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Aston Lawyer
Aston Lawyer, Solicitor
Category: Law
Satisfied Customers: 10550
Experience:  Solicitor LLB (Hons) 23 years of experience in Conveyancing and Property Law
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Dear Sir/Madam, I am a 28 year old male who lives in London.

Customer Question

Dear Sir/Madam,
I am a 28 year old male who lives in London. My father is a 58 year old man who recently divorced his wife (my mother) and we sold our main house and I am currently renting.
Since the divorce, my father had promised me that he would purchase a property for me. I have now found the flat that I want (£400k) and we are a cash buyer.
However, it gets slightly complicated...
I initially was hoping for him to purchase the property under my OWN name (as I want to have complete control of it) - but unfortunately my father says he will not do this: as he believes that I am financially irresponsible and that it is risky for him to do this. His proposition is this: that he will purchase the property under his OWN name...and then several years later 'gift' it to me - when he feels I have 'matured'.
On the flip side, I also do not trust him. Unfortunately he is a gambling addict and I fear that if the property were purchased under HIS name, then he may one day - in the near future - encounter severe financial difficulties that would force him to sell or re-mortgage the property: resulting with me having no property at all.
Despite his 'assurances' that he will not sell/re-mortgage the flat (if he were to purchase it under his own name), this is a risk I am simply not willing to take.
So, given the fact that he is unwilling to purchase the flat under MY name, and given the fact that I am also unwilling to agree to purchase the flat under HIS name (as we don't trust each other), we have tried to discuss how we can resolve these differences.
A friend told me that one potential option available to guarantee each others concerns would be for him to purchase the property in a trust.
Unfortunately my knowledge of trusts is very limited, so I would like to know a few things please: is there a way for him to purchase the property in a trust (with me as the sole beneficiary) so that the following conditions can be met:
1. He cannot sell/re-mortgage it under any circumstances (For example if he enters financial difficulty or simply we have a falling out).
2. Ownership of the property would ultimately come to me (I am not too concerned about the timeframe - as long as I can rest assured it will end up in my name)
If there is such a solution via a trust, I would be grateful if you could kindly give me some information on what type of trust he would have to use, and what he would have to do so that I could have full assurance that the property would end up in my name without him being unable to sell/re-mortgage it under any circumstances.
Thanks a lot.
Submitted: 2 years ago.
Category: Law
Expert:  Aston Lawyer replied 2 years ago.

Hello and thanks for using Just Answer.

My name is ***** ***** am happy to assist you with your enquiry.

The way forward is as follows-

The property is purchased by your Father, so he is shown as the legal owner on the Land Registry Deeds. On the same day your Father completes the purchase, a Trust Deed is signed by both of you.

The Trust Deed will stipulate that although the property is owned by your Father, he is holding it upon Trust for you. It will also state that your Father can not sell or re-mortgage the property without your consent.

As added protection for you, a "Restriction" can and should be registered at the Land Registrymeaning that the Land Registry would require your consent before dealing with any subsequent sale or re-mortgage application affecting the property. This saves your Father from being able to go behind your back and sell or re-mortgage.

The Trust Deed and Restriction will then just sit there until such time as your Father is happy to transfer the legal ownership of the property to you.

If for whatever reason he does not decide to transfer the legal ownership, then the fact that he has signed the Trust Deed is evidence that the property ultimately belongs to you, and you would have the right to go to Court and request that the ownership be transferred to you, if the worst came to the worst.

It would be advisable for you to instruct your own Solicitor concerning the Trust Deed and the registration of the Trust Deed, and the Solicitor acting for your Father in the purchase will be able to advise him as regards ***** ***** Deed. If your Solicitor were to prepare the Trust Deed, you are looking at £250-£400 plus VAT in legal fees, provided everything goes smoothly.

I hope this helps you, and sets out the legal position.

Kind Regards

AL

Aston Lawyer and other Law Specialists are ready to help you
Customer: replied 2 years ago.

Dear Al,

Thank you very much for the informative and helpful response. I have three additional questions relating to the purchasing arrangement that you proposed in your last message, which I have listed below:

(1) Would it be possible to undertake the purchase in the manner you proposed (where my father purchases the property and is shown as the legal owner – whilst the trust stipulates that it is being held in trust for me) but to also include the additional clause: that by the time I reach a certain age (e.g. 35 - in 6 years time) the property’s ownership would automatically convert to myself?

