house dispute

daniesto

my first post here.


If you buy a house under your name but the deposit was paid by someone like a family member can they claim right to your house? I know in UK banks wants to know where the deposit comes from. There is no documents signed to say the money was given as a loan or gift. If the person can prove it to the bank that they paid the deposit and only using your name to buy the house (all the deeds/documents/direct debits are in you name) will the bank fault you and you would lose the house?
many thanks

PasturesNew

Worst case scenario is that they'd be deemed as "owning" the value they put in, or the %age.... not the whole house.

Although, you've not given the full story, so there might be other details you've omitted that are crucial to anybody saying.

Pixie5740

daniesto wrote: »

my first post here.


If you buy a house under your name but the deposit was paid by someone like a family member can they claim right to your house? I know in UK banks wants to know where the deposit comes from. There is no documents signed to say the money was given as a loan or gift. If the person can prove it to the bank that they paid the deposit and only using your name to buy the house (all the deeds/documents/direct debits are in you name) will the bank fault you and you would lose the house?
many thanks

The person making a claim doesn't have to prove anything to the mortgage lender because the mortgage lender does not own the property. Yes they have a charge against the property to secure the loan but the lender is neither a legal nor beneficial owner of the property.

The person making the claim would need to be able convince a court that the money was not a gift and that (s)he has a beneficial interest in the property. The other possibility is that the money was not a gift but a loan and in that case the person couldn't claim a beneficial interest in the property.

eddddy

Are you asking this because you're planning to do it? Or because you've already done it, and things are now getting messy?

daniesto wrote: »

If you buy a house under your name but the deposit was paid by someone like a family member can they claim right to your house?

The starting point is - what did you both agree when the family member gave you the money?

Did you agree it was a gift, a loan, a payment for part share in the house, or something else?

Whether the agreement can be enforced in court is another question.

daniesto wrote: »

...will the bank fault you and you would lose the house?

If you lied on the mortgage application form about where the deposit came from, and the bank later find out - they might ask for their loan back.

In more extreme circumstances, they might also report you to the police for fraud.

daniesto

first of all many thanks for your replies.


Lets refer family member as Tom (the person who gave the deposit) and other party (ones who's name on the deeds as Paul)


Paul bought the house under his name but the deposit was given to him by Tom via a bank transfer. The property was rented out which paid the mortgage but all the profit went to Tom as it was a mutual agreement between the two (no legal documents signed here). Over the years Tom made 70k profit from the house but Paul never asked for a penny nor was offered. One day Paul decided he wants to get some of the rent money but Tom disputed that he has the right to the property because he paid the deposit and now he wants that house. There is no legal documents signed to say the deposit was loaned or Paul must pay it back which means it is given a gift.


Paul disputed he wont give the house back because everything is under his name. The account where Tom put the deposit money was closed few years ago therefore there is no statement to prove it either. Paul recently re-mortgaged the property took £80,000 and bought a flat. However Paul said when he sells the house everyone will get a fair share but meanwhile he will keep the rent profit which is about £200 (after paying the mortgage payments)


Now if Tom takes Paul to court saying he has a right to the original property because he paid the deposit what would happen?


Note: Paul is paying both mortgages at the moment.

Paul is me
Tom is my step-dad

daniesto

And I apologise for not given the full story earlier.

Fosterdog

How long has this been going on? For "Tom" to have made £70k profit from the house from £200 a month rent profit would have taken almost 30 years, then add on the time to pay back the original deposit and it could be over 30 years.

lisyloo

Now if Tom takes Paul to court saying he has a right to the original property because he paid the deposit what would happen?

Just to confirm. Am I correct in saying Tom has absolutely no proof whatsoever that he paid the deposit?

lisyloo

all the profit went to Tom as it was a mutual agreement between the two

One day Paul decided he wants to get some of the rent money

But it was a mutual agreement that Tom got the rent money right?

but Tom disputed that he has the right to the property because he paid the deposit and now he wants that house

What was the agreement regarding the deposit/house ownership?

Paul said when he sells the house everyone will get a fair share

What does that mean. The same % of the equity that the deposit represented?

but meanwhile he will keep the rent profit which is about £200

So that's contrary to the original mutual agreement in the first quoted statement?


Apologies but we need to get the bottom of the details.

Caz3121

to confirm
The property is in Paul's name only and Paul is paying the mortgage
It is currently rented out (was this a BTL mortgage?) and Paul receives no rental as it all goes to Tom...does he see this as 'getting his money back'?
who is declaring the rent for tax purposes?

Pixie5740

To me that sounds as though Paul is the sole legal owner of the property but Tom might be the sole beneficial owner of the property. Could you please clarify:

1) Who is named as the landlord on the tenancy agreements?

2) Who has been declaring the rental income to HMRC?