Tenants in common

Lorenzo94

Good evening, I’m completing my purchase of a SO flat on Friday.
My friend and I are doing tenants in common. My solicitor is insisting that we put ownership at 50:50, while I asked to do 99/100 for myself and 1/100 for my friend (simply because I’m contributing towards all the cost of buying, namely deposit and legal fees).
Ultimately, when stair casing to 100% I am planning to be the sole owner of the property, hence I believe that owning 99/100 will make it easier.
My solicitor also has drafter a declaration of trust where it says that after the mortgage has been paid off (in an eventual sale), I’ll get 60% and my friend 40% of the monies left. Is that even possible? There’s no mentioning about me contributing towards the whole deposit in the document.
I will give her a call tomorrow, but it all sounds weird to me.
thanks!

AskAsk

why does your friend only own 1%?  doesn't seem worth bothering?

Lorenzo94

he is fully aware of it. As I said I am contributing all towards deposit, fees etc. As well as this, I’ll pay a bigger share of mortgage service charge etc.

Lorenzo94

Also. He plans to leave the UK I’m the future while I plan on staying here. He’s on the mortgage solely for affordability purposes.

AskAsk

Lorenzo94 said:

Also. He plans to leave the UK I’m the future while I plan on staying here. He’s on the mortgage solely for affordability purposes.

so he is only lending his name to get you the mortgage?  will he be paying half the mortgage or only 1% of the mortgage?

Lorenzo94

He is going to contribute 40% towards monthly expenses while I’ll be paying 60% (I.e I’m paying £900~1,000 pcm while he’ll be paying £600).

oniongirl

Sounds like you are getting the better deal and that's pretty unfair to me. If you are contributing to the mortgage 60/40, you should get your deposit back and 60% of the remaining profit. He would get 40% of the profit, after you'd got your deposit back. We had a Declaration of Trust that said exactly that.

Glad I'm not your friend!

Lorenzo94

Yes in the end we agreed to that. Unfortunately property ownership in Italy (where I am from) is very different. Also, I had a mortgage broker who has misinformed me.
we just signed the deed where I’ll get the deposit back and then we’ll split the shares depending on how much we pay.
sorry for the confusion! (Mostly on my side).

AskAsk

Lorenzo94 said:

Yes in the end we agreed to that. Unfortunately property ownership in Italy (where I am from) is very different. Also, I had a mortgage broker who has misinformed me.
we just signed the deed where I’ll get the deposit back and then we’ll split the shares depending on how much we pay.
sorry for the confusion! (Mostly on my side).

although banks in the uk are not interested in how a property is split in ownership between tenants in common, the buyer solicitors, namely your solicitors, have to act in the bank's interest as they are the owner of the property until the mortgage is paid off.  and having a split of 99% to you and only 1% to your friend, would worry the solicitor and the bank as it would mean that your friend is only lending his name to help you raise the mortgage and so he wouldn't have as much interest in keeping up the mortgage payments on the property when things get tough as he wouldn't care if the bank repossess, since he hardly own anything in it.

this is why the solicitor was unhappy with accepting 99/1 split that you had proposed.

Lorenzo94

That makes more sense. I wish my first mortgage broker had told me that. 

My solicitor in the end explained to me everything and now I have a much broader understanding of property ownership in the UK . Thanks everyone for educating me.

AskAsk

Lorenzo94 said:

That makes more sense. I wish my first mortgage broker had told me that. 

My solicitor in the end explained to me everything and now I have a much broader understanding of property ownership in the UK . Thanks everyone for educating me.

congratulations by the way of being an owner of a property