Deed of Trust

[Kelly Jo]

My partner and I have just brought a house together and we are in the process of having a Deed of Trust drawn up between us. I put down the deposit of �128,000 and then we are both sharing the remaining mortgage of �92,000 between us. This gives me a share of 79% in the property and my partner has a share of 21%. If we were to split up and sell the property does this mean that we pay fees and remaining mortgage and then the remainder of profit is split 79/21? Or does it mean that I take my �128,000 deposit and we split the remaining profit 50/50?..... Im a bit confused?

[MustafaTickl]

Total price of property = �220.000. At this time, before b/f contributes anything, your �128,000 entitles you to 100% of net proceeds. �92,000 mortgage = say 40% to make it easy in round figures and = say 2% pa repayment over 20 years, again in round figures for easy illustration. Therefore if the proposed arrangement lasts the whole 20 year mortgage term, and if you hold the property as tenants in common and with the b/f paying half mortgage repayment, for the first year the percentage of shareholding would be 100% you b/f nil, at the end of the first year this would change to 99% you b/f 1%, and then for each following year 98/2, 97/3, 96/4 and so on until you reach 80/20. This is in round figures, and there may not be much point in mucking about with fractions of percents. To be totally effective you should Register the revised percentage holdings annually at the Land Registry. Your contract must also say what happens if the b/f defaults upon any payment(s) or abandons the arrangement

[Peter Edward]

On sale your 79%stake must be protected and the 128,000 must be adjusted in line with any change in the value of the property, hopefully upwards. Therefore, this amount should be deducted from the sale price and the balance should be shared equally between you after the fees etc. and o/s mortgage have been deducted.

After all, you are both to contribute equally to the mortgage payments and should have an equal share of the remaining equity.

Do others out there agree with me if so I would like to hear from you. Check very carefully how your solicitior draws up the Dec. of Trust. My daughter's used a standard form which deducts the mortgage first and then splits the remainder in accordance with percentages very simlar to your own This has the effect of giving her ex. double the amount he is entitled to .

Please post back if you want further info. on how not to do it!