Declaration of trust - fair split?
Discussion
Hi PH'ers
I am buying a place with the good lady but not being married and coming at it with very different deposit levels (95% - 5%) I am struggling to work out whether the wording our solicitor has provided is sound logic. Yes romance is dead etc etc
Essentially, if the worsts happens then there would be two scenarios:
House sell for more than we paid (think we may have reached peak house) then costs of sale split 50/50. We get our original deposits back and any equity is split 50/50. Makes sense to me.
House sells for less than we paid. Solicitor has just suggested fixed % split with 50/50 on cost of sale.
Is there a smarter way to do the logic in the second scenario or is that pretty standard wording for these things. Asking on here first before going back to solicitor as wanted a wider view.
Thanks
I am buying a place with the good lady but not being married and coming at it with very different deposit levels (95% - 5%) I am struggling to work out whether the wording our solicitor has provided is sound logic. Yes romance is dead etc etc
Essentially, if the worsts happens then there would be two scenarios:
House sell for more than we paid (think we may have reached peak house) then costs of sale split 50/50. We get our original deposits back and any equity is split 50/50. Makes sense to me.
House sells for less than we paid. Solicitor has just suggested fixed % split with 50/50 on cost of sale.
Is there a smarter way to do the logic in the second scenario or is that pretty standard wording for these things. Asking on here first before going back to solicitor as wanted a wider view.
Thanks
When I did this a few years ago (before we married), I split any profit 50/50 after the difference in deposit had been dealt with, so take the deposit out individually and then share the rest, any loss we just split 50/50.
It's not an equal split but considered it an equitable approach, given we were basically sharing bodily fluids!
It's not an equal split but considered it an equitable approach, given we were basically sharing bodily fluids!
The way I did it,many years ago,my then partner worked for a solicitor by the way,drew up the contract.
I put down 65% and she 35% of the deposit, we then shared the mortgage,bills and so on and lived in the house for ten years.When we split she stayed and bought me out paying me 65% of the equity. I think you will find this is the correct way to go.
I put down 65% and she 35% of the deposit, we then shared the mortgage,bills and so on and lived in the house for ten years.When we split she stayed and bought me out paying me 65% of the equity. I think you will find this is the correct way to go.
Our declaration of trust (100% me 0% my GF) was that in the event of sale the mortgage was repaid, I was paid back my deposit and any funds over and above that were split 50:50.
e.g.
200k house, with 100k deposit and 100k mortgage
House sells for 220k, mortgage company gets it's 100k back (or whatever the settlement amount is) I get 110k and my GF gets 10k.
We're married now so all bets are off, if we split I get to live over a kebab shop
e.g.
200k house, with 100k deposit and 100k mortgage
House sells for 220k, mortgage company gets it's 100k back (or whatever the settlement amount is) I get 110k and my GF gets 10k.
We're married now so all bets are off, if we split I get to live over a kebab shop
Old Merc said:
The way I did it,many years ago,my then partner worked for a solicitor by the way,drew up the contract.
I put down 65% and she 35% of the deposit, we then shared the mortgage,bills and so on and lived in the house for ten years.When we split she stayed and bought me out paying me 65% of the equity. I think you will find this is the correct way to go.
That sounds like you got a very good deal - you got 65% of the equity even though you each paid for the same proportion of the mortgage? Was the deposit very significant?I put down 65% and she 35% of the deposit, we then shared the mortgage,bills and so on and lived in the house for ten years.When we split she stayed and bought me out paying me 65% of the equity. I think you will find this is the correct way to go.
will_ said:
Old Merc said:
The way I did it,many years ago,my then partner worked for a solicitor by the way,drew up the contract.
I put down 65% and she 35% of the deposit, we then shared the mortgage,bills and so on and lived in the house for ten years.When we split she stayed and bought me out paying me 65% of the equity. I think you will find this is the correct way to go.
That sounds like you got a very good deal - you got 65% of the equity even though you each paid for the same proportion of the mortgage? Was the deposit very significant?I put down 65% and she 35% of the deposit, we then shared the mortgage,bills and so on and lived in the house for ten years.When we split she stayed and bought me out paying me 65% of the equity. I think you will find this is the correct way to go.
Thanks for the replies above. I was focusing on selling price but actually it actual equity/money remaining after mortgage would be repaid/estate agent taken their chunk etc. So would this be right following the examples above and using some round numbers:
If I put in 100k, she put in 5k
Sell house after X year and after all costs etc equity left is 150k. Then that's 100k to me, 5k to her, 45k extra split 50/50 would mean I walk with 122,500, she with 22500.
Sell house after X year and market has tanked off a cliff, equity left after costs etc is 90k then we would each suffer losses at 50/50 which would mean we are 15k in the hole taken at 7.5k each but she can't lose more than she originally put in so she leaves with nothing I leave with 90k in effect "losing" 10k. In reality whoever has the biggest deposit has the greatest potential to lose.
If I put in 100k, she put in 5k
Sell house after X year and after all costs etc equity left is 150k. Then that's 100k to me, 5k to her, 45k extra split 50/50 would mean I walk with 122,500, she with 22500.
Sell house after X year and market has tanked off a cliff, equity left after costs etc is 90k then we would each suffer losses at 50/50 which would mean we are 15k in the hole taken at 7.5k each but she can't lose more than she originally put in so she leaves with nothing I leave with 90k in effect "losing" 10k. In reality whoever has the biggest deposit has the greatest potential to lose.
It's a pointless exercise. Probably because at some point you'll get married. Probably because at some point you'll have children.
In the case of the latter, PH threads on being unhappy, usually alludes to the fact that she will win.
Personally when my GF (now wife) moved in with me (and I do have a bit more property than you - not being smug for one minute btw) I just thought sod it. It'll probably all be ok. I'm an optimist and maybe a fool perhaps.
I know (now we have two children) irrespective of her initial lack of wealth/capital/property/land, she'll probably have the lion's share if it came to it.
In the case of the latter, PH threads on being unhappy, usually alludes to the fact that she will win.
Personally when my GF (now wife) moved in with me (and I do have a bit more property than you - not being smug for one minute btw) I just thought sod it. It'll probably all be ok. I'm an optimist and maybe a fool perhaps.
I know (now we have two children) irrespective of her initial lack of wealth/capital/property/land, she'll probably have the lion's share if it came to it.
austinsmirk said:
It's a pointless exercise. Probably because at some point you'll get married. Probably because at some point you'll have children.
In the case of the latter, PH threads on being unhappy, usually alludes to the fact that she will win.
Personally when my GF (now wife) moved in with me (and I do have a bit more property than you - not being smug for one minute btw) I just thought sod it. It'll probably all be ok. I'm an optimist and maybe a fool perhaps.
I know (now we have two children) irrespective of her initial lack of wealth/capital/property/land, she'll probably have the lion's share if it came to it.
Curious. Hypothetical how would she end up with all the loot if you were unmarried but had kids?In the case of the latter, PH threads on being unhappy, usually alludes to the fact that she will win.
Personally when my GF (now wife) moved in with me (and I do have a bit more property than you - not being smug for one minute btw) I just thought sod it. It'll probably all be ok. I'm an optimist and maybe a fool perhaps.
I know (now we have two children) irrespective of her initial lack of wealth/capital/property/land, she'll probably have the lion's share if it came to it.
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