Deed of trust

Emmahod

Hi all 
looking for some advice please.

Me and my husband moved into a house that his parents owned 15 years ago and his name was added to the mortgage alongside theirs.
during those 15 years we got married and have paid for and maintained the house. His parents have not paid any contribution to it.

it is up for sale now and it is only valued at approx 110k but it has come to light that there is a deed of trust on the property so his parents would automatically get 50k of the sale so by the time the mortgage and fees are paid it leaves very little for me and my husband.

his parents have said that they don’t want the 50k and it has to go into a savings account in our name for a deposit on a future house which is very generous and I am thankful but not sure if this would settle the deed.

we are currently living in a rental and are not looking to buy just yet. 

I can’t help but feel frustrated that after all the money we have paid into the house especially me as I am the higher earner into our household that there isn’t anything left for us.

i am not trying to take money off his parents I just assumed that our contribution to the house would be considered. 

If the house sells for less than 110k then there won’t be enough equity to cover the deed so will that mean that we would owe them?

Can anyone offer any advice on this situation?

GDB2222

I haven’t seen the deed, but I am sure that whatever agreement you come to with the parents in law will ‘satisfy the deed', if properly done. You may find that the solicitor handling the legal side of the sale will tell you to get separate legal representation. 

Parents in law are effectively giving you the £50k, so you will end up with all the equity in the property. I am not sure what more you can possibly expect? 

Emmahod

GDB2222 said:

I haven’t seen the deed, but I am sure that whatever agreement you come to with the parents in law will ‘satisfy the deed', if properly done. You may find that the solicitor handling the legal side of the sale will tell you to get separate legal representation. 

Parents in law are effectively giving you the £50k, so you will end up with all the equity in the property. I am not sure what more you can possibly expect? 

Thank you. I understand that they are effectively giving us the 50k but with the restriction of how the funds can be used. 

Our initial plan when we discussed the house sale was to use the equity to clear a few debts we had to strengthen our credit score as we have had financial hardship in the past 

As I said I’m not trying to take their money I just assumed that as we had made 15 years of mortgage payments this would be taken into consideration when the equity is split. 

I am assuming our solicitor can get access to the deed and clarify exactly what it says. 

GDB2222

Are you saying that you have debts of £50k, or just that the debts are a fraction of that amount? 

In principle, I think that parents in law should have a say in what you do with this money. However, they may not understand your financial situation, so they may be blissfully unaware of your debts. 

Emmahod

GDB2222 said:

Are you saying that you have debts of £50k, or just that the debts are a fraction of that amount? 

In principle, I think that parents in law should have a say in what you do with this money. However, they may not understand your financial situation, so they may be blissfully unaware of your debts. 

No no we don’t have 50k just a fraction. 

I guess all we can do is have a chat with them and see what agreement we can all make 

thanks for your advice 

GDB2222

One argument you could use is that it makes no sense having money on deposit earning say 4% if you have debts on which you are paying say 20%.

Maybe you could agree as follows:

You'll use £5000 (just as an example) to pay off debts, and you will pay back the money at the rate of say £150 a month until the £5000 is cleared. The interest on £5000 could easily be £100 a month, and you won’t be paying that, so £150 might be affordable. 

It sounds like they want the best for you and your family. 

Hoenir

Emmahod said:

 but it has come to light that there is a deed of trust on the property so his parents would automatically get 50k of the sale so by the time the mortgage and fees are paid it leaves very little for me and my husband.

A declaration of trust cannot be unilaterally imposed. Has to be an agreement between all parties involved. Also to stand up in court the other parties must have obtained independent legal advice. 

GDB2222

Hoenir said:

Emmahod said:

 but it has come to light that there is a deed of trust on the property so his parents would automatically get 50k of the sale so by the time the mortgage and fees are paid it leaves very little for me and my husband.

A declaration of trust cannot be unilaterally imposed. Has to be an agreement between all parties involved. Also to stand up in court the other parties must have obtained independent legal advice. 

Well, the op could certainly squander the £50k on legal fees.

doodling

Hi,

Leaving aside morals and feelings:

- You own part of the house so you should only get part of the money.  If you are expecting something in return, it is never a good idea to make payments to a mortgage without understanding the ownership of the property (and that includes understanding the details of any trust deed).

- The rest of the money is being given to you so luckily the ownership of the house doesn't make a difference in this case.

- If the parents are happy with the outcome from the sale then that is good enough - there is no independent person who checks these things.  The conveyancer handling the sale will expect to distribute the money according to the deed however and may require anyone acting to their own detriment to seek independent legal advice (e.g. if the parents told the conveyancer to give the money directly to you).  That isn't an issue here as the conveyancer will pay the parents £50k and then they will give that to you.

- Does the trust deed really allow a situation to arise where someone's liability under the deed is not met by the sale of the property (give or take any negative equity situation)?  Whilst I think this is theoretically possible, it is unusual and whoever advised you when the deed was signed may be negligent if they didn't tell you about that at the time.

- Unless the parents do something weird and highly unusual with a trust then once they have given you the money you can do what you want with it.  Gifts are final, you can't give someone something and then insist on dictating what they do with it.

- Once you have been given something then you are under no obligation to tell the giver what you have done with it - you could spend the money on chocolate and just not tell the parents.

Obviously, when you introduce feelings and morals into the above there is the opportunity for people to get upset - you need to take the above points and apply the feelings and morals applicable to the parties involved to get to a solution you are happy with.

Emmahod

Thank you all 
you have given me a lot to think about 

Bookworm105

so who is living in the house at the moment?
- you say you are living in rental, when did you move out
- where have the parents lived for the last 15 years?

The deed of trust establishes that parents have a "beneficial interest" (ie entitled to money) from the sale of the property but unless all 4 of you have lived there as your main home for the entire time at least one of "you" is exposed to capital gains tax on the sale of the property.