How to word our declaration of trust?

alex_163163

So I have already posed this question to my solicitor via email today, but haven't had a reply yet so thought I'd ask on here to see if anyone with a legal background has some advice too?


I'm buying a house with my boyfriend. We are buying as 'Tenants in Common' as we are unmarried and because we are putting down different deposit amounts.
Exact figures at play.
Deposit £25k (12% of the purchase price).
My contribution = £22k (88% of deposit).
Boyfriend's contribution = £3k (12% of deposit)
We are then paying 50:50 on future mortgage payments.
We are placing a Declaration of Trust in place so that in the even that the relationship breaks down (if house is in positive equity) we would each get our initial deposit money back, then split any gained equity 50:50.
This is the way we have decided works best for us. I know others may suggest different ways but this is what we have decided for us. If kids or marriage come into play further down the line we will re-look at this.


So my question is, how do I word this on the form my solicitor has sent?
We have selected 'tenants in common with unequal share'.
We then have to specify the proportions of unequal share in the space below on the form.
As my contribution is 88% of the deposit, does this mean my share is 88% of the whole house even though we are splitting the mortgage payments 50:50?
I guess it does as he will never be paying more than me via the mortgage to increase his share?


Just looking for someone to confirm my logic? Or correct me if my logic is wrong!
Thanks in advance!

Barejester

As my contribution is 88% of the deposit, does this mean my share is 88% of the whole house even though we are splitting the mortgage payments 50:50?
I guess it does as he will never be paying more than me via the mortgage to increase his share?

Working with a house cost of £210K, you'll both pay £92.5k +interest on top of the deposit amount. After the mortgage is paid, and with no house price rises, your partner would own a share of the property worth £25k and you would own a share worth £185K.


Obviously there are variables I haven't taken into account, price rises being one such factor, but in simple terms - if you and your partner agree that's fair, crack on.

saajan_12

alex_163163 wrote: »

I'm buying a house with my boyfriend. We are buying as 'Tenants in Common' as we are unmarried and because we are putting down different deposit amounts.
Exact figures at play.
Deposit £25k (12% of the purchase price).
My contribution = £22k (88% of deposit).- so 10.5% of purchase price
Boyfriend's contribution = £3k (12% of deposit) - so 1.5% of purchase price
We are then paying 50:50 on future mortgage payments. - so you are each servicing debt that covers 44% of the purchase price
We are placing a Declaration of Trust in place so that in the even that the relationship breaks down (if house is in positive equity) we would each get our initial deposit money back, then split any gained equity 50:50. So you get 19k more than partner when you sell (unless negative equity).
This is the way we have decided works best for us. I know others may suggest different ways but this is what we have decided for us. If kids or marriage come into play further down the line we will re-look at this.


So my question is, how do I word this on the form my solicitor has sent?
We have selected 'tenants in common with unequal share'.
We then have to specify the proportions of unequal share in the space below on the form.
As my contribution is 88% of the deposit, does this mean my share is 88% of the whole house even though we are splitting the mortgage payments 50:50? This way if you sell when the mortgage is paid off (ignoring any change in house prices for now) you get 88% x 208k = 183k and Partner only gets 12% x 208k = 25k so a 158k difference even though you only put in 19k more and we're assuming no change in the house value! That's fine if that's what you both agree with, but note its very different to the bold bit above
I guess it does as he will never be paying more than me via the mortgage to increase his share?


Just looking for someone to confirm my logic? Or correct me if my logic is wrong!
Thanks in advance!

Your contribution is 22k deposit (10.5% of purchase price) + half the mortgage (44% of purchase price) = 54.5%
Partner’s contribution is 3k deposit (1.5% of purchase price) + half the mortgage (44% of purchase price) = 45.5%

I would split the shares as you own 54.5% and partner owns 45.5%. That way if the property value increases/decreases, you get a portion of that benefit / loss in accordance with what proportion of the house is covered by your deposits.

This mirrors your exact wishes ‘we would each get our initial deposit money back, then split any gained equity 50:50’ if property prices stay constant, but you would need to say explicitly if you wanted to own ‘the first 22k’ and partner get ‘the first 3k’ as this would make a difference if prices do change.

alex_163163

Thanks Saajan for your explanation. That makes sense.
It is not that I want to own a share worth £183k at the end of the mortgage. Not at all!
I just didn't know how best to work out the share based on our wishes as I've explained above. Thank you for taking time to explain :-)
The shares you suggest of 54.5% and 45.5% makes sense, and this is in line with what we want.
And like you say we will explicitly state my boyfriend owns the first £3k, and me £22k.

Obviously we are not planning on breaking up, so hopefully will never be an issue. And if it does we hope we could settle things amicably even if this wasn't in place.
But I have a close family friend who was massively stung by her partner of 25 years when they broke up (not married). So I just want to make sure my significantly larger deposit amount is protected should the absolute worst happen.

TBagpuss

alex_163163 wrote: »

Thanks Saajan for your explanation. That makes sense.
It is not that I want to own a share worth £183k at the end of the mortgage. Not at all!
I just didn't know how best to work out the share based on our wishes as I've explained above. Thank you for taking time to explain :-)
The shares you suggest of 54.5% and 45.5% makes sense, and this is in line with what we want.
And like you say we will explicitly state my boyfriend owns the first £3k, and me £22k.

So you need to be very specific. You could say say (in effect) "On sale, £3K is paid to him, £22K to her, and then the remaining balance is split 45.5% / 54.5%."