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Thomas
Thomas, Solicitor
Category: Property Law
Satisfied Customers: 7626
Experience:  UK solicitor holding an England and Wales practising Certificate.
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Hi there, I am about to sign a declaration of trust with my

Resolved Question:

Hi there, I am about to sign a declaration of trust with my partner of ten years. My partner took out the mortgage on the property so his name only will be listed as owner on the mortgage deeds.
The solicitor gave some points which we could or didn't need to put in.
We have included the following point:

The property can be sold on request of the other party at 6 months notice
One party can purchase the interest of the other party with a valuation of 3 independent estate agents
If one party dies the share passes to the other party
The net sale proceeds will be shared 50/50
A restriction is to be entered against the title in my favour.

My partner is providing £160k deposit and I am providing £40k
As I will be entitled to 50% of the proceeds of the sale I'm assuming my money is safe and there is no need to state how the purchase price was provided or would this be sensible in order to prove I contributed?

The house is due to complete Wednesday 22nd Jan so we will sign the declaration Tuesday or Wednesday.
My partner/fiancée wants me to transfer my £40k to the solicitor tomorrow.

Do you think that my interests are covered safely enough?
Many thanks!
Johanna
Submitted: 3 years ago.
Category: Property Law
Expert:  Thomas replied 3 years ago.
Hi Johanna

Is the reason why are you are not able to purchase in you draw names?

Kind regards

Tom
Customer: replied 3 years ago.
Hi Tom, I was declared Bankrupt (I am now 6 years discharged) due to large course fees from a Veterinary Science degree.
I am able to get a mortgage however this would be from a broker and my Fiancée said we would have to pay a higher rate of interest.
The purchase price if the house is £658,000.
My fiancée is self employed and I'm not working at the moment due to ill health although I'm told this isn't usually a problem as housewives/partners are usually able to be added to the mortgage.
My Fiancée went to the bank to ask for the mortgage as he banks with them and has a good relationship with them and large amounts of savings to offset against the mortgage.They are RBS. They said they don't lend to people who have ever been bankrupt.
He did do all this without telling me first though and went ahead with agreeing the mortgage which he tells me he thought the best thing to do so as not to lose the house and stress me out.
We are possibly getting married this year.
Expert:  Thomas replied 3 years ago.
Hi

Thanks.

I am on my way to work and will answer at 9am.

Tom
Expert:  Thomas replied 3 years ago.
Hi Johanna,
Thank you for your question and patience, I’m Tom and I’ll try to help you.

Obviously, it’s difficult to comment on the issues your partner has stated with regard to mortgage availability if you were also a co-applicant, so there is an implicit element of trust here that you have with him.

If it is the case that you are putting in less deposit than him but the equity in the property is going to split 50/50 without the disparity of deposits being taken in to account then – in money terms – it’s obviously a very good deal for you.

A declaration of trust registered in the form of a restriction is the second-best option to protect your interest in the property, with the first best being named as a joint registered proprietor. You need to check the wording of the type of restriction that will be entered on the title. If it states either that the property will not be sold without your consent, then this would obviously be fine. If it states that the property will not be sold without the terms of the declaration of trust being complied with then this is also okay.

I would also ask for an additional clause to be inserted in to the declaration of trust stating that your partner will not remortgage or obtain further borrowings on the property in addition to the present intended mortgage.

It’s important to note that although the declaration of trust may state that you leave your respective shares to eachother you should also both execute Wills, since it is the Wills that will ultimately be binding in these circumstances.

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.

Kindly rate my answer if you are satisfied with the information I have provided.

Kind regards,


Tom
Customer: replied 3 years ago.
Hi Tom, there will be a restriction against the property on the land registry in my name so the property can't be sold without my consent so I'm guessing I'm covered?
There is nothing to state that the declaration of trust will be adhered to but I think with the restriction this should be ok?

I have already signed a legal document agreeing that I should vacate the property to enable the bank to exercise its rights, acknowledge that the bank may without further consent grant to the customer a new or increased loan or other credit facility and I agree that any interest or rights I may have in the property are subject to the mortgage.

So I am getting a good deal, as long as the mortgage is paid and my fiancée does not remortgage without telling me.

I guess there is therefore a level of trust I am entering into here.
I am providing my life savings to the solicitor today so it would be devastating for me to lose this.
I
Expert:  Thomas replied 3 years ago.
Hi,

The restriction is fine if it states that the property cannot be sold without your consent, yes.

The document that you signed will be the bank's standard deed of postponement, which essentially means that you cannot claim your interest ahead of the banks. Very normal.

You need to ask the specific wording of the restriction, if it states that the property cannot be sold without your consent then you are fairly well covered.

Please remember to rate my answer.

Kind regards,

Tom
Customer: replied 3 years ago.
Thanks Tom,.
Final question! If the house is remortgaged, my fiancée told me our deposit will stay in the house so I will still get my money. Is this correct?

Expert:  Thomas replied 3 years ago.
Hi,

It depends how much he remortgage's by, potentially it could swallow up more of the equity. I would insist on a provision prohibiting remortgaging/borrowing in the declaration.

Tom
Customer: replied 3 years ago.
Yes that's what thought.
Thanks Tom!
Expert:  Thomas replied 3 years ago.
Thanks.

Please do remember to rate my answer.

Tom
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