Deed of Trust - Interpretation

john1002

Yes that’s correct all money paid so far is mortgage and improvements, so your % figures are what I was wanted confirmed, as well as the mortgage issue as in my mind as my name is not on mortgage I thought it was my partners responsibility to pay it back not mine but you have clarified that so once again thank you.

John

getmore4less

Will have a proper read later but including the interest on debt in calculations has serious flaws when dealing with equity.

getmore4less

A and D say different things.

(A) On 13 May 2011 the Property was conveyed to the Owner to hold legally and beneficially absolutely.

(D) The Owner paid £115,625.38 on 13 May 2011 towards the Costs of Purchase jointly with her ex-husband

What does the rest of D mean?

(D) The Owner paid £115,625.38 on 13 May 2011 towards the Costs of Purchase jointly with her ex-husband against a purchase price of £183,000. In December 2011 the Owner paid a sum of £50,000 to her ex husband to take a transfer of equity in the Property in order that the Owner owned the Property absolutely leaving a remaining balance of £65,625.38 having been paid towards the Costs of Purchase. The Property is now valued at £239,950 and the Beneficiary and Owner have therefore agreed that the Owner’s deemed initial contribution as at the date of this deed should be uplifted from £65,625.38 to reflect the increase in value of the Property since its acquisition in 2011 to £86,048.14 which amount is to be the agreed Owner’s initial contribution towards the Costs of Purchase (Owner's Initial Contribution).

the owner paid £115,625.38 then £50k that would be £165,625.38 against an initial value of £183,000 leaving a balance of £17,374.62

£65,625.38 is £115,625.38 - £50k what is that supposed to represent?

Who paid what amounts and what mortgage was there in May 2011.
Who paid what in dec 2011

It is really not clear what the starting point was and what the situation is at Dec 11 presumably when you(the beneficiary) got involved

The history of payments is not relevant to the buy in, at the point of transfer what is needed

just before the value and mortgage size to establish the equity owned by the owner
Then just a after the cash injection to establish the starting point for the equity owned by the owner and the beneficiary along with the new mortgage share

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(F) The Beneficiary and the Owner intend to contribute towards the Mortgage Payments equally.

Did that happen how big was the mortgage?

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That list of expensive is really not sensible as does not have any relation to the value, mortgage debt and equity.

By including interest that dilutes the value of the deposits.

A good example is where one pay 50% in cash and the other pays a mortgage, the obvious ownership is 50% each and the mortgage holder pays of the mortgage from their 50%, if you allow interest then over time they might pay say a total that is double their initial cost due to interest they now own 2/3 of the property.

Including the payments for savings towards an endowment makes no sense what matters is what it pays out at the end.

Capital injection to maintain/improve property should be done at ownership share.
or it gets much more complicated to assess how it changes ownership.

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Well it is what it is but you should never agreed to that pigs ear of DOD.

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I still cant see what the real numbers should be to see how far off the true equitable shares are from those with this DOT.


back to basics.

What cash did you put up front when you "bought in" all cash even paying off other debts
What was the place worth at the time
What mortgage was obtained?

What share of the mortgage have you been paying?
(has it been fixed or has it changed)

Tom99

getmore4less wrote: »

[FONT=Verdana, sans-serif]back to basics. [/FONT]
[FONT=Verdana, sans-serif]What cash did you put up front when you "bought in" all cash even paying off other debts
What was the place worth at the time – Beneficiary = £32,500 Owner = £86,048.14 [/FONT]
[FONT=Verdana, sans-serif]These are the defined 'Initial Contributions'. [/FONT]
[FONT=Verdana, sans-serif]What mortgage was obtained? - Information is not needed
What share of the mortgage have you been paying?
(has it been fixed or has it changed) Beneficiary = £46,381 Owner = £1,909.76[/FONT]

Not sure why the Owner has contributed so little to the mortgage payments but if those figures are correct the formula for splitting the net sale proceeds:

[FONT=Verdana, sans-serif]Beneficiary: (£32,500+£46,381)/£166,838.90=47.28%[/FONT]
[FONT=Verdana, sans-serif]Owner: (£86,048.14+£1,909.76)/£166,838.90=52.72%[/FONT]

getmore4less

what is needed is to find out how far off this is from an asset split based on sensible criteria.

(F) The Beneficiary and the Owner intend to contribute towards the Mortgage Payments equally.

if that has not happened it could make the DOT invalid.

OP said this is a standard DOT and just sort of look like it may have been done from a template.

Warning need to go out on how flawed this is as a way of dealing with contributions to a beneficial interest in a property.

Tom99

getmore4less wrote: »

what is needed is to find out how far off this is from an asset split based on sensible criteria.
if that has not happened it could make the DOT invalid.
OP said this is a standard DOT and just sort of look like it may have been done from a template.
Warning need to go out on how flawed this is as a way of dealing with contributions to a beneficial interest in a property.

The wording is not standard but it is quite clear how the net proceeds are to be split, providing each parties contribution to 'expenditure' is agreed. Whist the intention might have been to pay the mortgage equally, if the OP's figures for 'expenditure' are correct, that has not happened but the formula takes care of that anyway.

john1002

We have both paid equally towards the mortgage and the figures provided include our mortgage payments split 50/50

The DOT was done by a solicitor so not off the shelf per say.

Thanks again to everyone’s input.

John

Tom99

john1002 wrote: »

We have both paid equally towards the mortgage and the figures provided include our mortgage payments split 50/50
The DOT was done by a solicitor so not off the shelf per say.
Thanks again to everyone’s input.John

[FONT=Verdana, sans-serif]That's not what you said above. You said your 'Expenditure' was:[/FONT]
[FONT=Verdana, sans-serif]Beneficiary = £46,381 Owner = £1,909.76[/FONT]
[FONT=Verdana, sans-serif]'Expenditure' excludes your 'Initial Contributions'
[/FONT]

john1002

ok hopefully the following will help,

we have both paid £1909.76 towards mortgage so the owners value was 86048.18 after the uplift due to property value of 239950 valuation given at mortgage application.

The house was recently valued in DEC at 325000 due to the improvements made primarily a loft conversion adding two more bedrooms and a bathroom.

my initial contribution was 32500 and with improvements and mortgage payment equal the 78881.

so i understand the % split as advised and shown here and also that the monetary split is after the mortgage has been paid off so it makes no difference who's name the mortgage is in as any payout is minus this.

thanks again and hopefully the above has explained the fiqs already quoted.

John

getmore4less

How big was this mortgage?
When did you buy in?
If you paid equal and the owner paid £1900 that's <£4k on the mortgage not a lot for £110k +

Initial Value £239,950
cash/equity included £32,500 + £86,048

suggests a mortgage of £121,405

how have you got it down to £112k with only £4k of payments