Do we have to be Tenants in Common with a declaration of trust?

hanb

Hi all,


I've read a few things on this but can't find out whether it is a must or just the normal for most..


We've had an offer accepted on a house (yay!) and have agreed between us how it will be financed but because it won't all be 50/50 we think we have to have a declaration of trust and therefore be tenants in common and not joint tenants but I'm hoping for confirmation if possible.


The difference is in our deposit - 90,000 (60,000 from me and 30,000 from OH) with the purchase being 290,000. We have agreed that we will both contribute equally to the repayments and overpayments and that when the house is sold, I get my 60k back and OH gets his 30k back and then if there's any money left after the mortgage etc is paid off we'd split that 50/50. We also agreed that should one of us die, the other person would get the other half.


So we had hoped we could just be joint tenants with a document to state that we'd get our deposit amounts back but after that it's 50/50. However, it would appear that the document we'd need is the declaration of trust and that to have that means we need to be tenants in common and get wills drawn up instead of being joint tenants. Is this the case?


Am I missing anything glaringly obvious? Apologies if so!

booksurr

you have over simplified it - by opting for return of a defined sum of money to each of you what happens if there is not enough money left after the mortgage is repaid to provide 90k to be split 60/30?

there is no single answer to how best to own a home when significantly unequal deposits are introduced into the purchase, and then how to handle the question of a split up afterwards. Of course if you marry it is irrelevant as after 2 years as the divorce court will take 50/50 of everything as the start point. Before 2 years (a "short marriage") the court will try to put you back to your respective start points.

at one level you simply need a declaration of trust that addresses only the question of the return of the deposit. You can own the property as JT or TIC, neither matters, but what the DoT will need to do is address the issue of what happens if there is less than £90k available after the mortgage is paid. Clearly in that case you cannot get back 60/30 so the DOT should allow the loss to be passed on to each of you - but how?

you say everything will be split 50/50 - OK if that is your key agreement then say there was a 20K loss - you would get back 50k of your 60k deposit (83%) and she would get back 20k of her 30k (66%). So she is no longer 50/50 - still think that is fair???

the alternative is to own as TIC but in unequal shares based upon the fact you put up 60k and she put up 30k. Having paid a 90k deposit, you then have a mortgage to fund and you have agreed that will be split 50/50. That is not something covered by either JT or TIC ownership, it is simply a separate agreement. So say the house cost 200k, under an equity ownership TIC you would have 60 + ((200-90)/2) /200 = 57.5% ownership and she would have 30+((200-90)/2) / 20 = 42.5%. If you split that is how the house is shared and you may or may not get back your full deposits as a result.

It is not as simple as I want my 60k!

hanb

Thank you for your response. Clearly we have simplified things too much!


I've added to my original post that the house is 290k so 200k mortgage - not sure if it makes a difference but thought I'd include it.


Obviously we'd like to think we'd get that money back but know that it's not a certainty so we do need to think a bit more about that. We just thought that was the best way to 'protect ourselves' and because it is a large difference, not just a grand or two (still a lot, but you know what I mean!). Hmm food for thought.


Thanks again


Also, I'm the she and OH is the he