Help..partner paying full deposit. How can I legally protect myself

[Eiremogra]

Apologies for this really long post!!! Really hoping for some advice!Buying a property with my partner who is putting in full deposit amount..what legal steps should we put in place to protect both our interests?

My partner and I are planning on getting a mortgage together. He is putting in the full amount of the deposit. I earn a little more than him and together we have been AIP a decent mortgage. My question is what legal steps should we take to protect us both. I know a joint tenancy is best - allowing the property to be left to the other party in the event of a death but I’ve also been reading about a ‘deed of trust’ which would ensure other agreements should we break up. He has said that he would expect to get his full deposit repaid by me should we break up...but..he would not be able to get a mortgage anywhere near our AIP on his own (without my salary) plus if we are together for many years within that time I have paid towards furniture/repairs/daily living costs..surely this should be considered as a major contribution? A friend has advised that the deed of trust should indicate a time limit, i.e if we split within 5 years he gets his full deposit back but after that period of time I do not have to repay him. Even if we do split within the capped time frame surely the amount to be paid back to him by me would be half of his deposit contribution? Really hoping for some solid advice to protect me financially... I have been badly ‘stung’ in the past by an ex partner who left me in a lot of financial debt so need to ensure all measures are taken this time around!!

I'd advise anyone- male or female, to ring fence the deposit so that they receive it back. Any profit then gets split 50/50. If he didn't have the deposit- you wouldn't have the mortgage either so to say that the mortgage is reliant on you- you're reliant on his deposit when you don't have one. I'd be bloody wary if my partner expected to get the deposit split too in the event of separation, again- regardless of sex.

N. Some of the advice in this thread is factually wrong, (“ in the event of a split, legally you would be entitled to half, just because you're on the mortgage, regardless of putting less or even no money into it” .( No, not if the Deed says otherwise).

Are you planning to pay the mortgage 50/50? If so, it seems fair that he protects his deposit and then the rest is split 50:50 . You can buy because the joint force of his deposit and your salary. You keep the proceeds of your salary as savings, pension or new handbags, he keeps the proceeds of his deposit!

If you will pay different amounts towards the mortgage it would seem fair to say :
He gets his deposit
The rest is owned % wise according to level of mortgage payment.

But.

I paid a much higher deposit. 4 times as much. My deposit wa protected in cash terms but the value of the house had doubled. My ex benefitted from the increase in value of my deposit and walked away with £100k worth of value of my increased deposit. If I ever did this in future I would get it represented as owning % shares of the property:
X % paid for by deposit
Y % paid for by mortgage owned respectively 69% / 40% or whatever mortgage contributions you are paying. (In our case the mortgage was 50/50. But my deposit was bigger than our mortgage).

Take legal advice.

My concern is that he wants it stipulated in the agreement that I will repay his half of the deposit if we split. I know we have to protect both our interests but AIBU to think this is very unfair?

Why do you think that’s unfair?

PPs have pointed out how it can work legally. But it’s not unfair he should get back the initial deposit. I don’t know why you’d consider it unfair?

When my fiance and I bought our house, his parents gave him 25k for the deposit. My family helped me with 5k and I also saved a bit more. We had a deed of trust/declaration of trust drawn up by a solicitor with input from my friend who is a financial advisor - it protects both our deposits but of course, mainly his - which is very understandable and what both of us wanted! We are joint tenants and pay mortgage & bills together.

You wouldn't 'repay half of the deposit' - if you sold the house, first of all he would get that money back. Then the rest of the equity would be split jointly. You wouldn't have to pay him anything.

He should get his deposit back if you split. As PP have said if you split you will either have to sell the house or one of you buys the other out.

If you sell he gets the deposit back and then you split whatever equity is left. If one you buys the other out then the deposit is factored into the purchase price.

Do you mean that you will be paying kore of the mortgage, e.g if the mortgage is £1000 a month you pay £700 and he pays £300? If so then you need to have this written into the declaration that this will be the equity split. If you mean that your salary has allowed you to get a bigger mortgage but you will be paying half each every month then you split it 50/50 after he's taken his deposit back - you aren't actually contributing anything extra.

@ErickBroch

You wouldn't 'repay half of the deposit' - if you sold the house, first of all he would get that money back. Then the rest of the equity would be split jointly. You wouldn't have to pay him anything.

^ that's what I thought. Why would you get any of the equity of the deposit?

but..he would not be able to get a mortgage anywhere near our AIP on his own

And you wouldn't be having a house at all without his deposit 🤷‍♀️

I'm assuming he meant you'd repay him if you split and you stayed in the house. Either way just ring-fence his deposit. Anything you spend on the house afterward doesn't change the fact that he paid a lump sum up front and you haven't.

Also you wouldn't be getting the mortgage without his deposit so the my income means he can get the mortgage he wants is irrelevant.

Ah x post @PolPotNoodle beat me too it.

My other half put down the full deposit, we have in the deeds that if we sell the first (£Xk + 2% gross interest) will be paid out to him out of any equity. We would have still got the house without such a large deposit but it would have made the monthly payments crippling. This way he has invested his money into our home (with a minimal return) and we can both comfortably afford half the cost.

