Issue with Declaration of Trust

Kristoff77

Hi there, me and my partner are buying a house together as tenants in common and trying to set up a declaration of trust to make note of our deposits.

But it's turning out to be more complicated than I thought as the solicitor says that everytime we remorgage we will have to get the declaration changed to say the new morgage provider and new morgage amount.

The morgage is 27 years long so if we remorgaged every 2 years we would have to hire a solicitor 14 times to get it changed over the years.

To me this seems quite a stressful experience trying to find a solicitor who is willing and able to do it so regularly, plus the extra cost.

Has anyone else heard of this being a requirement? The few people I know who have done a deed say they didn't know about it. And I can't find any information about it online. 

They have also said they dont keep the deed but can file it with the land registry if we ask. Otherwise the only proof of it's existence will be our copy.

poseidon1

That sounds like complete nonsense, and perhaps you should find another lawyer to draft the trust deed. 

 What the deed is aiming to do is to establish the intial shares of equity in the property based on your deposit contributions, and how your equity shares in the property alter in future based on your respective ongoing contributions to the mortgage payments. The trust wording therefore needs to accomodate the potential for your respective mortgage contributions to vary in the years to come.

Remortgaging every two years ( if that's what you choose to do),  is entirely irrelevant to a properly drafted tenant in common trust deed that should withstand any number of changes of mortgage lender and loan amounts. Sounds like you have been lumbered with a numerically challenged lawyer with a vague understanding of what the trust deed is supposed to do.

Suggest you have a read of the following article so  you understand what this deed of trust is designed to do, then find another solicitor who has the competency to address your particular circumstances - 

https://www.elitelawsolicitors.co.uk/declaration-of-trust-for-property/#:~:text=What should be included in,is put up for sale

Incidentally supplying the above link is not an endorsement of the firm who wrote the article, they merely cover the relevant issues with appropriate contextual references.

Exodi

I'd say it depends on how complicated the Deed of Trust is. Sometimes a solicitor can over-complicate things, but more often the customer is the one requesting trigonometric equations that calculate the equity based on the current lunar cycle, discounting how many lightbulbs party A had to buy, of course. Even on this forum we love to delve into all the what-if's imaginable.

In all of my previous DoT's (which were relatively straight forward), the current mortgage balance was not even stated.

Also to be clear, rate-switching is not re-mortgaging, it's not terribly common to repeatedly remortgage.

Hoenir

Exodi said:

I'd say it depends on how complicated the Deed of Trust is. Sometimes a solicitor can over-complicate things, 

Solicitor will draft on the basis of what the client is trying to achieve. One party needs to seek independent advice as well .  

Exodi

Hoenir said:

Exodi said:

I'd say it depends on how complicated the Deed of Trust is. Sometimes a solicitor can over-complicate things, 

Solicitor will draft on the basis of what the client is trying to achieve. One party needs to seek independent advice as well .  

To an extent, but certainly I've been steered in different directions by solicitors in the past on their recommendation, such as certain things might be too complicated (and thus could be interpreted ambiguously) or too simple and does not consider X, Y or Z.

FWIW, I suspect an over-complicated DoT is likely the result of the party requesting it, rather than the solicitor (but I included the possibility for completeness and so I wasn't so blatantly suggesting that the OP may have a complicated DoT and that's probably their doing).

Also, in both instances the party I was drafting the DoT with wasn't required to seek independent advice.

Hoenir

Exodi said:

Hoenir said:

Exodi said:

I'd say it depends on how complicated the Deed of Trust is. Sometimes a solicitor can over-complicate things, 

Solicitor will draft on the basis of what the client is trying to achieve. One party needs to seek independent advice as well .  

Also, in both instances the party I was drafting the DoT with wasn't required to seek independent advice.

