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My name is ***** ***** am happy to assist you with your enquiry.
First and foremost, I would advise against any such agreement-but if you are happy to "help a friend" it has to be your decision.
2 alternatives really-
1. you retain ownership of 49% of the property. This way, you keep control and no doubt will benefit from any increase in value on the property. The Contract selling him 51% could include a proviso that you agree to sell him the remaining 49% in the future.
2. If you were willing to transfer the whole of the bungalow to him now, with the further payment being made in the future, your only option would be to have a private Mortgage registered against the property, the terms of the Mortgage being that the further sum be repaid in 10 years. This would give you security as it would be registered against the property, and even if he died before the 10 years had lapsed, you could still enforce the terms of the Mortgage (you would have to go to Court and issue possession proceedings).
I hope this assists, but please let me know if you require any further clarification.
You did not answer my question. What sort of deed of covenant would be required to cover this situation? Is a deed of covenant appropriate for this situation?
Thanks for your reply.
A Deed of Covenant is not appropriate or correct in either of the 2 propositions I set out in my initial Answer.
You either retain ownership of 49%, meaning no covenant is required, as you remain an owner.
If you proceed and transfer 100% to him, the correct document to be drawn up would be a Mortgage deed- stipulating that the Buyer should repay you the sum in or before 10 years time. If he were to die, before paying off the Mortgage, you can enforce the terms of it against whoever inherits the property.
A Deed of Covenant is normally used to confirm what a party can and can not do, and is not appropriate here.
Please let me know if you require any clarification.