This is the story of Nigel Green & his girlfriend Sally.
A little over a year ago Nigel Green bought his first home, a leasehold flat, using the conveyancing services of Rita Sen Solicitors. Now Nigel has come back to see Kelly Mitchell, bringing with him his girlfriend, Sally
Nigel explains to Kelly that he and Sally have decided to live together and Sally is proposing to move into the flat Nigel bought. A while ago Sally’s grandfather died and left Sally some money. She is proposing to use some of her inheritance to reduce the mortgage that is outstanding on the flat. However, the mortgage that Nigel took out when he purchased the property was based on a fixed rate for five years and there a penalty payable if more than 10% of the mortgage is repaid in any year during that first five-year period. In addition, Nigel and Sally have spoken to the mortgage provider who has told them that it is not possible for Sally to “come on” to the mortgage and that if she wants to be directly involved the couple will need to make an application for a new mortgage.
This will involve further fees. The couple have been told that the deal that Nigel got when he bought is no longer available and the best rate now is a little higher than Nigel is paying. Nigel and Sally find this all rather confusing, particularly because what they want to achieve seems so simple to them.
Kelly explains that she fully understands their frustration. However, the mortgage provider is entitled to make its own rules and it is not unusual for financial institutions to insist upon a fresh mortgage application where there is any change in the identity of the borrower, even if an additional name is being added. As Kelly points out, even where a mortgage is described as being “portable” to another property, in fact that mortgage is always cancelled and a new one over the new property entered into.
Nigel asks Kelly if there is not an easy way for himself and Sally to sort matters out.
The first thing that Kelly has to do is to make it clear to Sally that there might be a conflict of interest between her and Nigel. Sally looks even more worried. “What we’re trying to do is to protect both of you, just in case something goes wrong in the future,” Kelly explains. Before Sally can interrupt, Kelly continues, “Of course, I’m sure you’ll say nothing will go wrong between you, but, frankly, that is what everyone says. Sadly, they are not all right. We therefore have to try to do our best to prepare for the worst. Now, if you should fall out in the future I wouldn’t want either of you to say that you hadn’t got the best advice possible. Because I have acted for Nigel in the past I must therefore tell you, Sally, that you have a right to take independent legal advice and, if you want to, you are perfectly free to consult another Solicitor about your interest in this property.”
“Do I have to?” Sally asks. “No, no one can force you to take legal advice, but perhaps, when you’ve heard what I have to say and I have prepared the legal document that I’m going to suggest, you might think that it would be sensible to get a Solicitor to look it over from your point of view. I know it will involve a little extra cost, but this is very important.” Sally nods, obviously still uncertain. Nigel squeezes her hand, reassuringly.
“What I suggest is that we draw up a document called a Deed of Trust. This is a document that will say that although the property is still in Nigel’s sole name at the Land Registry in fact both of you have an interest in it. The document will go on to describe what those interests are, for example as Sally reduces the amount of mortgage, so her interest in the property might increase. The document can also say how all the outgoings on the property are to be met and detail what is to happen so far as any sale of property is concerned if you should fall out.”
The three of them then go on to discuss in more detail the arrangements that are proposed and Nigel and Sally realise that there are a number of things that they have not thought about. They agree that they will go away and discuss matters further between themselves before coming back to Kelly with their final instructions.