(2) In your previous message you wrote that a 'Restriction' could be registered at the Land Registry that would entail requiring my consent before my father would be able to deal with any subsequent sale or re-mortgage application...what would happen, however, if a situation arose where my father fell into huge debt and did not have the money to pay it back? Would any of his creditors be able to make a claim on the property – even without my consent and approval – in order to get money they are owed?

(3) If the property is purchased in the way that you mentioned (where my father purchases the property and is shown as the legal owner – whilst the trust stipulates that it is being held in trust for me) would that automatically make that asset (the property) ‘protected’ from any potential civil litigation against me personally? (For example, if a girl decided to press charges against me for sexual assault and was seeking financial compensation, would the property be ‘financially immune’ – given that my father would be the legal owner – even if it was being held in trust for me?)

Thank you very much for your assistance. I shall most definitely give you another excellent service rating.

Kind regards,

Darius

Customer: replied 2 years ago.
ForCustomer
Thank you very much for the informative and helpful response. I have three additional questions relating to the purchasing arrangement that you proposed in your last message, which I have listed below:
(1) Would it be possible to undertake the purchase in the manner you proposed (where my father purchases the property and is shown as the legal owner – whilst the trust stipulates that it is being held in trust for me) but to also include the additional clause: that by the time I reach a certain age (e.g. 35 - in 6 years time) the property’s ownership would automatically convert to myself?
(2) In your previous message you wrote that a 'Restriction' could be registered at the Land Registry that would entail requiring my consent before my father would be able to deal with any subsequent sale or re-mortgage application...what would happen, however, if a situation arose where my father fell into huge debt and did not have the money to pay it back? Would any of his creditors be able to make a claim on the property – even without my consent and approval – in order to get money they are owed?
(3) If the property is purchased in the way that you mentioned (where my father purchases the property and is shown as the legal owner – whilst the trust stipulates that it is being held in trust for me) would that automatically make that asset (the property) ‘protected’ from any potential civil litigation against me personally? (For example, if a girl decided to press charges against me for sexual assault and was seeking financial compensation, would the property be ‘financially immune’ – given that my father would be the legal owner – even if it was being held in trust for me?)
Thank you very much for your assistance. I shall most definitely give you another excellent service rating.
Kind regards,
Darius
Expert:  Aston Lawyer replied 2 years ago.
Hi Darius,
Thanks for your enquiry.
1. Provided your Father was in agreement, there certainly can be inserted into the Trust Deed a provision that upon a certain date in the future, your Father will take all necessary steps to transfer the legal ownership of the property to you. A simple additional clause in the Trust Deed can be inserted to this effect.
2. As the Trust Deed is evidence that the property is being held on trust for you, any creditors of your Father would NOT be able to get their hands on any portion of the property or indeed force a sale to re-claim what is owned. There would be nothing stopping them issuing proceedings against your Father, but once the Trust Deed had been produced to them, showing that the property is on trust for you, no Court would allow them to proceed with any financial claim against your Father.
3. Unfortunately, as per the above, you won't be able to have it both ways. If any party got to know that the property was being held upon trust for you, they could try and make a financial claim against you. Hence, the property would NOT be financially immune.
I hope this assists you.
Kind Regards
AL
Customer: replied 2 years ago.

ForCustomer

Thank you once again for your excellent concise and informative response.

My father and I discussed the issue, and he agreed that he would be willing to insert a provision in the Trust Deed stipulating that after 4 years he would take all the necessary steps to transfer the legal ownership of the property to me.

Two additional questions that I have which I would be most grateful if you could help clarify for me are:

1) Are there be any Inheritance Tax advantages (or disadvantages) in having my father purchase the property under his name but held in trust for me? (i.e. Would it provide any protection against inheritance tax?)

2) Would I have to pay Stamp Duty once the property's ownership became transferred to me (after the 4 year period)?

Thank you ever so much for your assistance.

Kind Regards,

Darius

Expert:  Aston Lawyer replied 2 years ago.

Hi Darius,

I hope I have answered your original questions, and I would be happy to assist further if you were to post your latest request as a new question.

Thanks

AL

Customer: replied 2 years ago.

ForCustomer

I would be happy to do that. In order to request you (rather than another property solicitor) to answer the question, shall I just begin the sentence with 'ForCustomer so that it goes directly to you?

Kind Regards,

Darius

Expert:  Aston Lawyer replied 2 years ago.

OK

Thanks

AL