Page 17 - Phonebox Magazine October 2015

A gift, a loan or an interest in property?
Specialists at law firm Shakespeare Martineau explain here how you can best protect yourself and/or your family when it comes to purchasing a property.
If you are cohabiting or a third party is helping you to purchase a property or making ongoing payments you should consider making written arrangements dealing with each party's respective shares to avoid a costly dispute in the future. Increasingly couples are living together before they get married and families are also pooling their resources to help their children (whether married or unmarried) in purchasing their homes. Ideally legal advice should be taken at the outset of making payment(s) but seeking legal advice at any stage is strongly recommended.
Below are some questions our clients often ask us.
We are helping our daughter purchase a house with her husband. What steps should we take to protect our share if their relationship breaks down?
Any agreement with your daughter and her husband regarding your contribution to their purchase should be recorded in writing at the outset and the intention made clear. Is it a gift, loan or are you acquiring an interest in the property? Verbal agreements are very difficult to prove and if disputed could result in one party's word against the other as to the intention behind the payment. A Declaration of Trust can deal with each party's respective interest which our Wills and Probate team can assist you with. If this step is not taken the property could be the subject of Court proceedings, including
divorce and financial proceedings. The Court could consider the payment an unconditional gift to both your daughter and her husband. Our Family Law team frequently deal with these costly disputes.
My partner and I are buying a property together. I am contributing 100% of the deposit. Can I ensure that my share is protected if we separate?
As an unmarried couple you do not have the same rights as married couples. However, cohabiting parties can still acquire an interest in property owned in the sole name of the other party and that interest can be pursued through Court proceedings, for example under the Trusts of Land and Appointment of Trustees Act (TOLATA claims). This is a complex area of Family and Property Law. A Declaration of Trust drafted at the outset can deal with yours and your partner's respective shares in the property you are purchasing. In the event that you separated it would then be clear as to what the parties' respective interests were and how the property should be dealt with on separation. Additionally a Cohabitation Agreement can deal with the home, and matters such as nominations for death in service benefits, savings and children. Whilst a Cohabitation Agreement is not automatically binding, it does show good evidence of the parties' intentions.
What is a Declaration of Trust and how does it work?
A Declaration of Trust is a document that can confirm the ownership of a property and the proportions of the ownership. It can also record details of an owner of the property where that person is not the legally registered owner at Land Registry. Common scenarios where a Declaration of Trust can be used are the following:-
A couple are purchasing a property together but are contributing different amounts to the purchase price and want the sale proceeds to be divided to reflect this on any future sale. This can be in a situation where there has been a parental gift or where one person has more assets of their own to contribute.
A couple are both contributing to the purchase of a property that is being purchased in the sole name of one of them. One person may already own a property with an existing mortgage so can't be a party to another mortgage.
A parent is contributing towards a child's purchase of a property in their sole name and wants this contribution to be returned to them on a future sale. The parent may need these funds in the future but are helping their child to get on the property ladder.
Friends are purchasing a property together and want to record the proportions and a mechanism for agreeing a future sale.
Contact one of our team for any further help
Jane Charlton
Family Team jane.charlton@shma.co.uk 01908 304 412
Felicia D'Amelio
Family Team felicia.d'amelio@shma.co.uk 01908 304 423
Joanna McKenna
Family Team joanna.mckenna@shma.co.uk 01908 304 401
Samantha Wilson
Private Client Team samantha.wilson@shma.co.uk 01908 304 413
info@shma.co.uk www.shma.co.uk
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