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Thomas
Thomas, Solicitor
Category: Family Law
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Experience:  UK solicitor
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My partner and me are looking to buy a house jointly but the

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My partner and me are looking to buy a house jointly but the mortgage will be in my name due to her adverse credit history. She wants to pay her 50% so the plan is that I will pay 50% deposit and she will pick up the mortgage payment each month and I realise we need to have a legal agreement in place for this. For now the the question is - what would happen if we break up and need to sell, how would the proceeds of the sale be divided up?
Submitted: 2 years ago.
Category: Family Law
Expert:  Thomas replied 2 years ago.
Hi
Thank you for your question and patience, I’m Tom and I’ll try to help you.
You need to get advice from an independent solicitor locally about this and she needs to get advice from the solicitor she is using to do the conveyancing.
Basically, if you are not on the title for the property then you are utterly disadvantaged unless (1) you have a charge on the property for your share (ideally) or (2) you have a declaration of trust declaring that you have an interest in the equity in the property.
Your respective solicitors would prepare the charge or declaration of trust (which ever you go for) and give you advice on it to ensure that it reflects the negotiated arrangement between you both. You would need the lender’s consent to a charge because they have a first legal charge and there are binding mortgage conditions about second charges. If they do not agree to allow you a second legal charge then you will have no option but to either not proceed or else to execute a declaration of trust.
If going the declaration of trust route it is essential that it is regsietred against the title of the property in the form of a restriction (ideally) or notice, which your solicitors will arrange.
The charge and declaration of trust would govern what would happen when you break up and can stipulate a process for buy-out or sale and on what terms. If you married though then a court in divorce proceedings has the power to disregard the declaration or the charge. So, it will cover you whilst you are unmarried but once you are married it’s effect is potentially decreased.
My goal is to provide you with a good service. If you feel you have received anything less, please reply back as I am happy to address follow-up issues specifically relating to your question.
Kind regards,
Tom
Customer: replied 2 years ago.

Thank you for your response. To clarify, we would both be on the title for the property but the mortgage would be in my sole name, until such time as we can add my partner when her credit ratings improve. At this stage I am looking for guidance on the sale terms so as not to dsadvantage either of us.

Expert:  Thomas replied 2 years ago.
Hi,
Your lender is not likely to allow you both going on the title unless you are both named on the mortgage. This is a fairly standard policy of all lenders. I would check with them to see if this is the case.
Basically my advice stands unamended, except for the fact that it is she who would see an independent solicitor about drafting a declaration of trust or charge and for your solicitor to review it.
If there are other debts or shared property that you have together then it might be worth considering a cohabitation agreement, which is an agreement governing your cohabitation and what happens in the event of a split to the share items (other than the property which will be dealt with by the charge or declaration of trust).
Kind regards
Tom
Customer: replied 2 years ago.

Thank you. Given our circumstances can you give guidance on the sale terms to be included in the declaration of trust eg "on sale of the property I would be entitled to 50% of the proceeds after sale expenses and mortgage repayment, based on the fact that I have put in 50% deposit. Would this be fair an reasonable?

Expert:  Thomas replied 2 years ago.
Hi,
Yes, I would consider that fair but that's just my opinion as a person - not a lawyer. Lawyer's are not better placed to decided what is "fair" than lay persons...
I would suggest that it would be sensible to split the costs of sale 50/50 as well though..
Kind regards,
Tom
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