Deed of Trust - What Rights do other owners have?

cwaite

I purchased a property last year as an investment, with the help of a friend, he has many years of experience with buying, renovating and selling property, so when buying this property, we made a Gentlemen's agreement that in return for my friends advice and help with the property. Upon the sale, he would be entitled to a small percentage of the sale price (less costs).

My friend has recently suffered some health issues and is keen to protect the agreement to ensure that if they pass away before the property is sold this agreement is transferred to the beneficiary of his estate, he has said his solicitor has recommended that we setup a Deed Of Trust Document, however, if we do this does this mean that someone else has some control over the property, i.e. could they or the beneficiary of their estate stop me from selling the property if they wish? I am concerned that someone else would have control over my life savings that at I have invested in the property.

Can anyone advise me on this.

Thanks in advance!

HampshireH

How much exactly are you expecting to pay for the help and advice you got? 

Was this in lieu of labour for example? 

I would suggest you get your own legal advice. As it stands a "gentleman's agreement" stands for nothing 

Once you commit to a legal document you commit yourself so you really need a proper legal understanding of what you should do once you know what is being proposed

cwaite

HampshireH said:

How much exactly are you expecting to pay for the help and advice you got? 

Was this in lieu of labour for example? 

I would suggest you get your own legal advice. As it stands a "gentleman's agreement" stands for nothing 

Once you commit to a legal document you commit yourself so you really need a proper legal understanding of what you should do once you know what is being proposed

It is a percentage in respect of the advice they have given, as without them I wouldn't have attempted to purchase the property myself, there was no labour involved, I am rewarding them for giving me the benefit of their experience.

I am happy with it being a Gentleman's Agreement, I am an honourable man, its the other party that now wants something official. But obviously I do not want to enter into anything, if they or the beneficiaries of their estate should they pass away have control over the property (which is my life savings).

Annisele

Whose name is on the title? Yours alone, or yours and your friend's?

How detailed is this "gentleman's agreement" that you have? If you've just agreed "a small percentage", and you're thinking 0.1% while he's thinking 5%, your friendship is going to come unstuck pretty quickly. (Depending on whose names are on the title, it might be that the only damage is to your friendship rather than your finances - but it sounds as though you care about both of those things.)

Depending on how much money your friend is thinking he's going to make, it might be that the costs of you both getting legal advice on this are greater than the costs of just making a payment to your friend now.

Edited to answer your question: very broadly, if there's a deed of trust then the the rights the other owners have will be specified in that particular deed. They're not all the same, hence the need for your own legal advice.

HampshireH

cwaite said:

HampshireH said:

How much exactly are you expecting to pay for the help and advice you got? 

Was this in lieu of labour for example? 

I would suggest you get your own legal advice. As it stands a "gentleman's agreement" stands for nothing 

Once you commit to a legal document you commit yourself so you really need a proper legal understanding of what you should do once you know what is being proposed

It is a percentage in respect of the advice they have given, as without them I wouldn't have attempted to purchase the property myself, there was no labour involved, I am rewarding them for giving me the benefit of their experience.

I am happy with it being a Gentleman's Agreement, I am an honourable man, its the other party that now wants something official. But obviously I do not want to enter into anything, if they or the beneficiaries of their estate should they pass away have control over the property (which is my life savings).

What are you expecting that to look like. £1000, £10000, £100000? 

It sounds like they intend to have this written into their will so your deed needs to reflect all eventualities.

I needs to state the sale of the house will be at the sole discretion of the homeowner. (you) and cannot be influenced by the estate of (your friend) or any party to inherit thereafter.

To further state that you will pay x % to your friend but in the event the friend is deceased the deed of trust will be passed to the estate and any named person specifically due to inherit the benefit upon the sale of your property again not to be influenced or forced by the estate or person inheriting the monies.

Not in those words. You need to see your own solicitor.

What happens if you go into negative equity? Currently you will still owe the money on sale of the property but this would put you in further hardship.

What if you die first? You need to also have this promise in your own will 

theoretica

Or, could you afford to pay his share now?  It would give a clean break.