Can you protect greater contribution to a house purchase?
Discussion
Following on from another thread on here. A family member might be looking into buying a property with their partner and will not be married to them. The FM will be able to put up over £30k to the property whilst the partner will be lucky to put up £5k. Hopefully the relationship will last and it won’t be necessary to invoke any sort of legal agreement should they split.
They can probably buy a property around £150k on a joint mortgage. How can the FM not only protect the original investment but also get a larger proportion of any equity that might accrue from the FM having put much more in at the start.
Is there any name for such agreement of any sort of standard formula to work things out. I believe the partner would agree to such an agreement as heis fully aware the FM is bringing more to the party.
They can probably buy a property around £150k on a joint mortgage. How can the FM not only protect the original investment but also get a larger proportion of any equity that might accrue from the FM having put much more in at the start.
Is there any name for such agreement of any sort of standard formula to work things out. I believe the partner would agree to such an agreement as heis fully aware the FM is bringing more to the party.
Get a declaration of trust drawn up by a solicitor.
Each will own a portion of the property relative to what they put in.
It can also set out mortgage and maintenance obligations, etc etc.
To quote Don Henley "When happily ever after fails, and we've been poisoned by these fairy tales, the lawyers dwell on small details ..." Never was a truer word said. This will make things much easier.
Better safe than sorry !
Each will own a portion of the property relative to what they put in.
It can also set out mortgage and maintenance obligations, etc etc.
To quote Don Henley "When happily ever after fails, and we've been poisoned by these fairy tales, the lawyers dwell on small details ..." Never was a truer word said. This will make things much easier.
Better safe than sorry !
Edited by Red 4 on Friday 17th August 17:12
We had one done I would recommend they read it very carefully as I had to have ours redrafted about 5 times to get the wording to make any sense, you need it to reflect both scenarios what would happen if house went up or down in value (really it’s all about how you split equity post sale as the market value could decrease but you have paid off more equity) where do solicitors and agents fees come from in the event of a sale, what happens if one party wants to sell, buy the other one out, who pays for maintaining propert etc. True love stuff right!
Agreed, could get very messy so having both parties agree and understand what they are signing up to would be sensible.
Would it be too much of an ask to PM a redacted copy of the agreement you drew up. Maybe I could tweak it to suit here?? Then get solicitor to check it over nearer the time.
TIA
Would it be too much of an ask to PM a redacted copy of the agreement you drew up. Maybe I could tweak it to suit here?? Then get solicitor to check it over nearer the time.
TIA
elanfan said:
Sounds good. Will the mortgage company have any issue with such an arrangement do you know?
They should be fine with it.Look at it this way, friends can buy together and protect what they put in. An unmarried couple are more like that situation (in law) than married hence the need to document properly.
It's not an unusual situation to be in and the mortgage broker and solicitor will easily deal with it.
I've just done one for the house I own with my mum. They are pretty simple and if I'd had the form of words I would have done it myself rather than waste money and time with a solicitor.
Happy to send a copy of it helps.
The key thing will be agreeing the % ownership and the division of funds on sale.
Bert
Happy to send a copy of it helps.
The key thing will be agreeing the % ownership and the division of funds on sale.
Bert
Thank you vindaloo.
Integros - I can see what you are saying and agree that as they’ll otherwise be the costs otherwise. It’s quite a difficult one isn’t it? The partner will benefit as they get to live in a nicer flat/house than they otherwise would is another thought.
Maybe the fairest way would be that the FM gets back £25k (this being the difference between what they each contribute) plus compound interest at say 5% a year before the rest is split 50/50. This would at least reflect the return the FM would have had should the money have been left invested?
Does this sound about right to you lot?
Hopefully a hypothetical situation as it would good if they stayed together.
Integros - I can see what you are saying and agree that as they’ll otherwise be the costs otherwise. It’s quite a difficult one isn’t it? The partner will benefit as they get to live in a nicer flat/house than they otherwise would is another thought.
Maybe the fairest way would be that the FM gets back £25k (this being the difference between what they each contribute) plus compound interest at say 5% a year before the rest is split 50/50. This would at least reflect the return the FM would have had should the money have been left invested?
Does this sound about right to you lot?
Hopefully a hypothetical situation as it would good if they stayed together.
elanfan said:
Thank you vindaloo.
Integros - I can see what you are saying and agree that as they’ll otherwise be the costs otherwise. It’s quite a difficult one isn’t it? The partner will benefit as they get to live in a nicer flat/house than they otherwise would is another thought.
Maybe the fairest way would be that the FM gets back £25k (this being the difference between what they each contribute) plus compound interest at say 5% a year before the rest is split 50/50. This would at least reflect the return the FM would have had should the money have been left invested?
