Acquiring part of parent's house

molerat

tebthereb wrote: »

Thank you. I do not quite follow the divorce scenario as my wife and I would hold say 10% of the property together? Therefore, I would expect that to remain the case after divorce and do not see that this would force a sale?

She might not want a share of the property but the cold hard cash instead. Will you be able to come up with that rather than being forced to sell up to realise the investment ?

Realopinion

The answer is yes you can buy a share in your parents property. You can do this either:

As a transfer of equity, your parents transfer 10% to you. You become a legal and beneficial owner of the property and register your name along with your parents and the restriction of the deed of trust at the Land Registry.

Fees to pay: solicitor fee for handling transfer of equity, Land registry fee and drafting of deed of trust fee.

or:

Draft a deed of trust, don't be a legal owner and only be a beneficial owner. Your parents still need to register the restriction within the deed over the property.

Fees to pay: Solicitors fee for the land registry changes, l;and registry fee and deed of trust fee

I wouldn't do either without using a solicitor. You don't want to make a mistake and also the cost for registering through the solicitors online system at the Land Registry is half what a paper copy submission is.

You can read online about deed of trusts for this type of transaction as you want to make sure you all have the option to sell your share in the future or your parents may wish to gift you more as time goes on.

One thing that comes to mind is that if you don't already own a property and then look to buy another property, because of your 10% interest in your mum and dads home, you are most likely liable for second home stamp duty if you aren't selling your main residence and buying another - well worth checking on this.

trailingspouse

What if house prices fall?

aneary

tebthereb wrote: »

I suppose I am loathe to pay a solicitor to help when the main issue seem to be identifying every potential outcome, understanding and documenting what happens in each event.

You loathe to pay someone who has spent 3 years at Uni doing a law degree, a year doing an LPC, two years of training oh not to mention the additional years of experience they have, what may cost you £200 (approx) could save you thousands later on and also more importantly save you bad blood with your parents/wife/children later on if you DIY approach goes wrong.

00ec25

tebthereb wrote: »

My parents are not worried about maintenance costs. I am acquiring a bit of their property at a percentage of market value. E.g.10% of 300k = £30k. They would never realise that on an open market as nobody would pay 30k for 10% of a property with tenants. I will have no power to force a sale and will document that.

I am interested in your point about divorce. Why would that force a sale? I suppose we could work around that by saying 5% each rather than 10% between us - using the example above.

if you pay £40,000 or more to your parents then you will be liable for higher rate SDLT on that payment as it will be an additional property for you since you have a beneficial interest in it and (I assume) you live elsewhere with the current wife (and kids)

40k @ 3% - £1,200 so if you are "concerned" to avoid a few £ of legal fees then you won't escape the SDLT

a divorce starts from the premise of 50/50. You will need to meet that 50% in the form of cash if your (then) divorced wife wants her share in cash - and why on earth would she want to retain a non cash interest in the ex parents in law's house if she was divorcing you?

TBagpuss

If you buy a share of the property and hold as tenants in common then any of the owners can seek to sell the property to get their money out, and in some cases (for instance, if the owner became your executors rather than you, because you died) might be required to do so. A properly written trust deed can address that. Similarly, any interest you have in the property would be an asset to be taken into account in any divorce. It's unlikely that a court would force a sale if there were other assets which could be used instead, but it is possible. Again, making sure that the declaration is properly drafted can address this.

But it makes sense for you (and your parents, separately) to take advice to make sure that the arrangements you come to work for everyone.