It is increasingly common now for families to pool resources in the purchase of property. This can be as a result of a struggling elderly parent, children remaining at home to save costs, a complex divorce settlement or Inheritance Tax planning. Our Residential Department has great experience of dealing with transactions like these, working very closely with the Private Client and Family Departments to establish the whole picture and ensure that all parties are fully protected.
The first point is to establish where any capital has come from and in what proportions the property is to be held. Please note where there is already a mortgage over the property which is not going to be paid off during the transaction, the consent of the lender will have to be obtained if there is to be a change of ownership in the legal title, and if not, notice will still need to be given for a change of beneficial interest (the equity in the home).
The rights of anyone occupying a home have to be preserved. Most commonly this will be an elderly parent who buys a property using funds provided by children. If the home remains in parent’s name then no problem but if instead the children own it then a Declaration of Trust should be considered to protect the parent.
The parties giving the capital also need to be protected and as solicitors have strict rules about not putting ourselves in any conflict please do not be offended if we suggest that some parties may wish to take independent legal advice. Protection offered for those putting capital into the home including having a Declaration of Trust signed by all parties or where additional security is required by the creation of a legal charge/mortgage (which may or may not provide for the payment of interest). A restriction will then be placed on the title to the property making reference to either the declaration or the charge and which gives notice of a security to any third parties (such as a local authority if there are any care fee issues).