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EMYR PIERCE The Property Doctor.

Q 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? A 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.

Q I am currently suffering serious financial problems. I want to transfer or sell my house to my son who has lived in it for the last 22 years. Could this prevent the property being repossessed? A By transferring the property to your son I presume you mean gifting it - as opposed to selling the property to your son in an arms length transaction at the full market value.

Any transfer to your son for no consideration (a gift) could be deemed to be a deliberate attempt on your part to defraud your creditors under the terms of the Insolvency Acts, and could be overturned by your trustee in bankruptcy should you subsequently be declared bankrupt.

If you are in arrears on your mortgage you will not be able to transfer, or gift the property to anyone without the consent of your lender and this consent will only be forthcoming upon repayment of the amount owed under the mortgage. In other words, whether you sell to your son, or any third party, will amount to the same thing whereby the lender will have first call on the proceeds of sale.

Q We have just bought a property abroad. Do we need to make a separate will in that country to ensure the property is inherited by our children? A In most European countries the answer would be yes. Your will would normally deal with the assets owned by you in the country in which the asset is situated. In other words your UK will only deals with your assets in England and Wales (Scotland has its own legal system).

EU members usually adopt similar rules but you would be well advised to enquire in the country in which your property is situated in order to establish what the laws of that country are in this context.

Emyr Pierce is managing partner of Emyr Pierce Solicitors in Cardiff, Western Mail Conveyancer of the Year, specialising in domestic and commercial property. See
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Title Annotation:Features
Publication:Western Mail (Cardiff, Wales)
Date:Feb 26, 2011
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