Often recommended. To give the document standing in the event of later legal dispute. One party possibly having a disportionate influence in it's wording. 

gwynlas

A straightforward DoT would be defing each deposit be paid out of wquity prior to sharing remainder.when propert sold

Complications arise if you want to link deposit to growth ie it being an investment and splitting remaing equity by percentage contributions paid

If you and your partner enter into civil partnership or marriage further down the line the property would potentially be split 50/50 on divorce

Kristoff77

Thankyou for your comments. 

The deed is a simple one which states our deposits and that if we broke up we would get these back and divide the equity equally.

The problem is it also states the morgage amount and morgage lender and in the deed specifies our obligation to pay the morgage equally and take out buildings insurance and keep it in a nice state. I presumed this was all included to keep our morgage provider happy?

It's not been done by my solicitor but a co-worker in her company who has been very difficult to get hold of or ask questions. I did email another solicitor for a quote but got no answer so presumed it must be difficult to get a solicitor to do a small job like this and have stuck with the one I'm with. They wanted payment before starting.

eddddy

Kristoff77 said:

The problem is it also states the morgage amount and morgage lender and in the deed specifies our obligation to pay the morgage equally and take out buildings insurance and keep it in a nice state. I presumed this was all included to keep our morgage provider happy?

I can't imagine they'd be a problem if that was changed to something more generic, like "the amount outstanding on the mortgage" and "the mortgage lender".

Your mortgage lender won't be interested in what this document says.

As far as your mortgage lender is concerned, you will almost certainly both be jointly liable for the whole mortgage. If one of you doesn't pay their share of the mortgage, they'll be free to pursue the other one for the whole amount.

And your mortgage lender will require buildings insurance.

Exodi

Kristoff77 said:

Thankyou for your comments. 

The deed is a simple one which states our deposits and that if we broke up we would get these back and divide the equity equally.

The problem is it also states the morgage amount and morgage lender and in the deed specifies our obligation to pay the morgage equally and take out buildings insurance and keep it in a nice state. I presumed this was all included to keep our morgage provider happy?

It's not been done by my solicitor but a co-worker in her company who has been very difficult to get hold of or ask questions. I did email another solicitor for a quote but got no answer so presumed it must be difficult to get a solicitor to do a small job like this and have stuck with the one I'm with. They wanted payment before starting.

Well I have a similar arrangement, and my DoT does not include the mortgage amount nor lender.

It has 4 points:

1. Party A & Party B hereby declare they shall hold the property upon trust for themselves in the following proportions as Tenants in Common:

2. On the the future sale of the property the follow shares shall be applied: Party A 50%, Party B 50%

3. Before the sale proceeds are divided, party A will receive X and party B will receive Y. This represents the deposit provided to acquire the property

4. All mortgage repayments and utility and service costs for the property will be the joint responsibility of party A and party B.

I've paraphrased a tad and there is a page where it identifies the party of the agreements, the property, definitions, etc.

I accept that it is unclear what would happen in a scenario where the sales proceeds are less than (X+Y).

I would imagine the lender wouldn't even have sight of this document? Likewise I don't understand the point of putting in things like obligation to take out buildings insurance when that is a condition of the mortgage? Seems there is a lot of unnecessary detail in it.

I think I paid around ~£250+VAT for a DoT five years ago, so probably a bit more now, but yes as you say, unlikely to get a conveyancer interested on its own so I'd imagine you'll end up being quoted £500 to do it in isolation.

NB: please let's not turn this discussion into critique about what else should be included in DoT, e.g. redundancy, children, etc, my DoT was made to bridge the gap until we got married. As I said before, people can get carried away and really over-complicate these things which can then invite disingenuous misinterpretation.

Hoenir

Kristoff77 said:

The problem is it also states the morgage amount and morgage lender and in the deed specifies our obligation to pay the morgage equally and take out buildings insurance and keep it in a nice state. I presumed this was all included to keep our morgage provider happy?

The DoT has nothing to do with the mortgage lender at all. They'll never see sight of it.