Does this sound about right to you lot?
Hopefully a hypothetical situation as it would good if they stayed together.
I think fairest and easiest is she gets her deposit back at the end, but from then on in everything is split fifty fifty including any increased equity. Otherwise she will have to pay more than half of the mortgage, more than half of any repairs or improvements...Integros - I can see what you are saying and agree that as they’ll otherwise be the costs otherwise. It’s quite a difficult one isn’t it? The partner will benefit as they get to live in a nicer flat/house than they otherwise would is another thought.
Maybe the fairest way would be that the FM gets back £25k (this being the difference between what they each contribute) plus compound interest at say 5% a year before the rest is split 50/50. This would at least reflect the return the FM would have had should the money have been left invested?
Does this sound about right to you lot?
Hopefully a hypothetical situation as it would good if they stayed together.
So if she puts in 30 and him 5 and buy for 150 and sell for 170, at end she gets 97.5 he gets 72.5.
Your interest suggestion makes sense but I think it adds too much complication and potential for dispute for the sake of a few thousand quid.
Edited by Integroo on Sunday 19th August 10:04
I was wondering on peoples views on fairness. Essentially in our case the percentage deposit was 20% on purchase. So 5 years later I will be retrieving 20% of the sale price. Meaning my £35k deposit has grown to £45k (ish) depending on sale price..
Some feel that is disproportionately generous in my favour, but I would be more than happy to flip that round and for missus (then girlfriend) to have put down her life savings and claim that % increase and just split the difference 50:50. Mortgage payments were 50:50.
If you only receive your original deposit back that would be insane, the value would have been eroded due to inflation, and the opportunity cost of parking that money with no return makes no sense, to me at least.
Admittedly the trust deed doesn't cater very well for the negotiation of an awkward parting of ways. Solicitor at the time didn't want t include half the stuff we tried to put in around that. Too much like hard work for her i reckon....
Some feel that is disproportionately generous in my favour, but I would be more than happy to flip that round and for missus (then girlfriend) to have put down her life savings and claim that % increase and just split the difference 50:50. Mortgage payments were 50:50.
If you only receive your original deposit back that would be insane, the value would have been eroded due to inflation, and the opportunity cost of parking that money with no return makes no sense, to me at least.
Admittedly the trust deed doesn't cater very well for the negotiation of an awkward parting of ways. Solicitor at the time didn't want t include half the stuff we tried to put in around that. Too much like hard work for her i reckon....
vindaloo79 said:
I was wondering on peoples views on fairness. Essentially in our case the percentage deposit was 20% on purchase. So 5 years later I will be retrieving 20% of the sale price. Meaning my £35k deposit has grown to £45k (ish) depending on sale price..
Some feel that is disproportionately generous in my favour, but I would be more than happy to flip that round and for missus (then girlfriend) to have put down her life savings and claim that % increase and just split the difference 50:50. Mortgage payments were 50:50.
If you only receive your original deposit back that would be insane, the value would have been eroded due to inflation, and the opportunity cost of parking that money with no return makes no sense, to me at least.
Admittedly the trust deed doesn't cater very well for the negotiation of an awkward parting of ways. Solicitor at the time didn't want t include half the stuff we tried to put in around that. Too much like hard work for her i reckon....
I went through exactly this, was a percentage terms, 50/50 mortgage payment and almost exactly the same values as yours. I felt the gain was too high for me personally. so after 3 years I changed it to be deposits back. We split after living there for 6years. The difference in money to her was an extra £9k... (I was fairly lucky because we bought in 2010 when house prices didnt climb alot for a fair while) yes a fair whack but it did mean she could go and get her own flat etc... with her now deposit and meant no arguments or bad fall outs because she would of had to move home and it gave her something to focus and move on with. Everything was very amicable.Some feel that is disproportionately generous in my favour, but I would be more than happy to flip that round and for missus (then girlfriend) to have put down her life savings and claim that % increase and just split the difference 50:50. Mortgage payments were 50:50.
If you only receive your original deposit back that would be insane, the value would have been eroded due to inflation, and the opportunity cost of parking that money with no return makes no sense, to me at least.
Admittedly the trust deed doesn't cater very well for the negotiation of an awkward parting of ways. Solicitor at the time didn't want t include half the stuff we tried to put in around that. Too much like hard work for her i reckon....
Morally I see no problem though as keeping it as a percentage.
And OP I had exactly what youre after and similar to Vindaloo, but mine was called a 'Tenants in Common', for all intetns and purpose it appears to be the same thing!
Edited by killerferret666 on Sunday 19th August 16:51
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