Emyr Pierce

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Protecting cash interest in home buy

My wife and I have made an offer on a house which we want to buy equally. My wife will take out a mortgage while I will pay for half the value in cash. My solicitor has said I cannot be mentioned on the Deeds because of my credit history and I don’t work. How can I protect my cash interest in the property?

This raises a couple of awkward issues. The property must be registered in the name of the person in whose name the mortgage is taken out. If the Lender will not consider you as a joint Borrower then the property must be vested in your wife’s sole name. Usually these situations can be protected by recording the extent of your contribution towards the purchase price in a Declaration of Trust entered into between yourself and your wife.

However, in principle, this Declaration of Trust would prejudice the interest of the Lender as it would be an acknowledgement on your wife’s part that she did not actually provide all the funds, over and above the mortgage advance, towards the purchase price. It will also represent an acknowledgment on her part that you have an interest in the property in view of your financial investment.

A second problem is that the easiest way of securing your investment in the property by taking a second charge over the property will more than likely be prevented by the Restriction contained in your wife’s mortgage preventing the registration of subsequent mortgages without the consent of the first mortgagee. While the first mortgagee will have priority over any interest secured by the second charge, mortgagees are increasingly reluctant to consent to any subsequent charges being registered against properties.

Ultimately, therefore, a Declaration of Trust, or Second Charge, while advisable, may not be possible. However, an equitable charge or, at the very least, some documentary evidence acknowledging your contribution towards the initial purchase price, would be advisable to ensure that at least documentary evidence of your financial input does exist.

Tenancy in Common could pay dividends

My father and I bought our terraced house together. I had always paid the mortgage on the property which has now been fully repaid and the property will pass to me on my father’s death. However the property remains in our joint names and my father is now 87 and in poor health. Where do I stand if he has to go into a Nursing Home with all the expenses that could bring?

Should your father have to go into a Nursing Home he will be assessed as to his assets in order to establish the contribution that he will be expected to make towards his accommodation. Unfortunately the starting point will be that the property is in your joint names in which case he will be regarded as owning one-half of the property.

One way of addressing this would be to sever the Joint Tenancy and create a Tenancy in Common with you and your father entering into a Declaration of Trust whereby it is acknowledged by you both that due to the substantially greater contribution made by you towards the property, such as repaying the mortgage in full, you owned the property in unequal shares.

This would at least ensure that you secure a greater proportion of the value of the property than would otherwise be regarded as belonging to your father. It is essential that you retain all details and records of the payments that you have made in support of any such Declaration that you own a greater share than your father in the property.