I have no rights to half that deposit and wouldn't expect to, i have rights to half the remaining balance of the house which is what ive been paying for. I decided from the start that we live to my means as the lower earner (i want to earn my bit) and if he wants luxuries then he pays for them. I do benefit from holidays almost paid 100% by him, but the likes of cars i pay my way and its clear due to the spec difference in our cars.

I think you’re being very grabby here, why would you be entitled to any of his deposit money in the event of a split?

If you broke up then his deposit should be paid to him first and then the remaining equity split according to what’s on the deeds.

He wouldn’t be able to afford the property without your salary, but you wouldn’t be able to afford it without his deposit. You don’t need to “protect your interests” unless your interests are getting your hands on someone else’s money. He’s the one taking the financial risk, not you.

I think if you are going into a house purchase with a partner and will be debating over how much each person is paying into the mortgage it's not off to a great start. My fiance earns significantly more than me so we pay our mortgage and bills proportionately - he doesn't expect me to pay what he does as he is the highest earner. I think that's a very fair way to split it! Also, if you want children in the future together, you may find he is the predominant mortgage-payer for a while, therefore things will fluctuate throughout time.

I think a deed of trust is a good way to go. Protect the deposit, if you split and you sell the house he gets it back and you split equity jointly. You aren't paying him anything or losing out in any way. Good luck OP

"He has said that he would expect to get his full deposit repaid by me should we break up"

What :s

So say house was £250,000: Deposit £50,000, Mortgage £200,000.

If you break up after a year, he wants £50,000 from you??

Very confusing request (or interpretation of request).

If you break up, he'll probably have to sell the house as he won't be able to continue paying the mortgage.

He should then get £50,000 back from the sale of the house. If you have paid back £10,000 in the time you were together and the house has increased in value by £5,000, you should then get £7,500 each, surely?

He wouldn't be paying you anything, and you wouldn't be paying him anything?

I have a deed of trust with my OH for exactly the same reason, he wanted to protect his deposit and I mine. Our deed is set up that we both get back our deposit, he gets the stamp duty payment back if there is enough equity and whatever is left is split 50/50. that remains in place even when we marry but ceases when there is a child, at which point it reverts to 50/50 tenants in common.

As PP have said it needs to be either time bound or event bound. Trust law is extremely complicated (not teaching anyone to suck eggs!) and even these deeds of trust can be challenged in court should they need to be and have been successfully based on the input to the family home over the years if you separate. The only crucial thing in this scenario is that you're on the deeds - which is sounds as if you will be?

@Eiremogra
Why don't you put in half the deposit ?

@EveryThingWillBeWorthIt - that sounds like a good idea for OP.

Fair or not, I dont think I would enter into a contract whereby if I split with my oartner, I would owe him a shit ton of money. I mean that's just insanity right there.

OP, are you saying if you split up then you should keep half of his deposit?

@Wanderlusto

Fair or not, I dont think I would enter into a contract whereby if I split with my oartner, I would owe him a shit ton of money. I mean that's just insanity right there.

You wouldn’t owe him a ton of money, you would return his money. If you had the large deposit would you happily give it to an ex partner?

What @ramblingsonthego said.

See a solicitor who specialises in this area!!

Wanderlusto, 'Fair or not, I dont think I would enter into a contract whereby if I split with my oartner, I would owe him a shit ton of money. I mean that's just insanity right there.'
It should never be written as OP would owe her DP money. The ring fencing of the deposit gives the partner that pays the deposit first claim on any equity to a specific amount or % from sale of property or transfer of property to another party. OP would not owe her DP this. If the property went into negative equity they'd just be splitting debt as it were, if the equity was less than the ring fenced amount her DP would get 100% of the equity but not 100% of his deposit back. If it was more he'd get his deposit back and they'd split the rest in agreed shares. It is a claim on the equity of the property not a claim against the other party. I'm not sure if the way OP has written it was an accident or may be OP has misinterpretated which would be an obvious reason to be concerned thinking your DP was expecting to claim from you.

OP it should be written as a claim against the equity in the property. This is very different from you owing him the money. The later is not something anyone should ask for or be happy to give in this situation. The former is very understandable. You need to see a solicitor who specialises in this area and discuss the situation and your options with them.

Thank you all for your responses, sorry for delay getting back. I’ve been working all day

@ProseccoThyme what are the details of a section 28 cohabitation?

@BooFuckingHoo2 I disagree, I am not being ‘grabby’ - like most stories, there’s a lot more to this one!

Has anyone had any experience of completing a cohabitation agreement in Scotland? As I said, I am finding this all so stressful! We are currently TTC and having regular trips to the fertility clinic combined with this is overwhelming :( I am absolutely not trying to take what is rightfully his,that’s not what this is about. I appreciate the fact that he is paying 100% of the deposit but I also know that my contribution, although not financial, will make our new house a home. I want to put something in place that protects us both. Going through all this fertility hell plus working as a key worker throughout the shit storm of Covid has maybe left me feeling overly sensitive...I just didn’t need to be hit with “and I’ll expect you to pay back my deposit if we split” conversation. Maybe DP could have phrased it differently?!! My thoughts are to draw up an agreement, ring fencing his deposit with a time cap - and if we manage to get pregnant? What then?

OP if you are actively TTC, planning to take a career break or go part time, then it will be much simpler to just get married. Once you have children it makes no sense for one person to protect the assets they bring to the relationship.