Declaration Of Trust Against A TR1 And Form JO

I purchased a property in 2014 with my now ex partner. At the time of purchase a declaration of trust letter was raised by our solicitors and witnessed independently and signed by my ex partner and I as his mother had provided a £40,000 deposit as we were unable to obtain a mortgage otherwise. A TR1 was sent to us and in box 9 the transferor transfers with: an X was placed in limited title guarantee box. In box 10, declaration of trust it stated with an X in the box "they are to hold the property on trust". Our solicitor then presented a form JO and this was completed asking us to declare how we wish to hold the property. My ex partner and I put a cross in the box of "the joint owners declare that they hold the property for themselves alone as tenants in common in following unequal shares: (complete) my ex partner completed it and wrote he owned 62.5% as he had provided the capital contribution of £40,000 (his mothers help) and I owned 37.5% as I had provided no capital contribution. The property was £160,000 and we took out a mortgage of £120,000 so £60,000 each. As you can see from the term ex partner we have now separated and are trying to deal with the situation amicably as we are not in a financial position to be paying solicitors costs nor do we wish to pursue litigation. My partner is now arguing that I do not have any entitlement to his mothers contribution of £40,000 and the letter of trust raised was to ensure she gets this back should we split up. The property has increased in value to £185,000 to enable us to sell it. I have paid towards the mortgage and bills for the last 2.5 years nearly £14,000 as so has he. As the outstanding mortgage now is only £115,000 final redemption, I am trying to say that the difference between £185,000 - £115,000 = £70,000 and I am entitled to 37.5% of this which is £26,250 and he is entitled to 62.5% which is £43,750. He is arguing the capital contribution his mother gave is returnable and when this has been returned to her the shares are to be split 50/50. I do not agree with this and feel I have a right of a share of the capital contribution as I don't understand how the form JO can show unequal shares as above because of the capital contribution but not include his mothers deposit when we separate being the above amounts. I have also checked with the old solicitors and they are advising me that the signed registered title of deed did not have the percentages on it. Therefore I am really confused as I am now looking that after selling the property paying estate and other fees and that we may not get the actual asking price for the property I stand to get less than I have paid in and feel disgruntled by this as I feel I have the right to a share of the capital contribution as how do I know he will actually give it back to his mother and not keep it for himself walking away with a bit fat deposit for another property which I wont be able to afford?

6 Answers

on the face of it, you are correct: your ex's mother's contribution effectively forms part of his 62.5%. there is no 50/50 split on the basis of the information you give here. I would also say any costs of sale etc should be split in the same ratio - if that is missing from the declaration of trust you should pursue the solicitor. there should also be a restriction on the title of the property to protect you both from a sale without complying with the declaration of trust.

Thank you for your help. Can I please just beg a little more advice. I have been in contact with the old solicitors who acted on our behalf and have been waiting on information as my ex and I didn't actually keep any copies of the forms we signed. They have sent me a copy of the signed declaration of trust, the TR1 and the JO and advised me that the beneficial interests are that the property will be held in trust to ourselves and the net proceeds after deduction of any selling expenses, solicitors, estate agents and indebtedness to the lender shall be paid as my ex to receive an amount equal to the capital contribution £40,000 (should there be a sufficient amount available). It then states after the above any balance is to be shared 50/50. However if by selling the property the net proceeds are less that the capital contribution of £40,000 then I am not under no liability to him and he takes on the outstanding debt.

They also advised me that the JO form which was signed by both of us and witnessed showing the difference in percentages were never submitted onto the TR1 form (transfer title of deed) as the letter of declaration of trust was raised instead for safety measures regarding the capital contribution being repayable and it is this that sits along side the TR1 registered with the land registry as held in trust.

Does this now mean that as it was the letter of declaration of trust submitted to the land registry against the TR1 that the JO is overridden? The TR1 does say property held in trust but there is a small box to the side saying declaration of trust or JO?. The old solicitors office also tried to inform me that the JO form which was originally raised still would of meant that I would of only owned 37.5% of the property after the capital contribution was repaid and would of in fact not been in my favour. They advised the JO would of meant after all expenses and the indebtedness paid the declaration of trust would then be in place and my ex would receive an amount equal to the capital contribution back as in the letter of declaration of trust and he would still then receive 62.5% of the net proceeds and I would of in fact only received 37.5% of the net proceeds.

I am confused now because if it is so that the capital contribution be repaid back and the net proceeds after all expenses paid be as per declaration of trust 50/50 we would be looking at £70,000 - £40,000 = £30,000 divided by 2 and getting £15,000 each.

If I was to get what was on the JO form and as you say above I would be entitled to a much bigger share but he is saying that isn't far and it was not agreed that way as he will only see a return of £3750 by returning the original capital of £40,000 to his mother while I would be seen to gain £26,250. I don't want to be seen as being greedy but I am trying to understand the process of how this all works.

If I am only entitled to 37.5% after his mother has been paid back as they are insinuating from the signed forms then I stand to lose a lot as I will get back less £30,000 x 37.5% = £11250 and he stands to gain £18750.

I know I signed forms and I understand that maybe we should of been a little more careful in what we were actually signing but then it was our first house together and we did put our trust in the solicitors acting on our behalf.

