Joint tenants/Tenants in common

AmyAlex

Hi

We need some advise on how to instruct the solicitor when it comes to joint ownership.

One of us has a higher percentage of the actual deposit, however after that initial input everything will be split 50/50 eg the monthly mortgage repayments. So we are unsure the best way to get this written up in the contract.

Any advise on this or where to find information on this would be greatly appreciated.

Thank you

Rain_Shadow

What is the relationship of the owners? Spouses, partners, siblings, friends, business partners?

saajan_12

This would be easier to explain with numbers, but I would suggest going by the proportions of each person’s deposit + half mortgage that they pay off, based on the values at the outset. You would then be tenants in common with different percentage ownerships and

So, A owns (A’s deposit/Purchase price) + 0.5*(Mortgage value at start/ Purchase price) % of the house

e.g. on a £200k house, if A put down £30k and B put down £10k then A’s deposit is 15% and half the mortgage is 0.5*(200k – 30k – 10k)/200k = 40%, giving a total of 55% ownership. B’s deposit is 5% and half mortgage 40% makes 45% owner.

This way if there’s any capital gain (or loss), your stake in the property paid by your deposit amount grows (or shrinks) in line with the market rather than staying static.

AmyAlex

Hi

We are a couple - unmarried

Thanks

chelseablue

When we bought I put in most of the initial money as I had a property that I sold.


We just asked the solicitor to draw up a Deed of Trust to say what are shares in the property are.


It cost £150


Someone correct me if I'm wrong but I think if we were to get married the trust deed kind of goes out the window and the house reverts to a joint asset (owned 50/50)

AmyAlex

Can the deed of trust be drawn up at any point or does it need to be before/at the time of purchase

Thanks

Pixie5740

It would make sense to do it as part of the purchasing process.

TBagpuss

It an be done at any time but obviously if anything goes wrong between when you buy and when you plan to have the deed drawn up, you're back to an assumption of equal shares.

One way to do it to ring fences your deposits.

e.g if you put in £10K and your partner puts in £20K and the house costs £200K, then you could say

on sale, you get 5% of the value of the property, your partner gets 10%, and the remainder is split equally. You need to state that if the net equity is than 15% of the property value at the time of sale that whatever there is is divided in those proportions (i.e 2/5 of any available equity to you and 3/5 to your partner)

Others chose to do it on the basis of actual cash sums, so you would say, in this example, that you get £10K back and your partner gets £20K . It has the advantage of being straightforward. It does mean that you money doesn't appreciate, but on the other hand, as the relationship continues it does mean that the inequality between you reduces, which many people are happy with as their priority is to secure their deposits in the short term.

Your solicitor is best placed to advise you about your options, assuming of course you are using an actual solicitor and not a conveyancing factory.

SmlSave

The easiest and cheapest way to record shares or funds given is to own as tenants in common and rather than saying percentages you can say the first £xxxx goes to........ on the actual Transfer Deed. However the actual amounts aren't saved with the deeds and so you both should keep a copy of the Transfer Deed.

Best and safest is to have a a Trust Deed which you can do at any time and register at the Land Registry, and you can hold the property as joint tenants if you wish.

BTW-it's easy to change tenants in common to joint tenants if you want in the future. We owned our first house 60/40 for two years to check we didn't kill each other then changed it to joint tenants.

SmlSave

chelseablue wrote: »

Someone correct me if I'm wrong but I think if we were to get married the trust deed kind of goes out the window and the house reverts to a joint asset (owned 50/50)

I'm afraid you are wrong, the Trust Deed still stands along with how you hold the property. (But in a court case it is easier to argue)

In the event of divorce, the divorce court does not have to be bound by a Trust Deed made before marriage.

If you die then it depends on how you hold the property and your Will.

OP - if you do decide to own the property as tenants in common it is a very good idea to make Wills to say what happens to your share of the house. Also, is your partner allowed to live there after your death? Scary but worthwhile to think about

bownyboy

We debated this when we bought our first house together 7 years ago. My partner put up 60% deposit in cash and I paid for the rest in mortgage.

In the end we went with Joint Tenants for the following reasons:

1 - being unmarried, if one of us was to die, then the other would automatically get the property with no hassels (which we want)

2 - We don't have children

3 - We have a deed of trust which states very simply what each of us bought into the relationship e.g. 60% cash for her and 40% mortgage for me

4 - We're getting married next year, so it will all be moot then anyway.