Multiple Tenants in Common, unequal shared, renovation and building costs

eddddy

r0wly86 said:

Lover_of_Lycra said:

Hang on a minute, mortgage? Is that going to the source of your £200k? 

we have a small mortgage on a shared ownership flat, when we sell that, we will buy MIL's shares minus 5%

As above, when you sell the flat you will have to repay the £200k mortgage.

You won't be able to take out a mortgage on the new house, unless you own 100% of the new house.

r0wly86

AdrianC said:

I'm not surprised that the aunt is reluctant at the thought of suddenly sharing an ex-council house (so we aren't talking a substantial property) with a tripling of the number of residents, including a small baby.

OP - you'd be better off finding your own property to buy - if for no other reason than throwing £200k at an ex-council house is very unlikely to give you any kind of sensible return on that investment.

she doesn't care about the space or the people, she has no issue with the building work, or us moving in. We lived there previously.

This is less about the relationship and just about protecting the investment.

We cannot afford to live in the area. The money we are putting into the house is coming from MIL's savings and while she is okay with it being invested in her own home, on the condition we are there and can look after her, she will not just give us the money to buy our own place

r0wly86

eddddy said:

r0wly86 said:

Lover_of_Lycra said:

Hang on a minute, mortgage? Is that going to the source of your £200k? 

we have a small mortgage on a shared ownership flat, when we sell that, we will buy MIL's shares minus 5%

As above, when you sell the flat you will have to repay the £200k mortgage.

You won't be able to take out a mortgage on the new house, unless you own 100% of the new house.

we can port our mortgage

[Deleted User]

r0wly86 said:

Lover_of_Lycra said:

Well I have no idea what you've been reading online but I know that when unmarried co-habiting couples separate the sale of jointly owned property can be forced through the court even if there are children involved. 

You won't even be a separating couple, just extended family living together so I see no reason why the aunt couldn't force the sale if she wanted to and if you were to obstruct it then the legal costs could come out your share of the equity. 

https://vardags.com/family-law/tenants-common-orders-sale

the right for a child to live on the land is taken into account

You won't be a divorcing couple. If your aunt decides to force the sale having a child won't stop her from being able to do so. Not that I think your plan to port a £200k joint mortgage with your wife to buy a 50% stake of this property on top of the 5% your wife already owns is even going to get off the starting blocks. You can't get a mortgage to buy part of a property, you'll need to buy 100% of it. Most lenders would have an issue with MIL living there and retaining 5% never mind throwing the aunt and cousin into the mix. 

AdrianC

r0wly86 said:

eddddy said:

You won't be able to take out a mortgage on the new house, unless you own 100% of the new house.

we can port our mortgage

That's a different question.

Yes, you probably can port your mortgage as opposed to needing to fully close that account and open a new one.

But that presupposes a mortgageable purchase. Which this won't be.

Think about it - what happens if they need to repossess...? They can't.

Tom99

r0wly86 said:

we can port our mortgage

If you could sort the mortgage out you could deal with the ownership by having a revised deed of trust setting out how future sale proceeds would be split. The formula would need to take into account the mortgage being repaid from your share.

Re the mortgage, who is the current legal owner ie registered at the Land Reg as the legal owner? You say in your 1st post that MIL is the trustee but is she the sole legal owner?

You may have the following problems with the mortgage:

1 - All the legal owners would need to agree and be party to the mortgage.

2 - It sounds as if at least one of the legal owners will be considered too old to be considered a borrower for a normal mortgage.

3 - Are you all going to be able to live in the house whilst all of the work is carried out?

xylophone

My wife's mother-in-law's house 

You mean your wife's mother's house (your MIL)?

At present, your MIL shares the house with her sister-in-law (your wife's aunt ) and your wife's cousin, (the aunt's son)?

Your MIL has a beneficial interest in 60% of the house, while the aunt's beneficial interest is 30% and her son's 5%?

Your wife owns the remaining 5%?

You and your wife propose buying your MIL's interest with the help of a mortgage. Is the mortgage company aware that MIL will remain in the property together with  the co-owners, (aunt and her son, who will soon be legally of age)?

You and your wife will still only have a beneficial interest in 65% of the property - if you choose to improve it, this will not change the percentage ownership.

You might, I suppose, agree a Deed of Trust such that on sale, a percentage of the "improvement" money you put in would be yours as well as your equity share - but you would need the aunt and her son to agree to this.

Linton

Two points....

To answer your original question as to how you can protect your investment:  the easiest partial answer is for a charge to be put on the house covering your rebuilding expenses.  In that way you would at least get your money refunded.  The aunt would still get her full share of the value of the house when sold but this value will be reduced by your charge being paid off. Obviously this would need the agreement of all the owners.

One detail: it would appear that only 4 names can be listed on the deeds of a house.  It would seem you will have 5 so you may need to get legal advice.

xylophone

One detail: it would appear that only 4 names can be listed on the deeds of a house.  It would seem you will have 5 so you may need to get legal advice.

The OP and wife are buying out the MIL.

Therefore the owners will be the OP (30%) his wife (35%) , the aunt (30%) and (when he comes of age) aunt's son (5%).

xylophone

 the easiest partial answer is for a charge to be put on the house covering your rebuilding expenses.  

Presumably this would be a second charge (after the mortgagee) - the mortgagee would need to agree.

And the mortgagee will also need to agree to the MIL remaining in the property and to the co-owners remaining there without being named on the mortgage?