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Thomas
Thomas, Lawyer
Category: UK Property Law
Satisfied Customers: 6261
Experience:  BA (Hons), PgDip, Practising Solicitor
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Hello there, I am hoping you can advise us about our potential

Resolved Question:

Hello there, I am hoping you can advise us about our potential house purchase. We are in the process of buying a house between us (my partner, my mum and I), but because of her age, and the fact that we need a mortgage, my mum can't be seen to own any part of the house and needs to gift me her 80% of the purchase price. Back in September when the process started, we were told by our broker that this wouldn't be a problem as long as my mum agreed, which she did. The original lender is now saying she can't actually live there and have withdrawn their offer. We have a new offer but my mum needs to write a letter saying she has no interest in the property, the gift is not refundable and there is no other charge on the property. Needless to say she is not happy to do this. We have been advised that after completion we can put into place a declaration of trust to protect her. We have 2 houses that could be sold to clear the mortgage and so then there wouldn't be an issue, but we can't guarantee when these will sell if at all! Please can you let me know if this declaration of trust is possible or whether you know of another way to protect her and put her mind at rest. Thank you in anticipation, Kate
Submitted: 1 year ago.
Category: UK Property Law
Expert:  Thomas replied 1 year ago.
Hi,

Is your mother actually going to live at the property with you?

Tom
Customer: replied 1 year ago.


Hello Tom,


Yes she is, this is the whole idea so that I can look after her if and when she needs it, she is 83 at the moment.

Expert:  Thomas replied 1 year ago.
Hi

Thanks for your patience.

The simple answer is that whatever you propose to do your solicitor has to refer to the mortgage offer and, if there is any doubt, then write to them specifically to confirm what you plan to do and ask for their consent.

If she is to live at the property with you then the lender will require that she executes their standard form deed of postponement/letter of consent. It basically says that she acknowledges that any interest in the property that she has ranks behind the first legal charge of the lender. The solicitor will prepare this for her and she will have to sign in in front of another independent solicitors to advise her on it (cost about £70+ vat) and then execute it. Standard stuff,

If it’s the case that she is contributing money to the purchase and it is not in her interests for this transfer of monies being a “pure gift” (ie. Where she receives nothing in return) then executing a declaration of trust is an option to you all. However, once agreed the lender would have to be advised that this is proposed and request their consent.

The declaration of trust would state that althoiugh only you and your husband are the registered owners of the property the property is subject, first, to the lender’s charge and thereafter to a division of the equity in the property in percentage shares between you, your husband and mother.

If you are to do this then you need to agree the percentages with your mother and then inform your solciiotr and ask them the check the mortgage offer and write to the lender. They can take some time to reply so you should get on this right away,.


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Kind regards,


Tom
Thomas, Lawyer
Category: UK Property Law
Satisfied Customers: 6261
Experience: BA (Hons), PgDip, Practising Solicitor
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