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Deed of trust answers needed

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Happy_duck
Happy_duck Posts: 4 Newbie
in House buying, renting & selling
Hi, I’m buying a house with my partner & am putting all of the deposit down with the equity from the sale of my previous property. I’ve received a letter from my solicitor asking me how I want to split the shares in the house (tenants in common) but am at a loss how to work that out? Help & advice appreciated. I thought I’d simply have it drawn up that I get my deposit money back if anything goes wrong in the future?

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  • da_rule
    da_rule Posts: 3,618 Forumite
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    You have 2 options:

    1) You get the deposit amount back (i.e. if you are putting £10,000 in then you get the first £10,000 of the sale price then the rest is split evenly); or
    2) You get the % of sale price that is represented by your deposit. For example, if you are putting in a 10% deposit you will get the first 10% of the sale price. Therefore the equity split would be 55%/45% in your favour.

    These examples obviously assume that after clearing the mortgage there is enough equity in the property to pay you back your deposit amount.
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
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    Happy_duck wrote: »
    Hi, I’m buying a house with my partner & am putting all of the deposit down with the equity from the sale of my previous property. I’ve received a letter from my solicitor asking me how I want to split the shares in the house (tenants in common) but am at a loss how to work that out? Help & advice appreciated. I thought I’d simply have it drawn up that I get my deposit money back if anything goes wrong in the future?

    This has been discussed ad nauseam on the forum.
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
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    Here is a starter for ten...

    https://forums.moneysavingexpert.com/showthread.php?t=5892237
  • Tom99
    Tom99 Posts: 5,371 Forumite
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    da_rule wrote: »
    You have 2 options:

    1) You get the deposit amount back (i.e. if you are putting £10,000 in then you get the first £10,000 of the sale price then the rest is split evenly); or
    2) You get the % of sale price that is represented by your deposit. For example, if you are putting in a 10% deposit you will get the first 10% of the sale price and the remainder is split 50%/50%. [STRIKE]Therefore the equity split would be 55%/45% in your favour[/STRIKE]


    The 55%/45% split will only happen when the mortgage is paid off.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
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    Working out the split of a sale is the easy bit of a Deed, plenty of threads covering that part.

    it can also account for a mortgage not paid 50:50.
    Not spliting the mortgage 50:50 can be used to adjust the shares so you own 50:50.

    eg 25% deposit, split the 75% mortgage 25:50 and own 50:50.

    There is also a variation on the get your money back, you lend the OH 1/2 your deposit and they pay that back on a separate agreement(with or without interest) and if it is not fully paid back by the time the dale happens it comes from their share.

    The condition that make the sale happen need to be clear as well

    death, split, child...
    sale only, buyout, if buyout what is included or not, any adjustments for not having as much fees.

    Then there is upkeep(maintenance/enhancements)
    how should those be paid
  • Happy_duck
    Happy_duck Posts: 4 Newbie
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    Thank you for the explanation. I want to do it the way you explain in your 1st option, so I will need to get revised paperwork that doesn’t ask for the share split I think.
  • Tom99
    Tom99 Posts: 5,371 Forumite
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    Happy_duck wrote: »
    Thank you for the explanation. I want to do it the way you explain in your 1st option, so I will need to get revised paperwork that doesn’t ask for the share split I think.

    [FONT=Verdana, sans-serif]Whichever way you go, a simple equity share split be it 60/40, 50/50, 90/10 or whatever will not work.[/FONT]
    [FONT=Verdana, sans-serif]You need the two part formula:[/FONT]
    [FONT=Verdana, sans-serif]
    [/FONT][FONT=Verdana, sans-serif]1st – You get back your deposit, either as a fixed sum or more usually as a percentage of the sale price less costs of sale[/FONT]
    [FONT=Verdana, sans-serif]2nd – You split the remainder, after all sale costs and mortgage, in the same proportions you are paying the mortgage, usually 50%/50%[/FONT]

    [FONT=Verdana, sans-serif]It is only when the mortgage is paid off that you can then express your ownership in simple percentage terms.[/FONT]
    [FONT=Verdana, sans-serif]
    [/FONT][FONT=Verdana, sans-serif]Usually you would have a separate Deed of Trust document setting out this agreement, together with any other terms you agree. That way if in a few years time you want to change the figures or percentages you can update the Deed of Trust without having to bother to update whatever is recorded at the Land Reg.[/FONT]
  • Happy_duck
    Happy_duck Posts: 4 Newbie
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    I get it now Tom99. I have asked for my money to be protected (no need for growth) & then a 50/50 split.
    Thank you for all your help everyone :j
  • getmore4less
    getmore4less Posts: 46,882 Forumite
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    That's the equivalent of an interest free loan of 1/2 the deposit to the OH that gets paid back when the place is sold.
  • Happy_duck
    Happy_duck Posts: 4 Newbie
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    getmore4less wrote: »
    That's the equivalent of an interest free loan of 1/2 the deposit to the OH that gets paid back when the place is sold.

    I’m happy with this. Thanks again
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