Declaration of Trust issues

Martina12

Hi
Please could anyone give me advice about a Declaration of Trust which my partner and I have in place but I think has been incorrectly drawn up.
In 2003 I bought a property with my partner as Tenants in Common. I put in £43k and my partner put in £6k. We bought the property for £190K. A year later I asked our conveyancing solicitor to protect my primary share of the property by means of a Declaration of Trust as we had a child by this stage. It was drawn up with the correct amounts of money put in by each of us shown but the equity, should things go wrong, should be divided 50% each once mortgage payments etc are taken out.

I recall asking at the time if there was an alternative proportion to the 50:50 split and the solicitor said that this was the fairest way of drawing it up as we were both putting 50:50 into mortgage payments etc. I did not receive independent legal advice at the time as I trusted my solicitor who had carried out the conveyancing. We both duly signed the document with an independent witness.

Fast forward to 2008, after our child number 2 was born, and we split up (due to his domestic violence). The legal advice I obtained at the time was to sit tight in the home with our children, as I couldn't now afford to buy my ex partner out of his share of the property.

2016 the property has more than doubled value and I have paid all the interest on the mortgage (we switched in 2008 to interest only), all bills, all repairs and maintenance etc. My ex partner has not paid a penny since 2008 and before that it was 50:50 split of all costs.

I would like to move with my children (from a 2 bed to 3 bed home) but can't afford to with a 50:50 equity split even with what the ex owes me. Do I have a case for a mistake in the Declaration of Trust? should it have been proportionate shares? why wasn't I offered this at the time?

I am totally distressed about this and have been for a long time. Mediation is out of the question due to ex partners' violent history. I would really appreciate any advice as I am going out of my mind with worry.

Many thanks
M

G_M

There are 2 potential issues with the agreement:

1) it does not reflect the unequal investments you each originally made into the property

2) it appears to assume 50/50 payments towards the mortgage

Having said that, you agreed to the terms of the agreement at the time, so on that basis it is likely to stand. On sale, you will each receive 50% of the equity.

You might have a claim against the solicitor who drew up the Declaration, for poor advice, but to be honest that would be a hard battle to fight.

You mention your 'partner'. Were you (are you) married? If so the terms of your divorce settlement could well take into account of the unequal contributions you each made into the property, as well as your respective needs (eg you have chaild care responsibilities/needs, he does not (I'm guessing).

However the modern tenandency for couples to skip marriage means this may not apply (unless the law has now adapted to treat long-term 'partners' as spouses?)

My advice? Get legal advice!

Martina12

Thank you so much for taking the time to reply.

In response to the issues:

Issue 1 - I agree that the agreement does not take into account unequal investment and it is that which I wondered if I could do anything about to rectify this.

Issue 2 - This is ok as it does state that I can recover half the mortgage (even if it is interest only) payments and essential maintenance of the property.

We weren't married which is why I asked for the Declaration of Trust to be drawn up in the first place. My ex partner has done so much better out of it than me and it seems so unfair, especially as I have the children.

If there is any way that I might be able to rectify this I would be very keen to hear. As I have said previously mediation is out of the question.

Many thanks again and yes I will get some more legal advice!

FBaby

The issue with claiming about the investment is that you've only paid towards the interest, not the capital. Similarly, if the house value had decreased, you wouldn't have been saying that you should be paying for the debt but should be shared, or so I am guessing.

I think you will struggle to do anything to change the Declaration of Trust. At best, you could go to court to argue that you should have more since you paid all the interest, but then he could maybe argue that as his name was still on the mortgage, he himself couldn't buy another property (or not get as much), so he's lost out himself.

Legal costs could spiral out of control, so you need to consider if it is really worth the battle.

Thrugelmir

Martina12 wrote: »

Do I have a case for a mistake in the Declaration of Trust?

What's the mistake? Unfortunately one cannot use hindsight to decide at a later date to say that's not what one intended. The DoT is in relation to the property only (not your relationship and the children). Yes you paid the interest on the mortgage. However your ex has incurred housing costs on their own account. In addition has remained named on the mortgage.

getmore4less

The DOT was not very good but you have indicated there is more to it than the initial post.(issue 2)

Without the full details people can only guess so give the full details.

.........


For proper equitable share if you pay the interest on the debt the increase in value of the bit that debt owns is yours even if interest only.
FBaby has missed that important point.

Guest101

There is another issue- your ex partner, by virtue of being named on the mortgage could not buy himself ( and you could not buy him out) so he's had to rent and you e benefitted from this

FBaby

Also might need to take into consideration, what is the arrangement in terms of him paying maintenance for the children. Could he have a case to say that he did pay half of the interest monthly (if the maintenance was a private arrangement and he didn't specify in the direct debit for instance that it is only for maintenance).

Martina12

Thank you all for replies I really do appreciate them.

In the DOT it states that The Parties will have joint responsibility of making repayments on the mortgage and each party reserves the right to make any payments that he or she thinks fit in the event of any default by the other party. It goes onto state that all repairs and improvements to the property should be paid for equally. In addition, it is to provide a home for both of us and our children and in the event that the purpose shall no longer exist the property should be put up for sale.

I have been paying the interest on £120k mortgage since 2008, along with buildings insurance and I have paid for essential maintenance and repair work. I have custody of our children and they live with me in the property. It is a small property and my eldest son is now 13, he shares a bedroom with his 10 year old brother.

This is why I am now looking at this DOT issue to see if I can change it to reflect our disproportionate original investment. I understand that I have signed it but thought at the time I was doing the right thing in protecting my original investment. I did ask about the 50/50 split of equity at the time but was told this was the fairest way of doing it.

In hindsight of course I can see that I should have left and sought independent legal advice but as I instigated the DOT in the first place I thought the solicitor would be acting for me and my children. It is my ex partner who financially will gain the most out of this compared to our original investments.

There is 8 years left until my youngest son reaches 18 and I am trying to make decisions about the best way forward. I am 51 years old and so moving on and getting a new mortgage is on my mind along with sitting tight here and saving like mad. I so want to make the right decisions for the future!

Hoping I have given a bit more detail and appreciate your thoughts...

Thrugelmir

Martina12 wrote: »

In the DOT it states that The Parties will have joint responsibility of making repayments on the mortgage and each party reserves the right to make any payments that he or she thinks fit in the event of any default by the other party. It goes onto state that all repairs and improvements to the property should be paid for equally. In addition, it is to provide a home for both of us and our children and in the event that the purpose shall no longer exist the property should be put up for sale.

[/QUOTE]

This is key. One assumes that this wasn't enforced in order to provide the children with a home. Any financial consideration being secondary.

getmore4less

How does the DOT trust deal with the can't pay/won't pay, saying the other can pay is not enough.

In addition, it is to provide a home for both of us and our children and in the event that the purpose shall no longer exist the property should be put up for sale

When he moved out the property should have been put up for sale

You have created a complication by not doing that.

you could work out the situation at the point he moved out and use full proper equitable from there to now if you paid everything from that point.

Solicitors will be needed if you can't agree