Unequal Contributions, a Joint Tenancy and the Daughter's Inheritance

At law, co-owners must hold as joint tenants; the beneficial ownership can be different. Because Amara and Ben are contributing unequal deposits and have different testamentary wishes, a joint tenancy in equity is inappropriate: survivorship would defeat Amara's wish to leave her share to Chloe. Equity presumes a tenancy in common in proportion to contributions, but that presumption can be displaced by an express declaration. A declaration of trust is essential. It should record the contributions, namely £180,000 from Amara and £20,000 from Ben, the £400,000 joint mortgage, and how the net proceeds are to be split. A fair formula is: repay the mortgage and sale costs first; then repay Amara her £180,000 and Ben his £20,000; then divide the balance equally, or in agreed shares to reflect unequal mortgage payments. That protects Amara's capital and gives Ben credit for his contribution. The transfer should state that they hold as tenants in common in the agreed shares, and a restriction should be entered at HM Land Registry in Form A so that a sole proprietor cannot overreach the trust without court authority. Amara should also make a will leaving her share to Chloe.

Operative clauses: (1) The Transferees declare that they hold the Property on trust for themselves as tenants in common in the shares set out in clause 2. (2) Initial beneficial shares: Amara 63.33%, Ben 36.67%, calculated by crediting Amara with £180,000 and Ben with £20,000, and treating the £400,000 mortgage as a joint contribution of £200,000 each; the shares are to be recalculated on sale after repayment of the mortgage and costs. (3) On a sale, the net proceeds are to be applied first in repaying the mortgage and costs, then in repaying Amara's capital contribution of £180,000 and Ben's £20,000, and the balance divided equally. (4) Each party may occupy the property until sale; neither may exclude the other. (5) On the death of a party, his or her share devolves according to his or her will or intestacy, not by survivorship. (6) Disputes are to be referred to mediation before litigation. The declaration should be signed as a deed and registered; a Form A restriction should be applied for. Chloe is not a party, but Amara's will can leave her share to Chloe, and the trust ensures the share exists to pass.

Ben's undisclosed IVA is material to the lender. If you are acting for Halifax as well as the borrowers, you owe duties to both; you cannot submit a mortgage application or certificate of title that conceals the IVA. If you act only for the borrowers, you must still not mislead the lender or facilitate a fraudulent application. Advise Ben to disclose the IVA to Halifax immediately and provide the IVA supervisor's details. If he refuses, you should decline to continue acting for him and, if you are on the lender's panel, report the matter to Halifax; you may also need to consider your obligations under the SRA's financial crime rules. Do not complete until Halifax has confirmed in writing that it will still lend. The IVA may also affect Ben's ability to meet the mortgage payments and his share of the equity. Separate advice should be given to Amara about the risk that Ben's creditors could claim an interest in the property; a restriction and the declaration of trust will help define his share, but they do not defeat a trustee in bankruptcy if the IVA fails.