Joint ownership and mortgages

[bijuhameed]

can a house be owned jointly by a married couple while the mortgage is only in either the husband's or wife's name

[Didwot]

A lender is going to require the mortgage to be a charge over the legal title of the property, and if the legal title is in joint names then the morgage will have to be in joint names. The legal title is the ownership of the property as it is shown at the Land Registry. The legal title is distinct from the beneficilal ownership of the property, and it is possible for one (or more) person(s) to hold the legal title as "Trustees" but for an others (or themselves and others) to be the beneficial owners, and to be entitled to the proceeds of sale if the property is sold. This is accomplished by a Deed of Trust, and one spouse could own the legal title and to mortgage the property, and for there to be a deed of trust showing that both spouses were beneficial owners of the property.

[Sludge]

Weird answer.
(1) The name(s) registered at the Land  Registry as proprietor(s) must appear on the mortgage. Only the proprietor(s) (all of them acting together if there is more than one, but not one of them alone) can mortgage a property.
(2) There are situations where persons are called beneficial owners, but this requires a somewhat lengthy explanation and since you do not ask I will not attempt it here. Sufficient to say that it most certainly is not brought about by  a "deed of trust".
(3) A deed of trust involves a third party called a trustee, usually a solicitor or an insurance company, who acts on behalf of a lender. When you sign a deed of trust, you give the trustee title (ownership) of the property and the trustees name is registered at the Land Registry as proprietor, but you hold the rights and privledges to use and live in or on the property. The trustee holds the title (ownership) until you repay the loan, whereupon you are registered at the Land Registry as proprietor. Unlike a mortgage, a deed of trust amongst other things gives the trustee the right to foreclose on your property without taking you to court first. This is used mainly where a private loan is made but the lender does not want the bother of directly administering the terms and conditions of the loan. 
                  
   
 
 
  
 

[Hgrove]

Didwot's answer is correct but not easy to follow for the layperson.  There are a number of ways in which a trust could arise; for ex. no more than three people can legally own a property so if someone died and his/her four or more children inherited, they would become beneficial owners.

[Hgrove]

I think (and I hope Didwot corrects me if I am wrong) Land Registry records do not show beneficial interests (where there is one legal owner) therefore it is a good idea to draw up a Deed of Trust.  I suppose a charge would then need to be registered to warn perspective buyers/lenders searching the register that third parties may have an interest in the property.

[Didwot]

Thanks Hgrove. What I was trying to let bijuhameed know was that although the simple answer to his question was "no" there was a method whereby they could achieve the same result, without going into all the techincal details. It is sometimes difficult to strike the balance between an overly technical answer, and one that is too simplistic. If bijuhameed is about to buy a property they will be able to tell their lawyer what is required and let them get on with it.
You are correct that HMLR is only interested in the Legal title and not the beneficial title.
A beneficiary under a trust should register a restriciton at HMLR under the Land Registration Act 2002 s40 using Land Registration Rules 2003, Schedule 4 Form A and/or B. The Trust of Land and Appointment of New Trustees Act 1996 contains certain protrection for the beneficilary/beneficiaries.
Sorry to bore, but you seemed interested.
PS HMLR will register 4 people as owners.

[bijuhameed]

Thanks very much guys for the response. Very helpful indeed. Now, I have the mortgage offer in my name and the life insurance is also in place. I was told that in the event of my death, the insurance will pay off the mortgage and according to English common law the property would come into my wife's possession. In this situation, is there any added advantage of making my wife the beneficial owner now. Rightly, my only concern is the security of my dependants

[Didwot]

If you die there is now coomon law rule that will ensure the holuse passes automatically to your wife. If you have made a will that will govern what happens to your assets, but if you die without a will the intestacy rules apply. If you are survived by a wife and have no children then she will inherit everything, but if there are children matters become complicated. The simple solution is to make a will. However having your wife as a beneficial co owner has its advantages (if you go bankrupt for example) and disadvantages (if she goes bankrupt for example), and you will need to think it through carefully.