I want to know if going to court would be of any benefit? What are my chances? Do I stand to lose or is there a chance I could win a share of the capital with the letter drawn up as a declaration of trust stating he get the capital and then the net proceeds split 50/50 and the JO having different information showing ownership as unequal shares of 62.5% / 37.5%.

Both of these documents have been signed and witnessed so I want to know would one rule out the other, or would a judge look at it and award 62.5% / 37.5% on all of the property including his mothers capital contribution, or award 62.5% / 37.5% after his mother is repaid the capital contribution. Or award 50%/50% including his mothers capital or 50%/50% after his mother has been repaid.

He is saying pay his mother the capital back and split the difference 50/50?

Sorry for appearing quite naïve but I am really confused over this as its getting harder to try and sort things out without having to get a solicitor involved or the courts but I don't want to give in and walk away with less than I am rightly owed. Plus in all fairness I don't have the finances to get a solicitor or go to the courts as I am worried of costs and could end up much worse off then to try to find a fine compromise between us so would appreciate a bit more advice so I can understand what I am dealing with.

Many thanks once again.

I would advise you try and seek legal advice from a solicitor and explain you need just precise clarification and negotiate a cost. Some solicitors charge by the hour while others will if the situation seems quite simple offer a costing up to a maximum so you will then be able to budget for it. There are also solicitors who offer a free first half hour session and you may come away with some really good sound advice which you can choose to share with your ex which may mean no further intervention needed or they can work on your behalf within the agreed cost to yourself.

As it appears to be far from straightforward then a solicitor's who specialises in personal and family law would benefit most and this would keep costs down.

A declaration of trust is a really important document in which trustees are appointed to hold property for beneficiaries and is governed by the Trustee Act 2000. As in this case it has been used because although you and your ex are the rightful registered owners, others like your ex's mother have contributed to the purchase price and want their interest noted. Although your ex's mother is not to be named on the property's title she can register her beneficial interest on the trust deeds and protect her interests. Even if your ex's mother contribution is a gift and not an investment she can use a declaration of trust to protect against the joint owner from receiving any of the gift in the event of a relationship breakdown as in your case.

The trust deed changes the legal ownership of a property. It can and should be protected at the land registry and can be enforced in court.

Once the declaration of trust is finalised, you should give your conveyancer the original completed and signed, but undated, deed before completion of the purchase. The conveyancer will then arrange to have the deed dated on the date of completion and registered against the title at the land registry when they register the purchase. If it is not registered, future purchasers will not be aware that someone else may have an interest in the property. It is also a document which is witnessed independently by an adult unconnected with the parties not a family member.

You should of been advised by your acting solicitor to seek independent legal advice before signing such a document.

With reference to the JO this would sit along side the declaration of trust and will identify how you both own the property. Form JO contains the same options as panel 10 on the TR1 but is designed as a separate form in order to assist in providing the relevant information and ensuring that each joint transferee signs a declaration of trust. If the declaration of the trust on which the transferees will be holding the property is already contained in a separate deed or will, a conveyancer may include details of it in, and sign, the form JO instead of the transferees.

From the information you have provided it appears that you have both signed a declaration of trust highlighting that the beneficial interests are shown that in the first after selling expenses and indebtedness your ex is to receive a share equivalent to the capital contribution to the extent that is available (which will be repayable to mother) and any balance be shared 50/50.

The JO you says shows you own different percentages? 62.5% to your ex and 37.5% to yourself. This can sometimes be calculated against the separate deed other than the JO. You can check to see if there is a clause in it which states that your ex is actually entitled to the capital contribution increased by a percentage equal to the percentage increase of the sale price of the property over its original purchase price. This could be if it is a family property you were buying and were given the property at a much reduced price along with the capital contribution in order to purchase the clause could be there to protect the families interests. You can calculate this to see if the difference is 12.5%.

The easiest way around this is to go with your ex, return the capital contribution to his mother and spilt the difference 50/50. I would attempt to keep this amicable and out of the courts as the costs can be significantly high and you could end up with less.

The matter should have been better thought out at the start.
Imagine if you will you seperated the day after the purchase, you then sold the house straight away (and ignoring any fees),
you would have been left with £160k (sale price) minus £120k mortgage = £40k.
So if you took 37.5% you would get £15k (for no risk), your ex £25k but he would still owe his mother £40k, he or his mother would be left £15k out of pocket.

So the 62.5 : 37.5 split really only applies (or should apply) to the house when the mortgage is paid off (by which time you would have each paid in another £60k plus interest.

If the remaining equity is split £40k to mother, 50;50 the rest then you and your partnet benefit equally from the rise in the house price (£15k each), while having only paid £5k off the nortgage. Meanwhile mother has had no return for her £40k risked.

This is still a good and fair deal for you. The fairer way would be to say that for her £40k the mother owned 25% of the house (£160k) and you and your partner 37.5% each. So when you had sold for £185k the mother would be entitled to 25% of that (£46.25k), and you and your partner having paid their debts (remember mother put up 25% staright away, your 37.5% each was all mortgaged) and mother her £46.25k would have been left with £28.75 to plit, that is £14.375k each.
This represents the true amount of the increased value for the capital you risked (mortgaged).


So the £26.25k you will get is about £12k more that you would if ownership had been split along truly commercial lines.

It is a must one to feel panel 10 of tr1

It is a must one to feel panel 10 of tr1