there. Does that affect how the property would be divided in the event of a split? Or if not, could it later be argued that it is unfair that it does not?

adonis10

Interested in the opinions in this thread as we are currently in a similar situation. A tad different as the deposit is being paid in the ratio of 88:12 me : partner, and we've decided that the mortgage payments are going to be around 40:60 (slightly arbitrary figure but one we're happy with). The reason for this is the massive amount extra I'm putting in and the fact that partner earns a few k more than I do. Bills are going to be 50:50, as will all renovation and decorative work, furniture etc.


This obviously raises some issues, the main one being how do we decide who gets what if the unfortunate happened and we split. Well, I happen to think that it isn't that difficult a calculation; let's say (it won't, but for an easy example) that the property sells for the same as we paid for it 3 years down the line; after all fees etc. I take back my deposit, she takes hers and the balance is split 40:60. Seems logical?


In the event that it sells for less/more we would have to work out how much of the mortgage has been paid (start mortgage less balance at sale date) and then split that 40:60, and the remainder is the deposit that we put down +/- any increase/decrease in equity. I guess this is where the issue would arise - would we split that 50:50, 40:60 or 88:12?! If it has increased in value due to works we've done, it'd be 50:50 in my eyes as we'd have paid for that equally. If it is market forces pushing it up or down, this is more difficult. The 88:12 option would greatly benefit the former in the event of a price increase and the opposite in the event of the decrease. I think this is the most tricky area and so I feel 50:50 is the most fair way to calculate it.


Any thoughts?

AnotherJoe

Yes, someone here was arguing that because his ex moved out and he'd been paying mortgage for 5 years and her not, that meant he was entitled to a larger share.

On the face of it that seems fair, but my thinking is that whoever stays, the person that moves out will have to pay rent or a mortgage elsewhere so its arbitrary to say that one is contributing to the value of the house since they are paying the mortgage whilst the other isn't. Rent may after all be more than the mortgage payments.

I dont think it would hurt to 'bake' this understanding into the agreement. And as you say putting time limits on it, eg if cannot come to an agreement with x months then must sell the house, and the property remains as x/y share even if one moves out.

Once this is in an agreement then its going to be very expensive to challenge later any parts even if some might think some "unfair" so practically speaking it seems likely to stand.

Guest101

adonis10 wrote: »

Interested in the opinions in this thread as we are currently in a similar situation. A tad different as the deposit is being paid in the ratio of 88:12 me : partner, and we've decided that the mortgage payments are going to be around 40:60 (slightly arbitrary figure but one we're happy with). The reason for this is the massive amount extra I'm putting in and the fact that partner earns a few k more than I do. Bills are going to be 50:50, as will all renovation and decorative work, furniture etc.


This obviously raises some issues, the main one being how do we decide who gets what if the unfortunate happened we split. Well, I happen to think that it isn't that difficult a calculation; let's say (it won't, but for an easy example) that the property sells for the same as we paid for it 3 years down the line; after all fees etc. I take back my deposit, she takes hers and the balance is split 40:60. Seems logical?


In the event that it sells for less/more we would have to work out how much of the mortgage has been paid (start mortgage less balance at sale date) and then split that 40:60, and the remainder is the deposit that we put down +/- any increase/decrease in equity. I guess this is where the issue would arise - would we split that 50:50. 40:60 or 88:12?! If it has increased in value due to works we've done, it'd be 50:50 in my eyes as we'd have paid for that equally. If it is market forces pushing it up or down, this is more difficult. The 88:12 option would greatly benefit the former in the event of a price increase and the opposite in the event of the decrease. I think this is the most tricky area.


Any thoughts?

I don't think people should buy properties with people they don't trust.


A deed of trust is in essence saying: I don't trust you to keep your word and therefore I want it noted down legally.

adonis10

Guest101 wrote: »

I don't think people should buy properties with people they don't trust.


A deed of trust is in essence saying: I don't trust you to keep your word and therefore I want it noted down legally.

Completely disagree. It's just a fall back option if it goes bad, which we don't want to happen and don't think it will. However, what is the problem with it? When one person is giving up a lot and putting in so much, perhaps they just want that extra bit of reassurance?

chris_m

Guest101 wrote: »

I don't think people should buy properties with people they don't trust.
A deed of trust is in essence saying: I don't trust you to keep your word and therefore I want it noted down legally.

That is a fair comment - but people and circumstances do sometimes change.
Look at the divorce rate, I would guess that most of those couples trusted each other at the outset then, for some reason, stopped doing so.

Guest101

adonis10 wrote: »

Completely disagree. It's just a fall back option if it goes bad, which we don't want to happen and don't think it will. However, what is the problem with it? When one person is giving up a lot and putting in so much, perhaps they just want that extra bit of reassurance?

Because you don't trust them to keep their word... It's a simple situation.


If you trust someone to be honest and stick to what they say. You don't require a bit of paper to confirm that.

adonis10

Guest101 wrote: »

Because you don't trust them to keep their word... It's a simple situation.


If you trust someone to be honest and stick to what they say. You don't require a bit of paper to confirm that.

Echo what chris_m said.


You have your opinion and that is fine, however my particular question was not about opinions, rather about the questions in my post. Unless you'd like to answer them, perhaps save your replies for a thread with the title "what is your opinion on the Deed of Trust" where your replies will be both relevant and welcomed.

eddddy

westernpromise wrote: »

For example, say one of you loses your job or becomes pregnant leaving the other to pay everything for two years out of three that you have lived there. Does that affect how the property would be divided in the event of a split? Or if not, could it later be argued that it is unfair that it does not?

You could make the deed as comprehensive as you want...

For example, what happens if...
- one party doesn't pay their share of the mortgage
- one party doesn't pay their share of utility bills
- one party damages the house
- one party doesn't clean the bathroom as often as the other

But I guess there's the cost issue, if you want a solicitor to draw it up. And the potential court costs, if somebody wants to enforce it.


But perhaps all the arguments and bad feeling generated between couples whilst working out these details will mean they split up anyway, before they've bought the property. So perhaps the problem will solve itself.

martindow

pph wrote: »

I have seen the draft from our conveyancer and it looks straightforward, costs £25.

Are you sure? I can't imagine a conveyancer doing anything at all for such a small sum.