[Didwot]

sorry - should read "no common law rule"

[Sludge]

Didwot is very seriously misleading you, bijuhameed, with this "deed of trust" and "beneficial owner" nonsense. To ensure that your wife inherits the property without difficulty you should own the property in what is called a Joint Tenancy with your wife. A Joint Tenancy is registered at the Land Reistry and ensures that the survivor automatically inherits without wills, probate and Inheritance Tax. If you take any other route your wife will have to apply for probate with all its costs, bother and delays and if your estate totals more than �263000 including the property (or your share of it) will have to pay the Inheritance Tax (can be a large sum) before probate is granted. You relly must talk to your solicitor about Joint Tenancy and totally ignore this Didwot nonsense.

[Hgrove]

May I clarify that being "beneficial co-owner" is lawyer speak for being joint tenants.  Technically where one joint tenant dies, the survivor is not actually inheriting anying - they own it already - that's why there is no inheritance tax. At the end of the day it has to be your choice, after taking advice, whether you wish to be joint tenants with your wife (meaning both of you are both legal and beneficial owerns) or whether you'd rather be the sole legal owner, executing a deed of trust with your wife as beneficiary (that way you are legal owner, and both of you are beneficial owners).  If (say) your wife runs a high risk business, the latter option might be advantageous.  If all you're concerned about is her security, the former option may be advantageous.  But there are lots of legal and tax implications which I don't know in detail.  As Didwot said, if you are buying with a mortgage with yourself as the sole legal owner, the lender will have something to say if you then want to change to both of you being legal owners.  If you are concerned about minimising tax liability on your estate, remember that by having the two of you as joint tenants, you are putting off the problem by one generation; this means your wife will not have to pay IHT, but your children will be hit harder when the time comes...  You may want to box clever in your old age: spend enough of your estate to cause it to drop below the IHT threshold, then the taxman does not get a look in...

[Sludge]

There is no such thing as a "deed of trust with your wife as beneficiary (and the rest of the rubbish in brackets by Hgrove)". It is all invented nonsense - it does not exist. 

[Hgrove]

Bijuhameed, it is very important that you take advice from a solicitor on this matter.

[bijuhameed]

Sorry folks, I didn't have the faintest idea that it is this complicated. I did ask my solicitor who, to be honest, wasnt very helpful. She was very dismissive and according to her , since the mortgage is only in my name, the question of Joint Tenancy doesnt arise at all.

I am however concerned and still trying to find out the best way to ensure the security of my wife and children, given that the mortgage is in place and  is only in my name.

[Hgrove]

Bijuhameed, I suggest you shop around for a solicitor who shows a flicker of interest and understanding!  There are some solicitors (like some doctors, builders, and a host of other professions) who don't like to say they are not conversant with that part of the law, and will fob you off rather than confess they haven't a clue!  The kind of solicitor you need is one who practises equity and trusts as well as land law.  One who does wills probably has the expertise you need. Alternatively, try a law centre (ask your local CAB to tell you where the nearest one is).  If you think about it, what she told you is obvious:  since you are the sole owner, the question of joint tenancy doesn't arise.  (In fact, it's a circular statement.  It says nothing new about your situation).  The question she did not answer however, is: Should it arise?  Should you change the nature of your tenancy?  (Tenancy is lawyer speak for ownership, it does not mean you are renting!).

[Sludge]

It is not all that complicated, bijuhameed, but you do seem to be getting some very peculiar answers both here and from your solicitor. The simple fact is that if they consent to your wife's name being on the mortgage then your mortgage lender will insist upon doing all of the legals in your property being owned as a joint tenancy with your wife (both your work and theirs and including the Land Registry and Revenue Forms). This is to ensure that no unfair advantage is taken of them. They will do this under the heading of "Transfer of Equity". It is a routine job for which a charge of about �250 seems usual. Simply write to your lender under a heading of "Transfer of Equity" setting out your proposal, and, if they agree, they will set it all up for you. That is all there is to it. So that you do not get an unexpected bill, enquire of them also whether or not your circumstances will give rise to a charge to Stamp Duty.