Property split

[tony84]

Hi,

Ive just read a thread on another forum about being able to split a property into percentages.

Basically i put down a larger deposit than another person on a property and also pay a higher percentage of the mortgage. although there is no issue with who will get what at the end - there is an issue with other debts that person has.

I didnt think a property could be split like that and thought it was only 50/50. The property is a residential property and both names are on the mortgage. Now ive read that, im wondering if it is worth getting something drawn up to protect atleast my share.

Thanks,
Tony

 

[ANOTHER REBEL]

Property can he held as Joint Tenants, in which case on death the share of one automaticaly passes to the other. This what properties purchased by a husband and wife are held as.

If buying properties with unconnected parties it is normally purchased as "Tenants in Common in undivided shares". Each party owns a share of the property.

I do not believe there is a limit on the number of parties that can own a share. In the past this has been used as a mechanism to delay projects such as motorways that were unpopular locally. A field would be purchased between say a 100 people, and the authorities then had to obtain a compulsory purchase order against each individual.

Shares do not have to be equal, they would normally be in the percentage that each individual contributed to the purchase price.

It is possible to covert a "Joint Tenancy" to "Tenants in Common in equal shares, where each party owns the same percentage with a "Notice of Severance of Joint Tenancy"

I would suggest that you start by asking the solicitor who dealt with the purchase exactly what the present position is.

 

[tony84]

So does that mean we can get it put officially that i own say 70% providing i can prove it?

Im just thinking should these other debts go wrong i dont want someone being able to get their hands on 50% of the property and therefore getting part of my equity.

 

[ANOTHER REBEL]

Start by checking with the Solicitor who acted, to see what the existing position is. I assume you would have purchased the property as tenants in common. It may be that if you supplied 70% of the deposit, and were also paying 70% of the mortgage and this had been made aware to your Solicitor; that your share is already noted in the Land Registry Certificate as 70%.
If it is not then as there is a mortgage, the lender will have to be involved and consent to the change.
All this will push up the legal costs.
You could always suggest to your Solicitor, that you as a layman were relying on him to look after your interest, that he had a duty of care to you as a client, and that he should sort it at no cost to you.
The new Legal Ombudsman came into operation earlier this week, and it is doubtful if he would want his firm to be one of the first to be investigated.

 

[tony84]

The solicitor was never told of the split, so i wouldnt lie but thanks i will look into it.

 

[ANOTHER REBEL]

To make things simple, let us assume that the property cost a £100k
If you gave him a cheque for £7K towards the deposit, and the other party gave him a cheque for £3K then I would suggest that this in itself shoulld have been enough to make him ask further questions, and find out the exact nature of your financial relationship in this transaction.

The reason one uses a Solicitor, is because they are supposed to have more knowledge than you.

They have a duty of care to you as a client, to consider and advise you on the technicalities that you would have no knowledge of.

The fact that you never told him, does not of neccessity absolve him of liability.

The question is, whether he should have considered the question, and made further enquiries from you.

I would argue if you personally paid 70% of the deposit to him and the other party 30% again to him, then this initself would have been sufficient notice, that the shares were not equal.

 

[KM-Tiger]

The solicitor was never told of the split, so i wouldnt lie but thanks i will look into it.

Doesn't matter, it would be absolutely standard form to explain the difference and implications of Joint Tenants vs Tenants in Common, and then draw up documents according to your informed instructions.

I don't doubt that any ombudsman would take a very dim view of a solicitor who failed to do that.

You say both names are on the mortgage. Are both names registered as owners at the Land Registry?

 

[tony84]

I would imagine so yes. It was bought as any house would be with 2 people.

 

[ANOTHER REBEL]

Don't imagine.

Check the facts with the Solicitor who acted.

 

[Angela Macready]

A Deed of Trust may do the trick. In this document you can set out how you wish the proceeds of any sale to split out. Your Solicitor should be able to draw this up for you.

Usually the advice about how you want to hold the property (tenants in common or joint tenants) is given in a letter because there is no longer a lot of face to face contact with conveyancing clients. This may not have been the case in your situation though so you may still want to pursue what others have suggested.

Good luck

 

[ANOTHER REBEL]

A Deed of Trust may do the trick. In this document you can set out how you wish the proceeds of any sale to split out. Your Solicitor should be able to draw this up for you.

Would this need to be recorded at the Land Registry, so that it shows up in a Title Search?

 

[Angela Macready]

Yes I think you would want to enter a restriction on the title. I did check to see whether you can simply amend the transfer but I don't think you can for something like this.

Speak to your Solicitor and they'll be able to advise you because then they can have a good look at the guidance and see which is the best option for you.

 

[tony84]

It doesnt bother me what shows up on the land registry just so long as it means nobody can get their mits on my share that isnt entitled to it.

 

[ANOTHER REBEL]

It doesnt bother me what shows up on the land registry just so long as it means nobody can get their mits on my share that isnt entitled to it.

I didn't think you would be bothered.

The importance of having it onn the land registry, is so that it shows up that you have a greater % of the property, and is for your own protection.

 

[Angela Macready]

The details of the agreement won't be on the register but having an entry will do highlight two things:

If you die, it shows that your share of the property isn't immediately transferred to the other owner (i.e. you can leave it to someone else in your will if you want to and if you die without a will, it will go to your next of kin); and

If you sell, it highlights the fact that the proceeds of sale don't necessary go into the joint account.

In my experience when selling for joint owners I end up speaking to one of the owners far more than the other. If someone were to have a reason to withhold the information, it may be that they don't tell me about any agreement and therefore I pay the money into the joint account when it should really be into separate accounts.

Good luck with getting it sorted. Better to do it now rather than wait because if things do go badly, it's unlikely the party with the lesser share will be as happy to consent to the restriction.