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'Deed of trust'...can anyone advise

(4 Posts)
anyadviceoutthere Tue 19-Aug-08 13:50:55

just wondering if any lawyers/conveyancers might be able to give abit of advice.

My partner and I are in the process of re-mortgaging the property we live in, it is currently owned by him soley and is valued t about £240K. the remortgage is for £170k.

As I have no cash to put in we are drawing up a deed of trust, which is completely fair IMO and states he will take out the 'first' 70K should we split up as this is the equity he has accrued over the years.

The thing I ama bit worried about is if the house falls in price considerably in the next few years as it seems it might, ie maybe will only be worth £200K. If we have payed of say £40K together does that mean he will still be entitled to the full 70K?

I am not anticipating a split thankfully but if the worst were to happen I would want things to be fair and I am not sure where I would stand.

Any advice gratefully recieved!

dilbertina Tue 19-Aug-08 14:09:49

I used to have a deed of trust agreement with dh before we were married. My understanding is that yes he is entitled to 1st 70k from sale.

Looking at it another way...if you only have £70k equity at sale, neither of you get anything from the re-payments you've made since the re-mortgage. Why should your payments be worth something if his are not? Basically the equity he has already built up is being ring-fenced.

GooseyLoosey Tue 19-Aug-08 14:17:18

Is he going to continue to be the sole owner and then hold the proceeds of sale on trust for you both? Whether he is always entitled to £70k whatever the value will depend on the actual wording of the trust deed, but from what you say that is the case currently. An alternative form of wording might be to say something along the lines of he gets "one third [or whatever percentage his current equity is] of the sale price received for the property, up to a maximum of £70K" - this would allow for a lesser ammount to be paid if the property value falls.

I am not a conveyancer, but I think that you will also need to note your equitable interest in the property on the title, otherwise your dp could receive the full proceeds of sale and you would be left taking him to court for your share (I think).

anyadviceoutthere Tue 19-Aug-08 16:06:41

Hello

Thanks for the advice.

Dilbertina, I understand what you are saying but I think the 'risk' should be shared equally between us, ie if we are both diligently paying off the mortgage, but the house value falls and yet he still takes out the first 70K then I have effectively taken on a financial risk for no return whereas he has reduced his risk and protects his 'equity' by having both of us making payments.

I would like it to be taken into account that as the market is falling (there is no denying it, at least where we live) the 'equity' may be less than 70K at this pint, but as we have no way of pinning down a value any mortgage payments made from now should be split equally then any other 'equity' should go to dp. Unfortunately the conveyancer does not seem able to get his head around this concept!!

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