Buying with Someone Else

Buying with Someone ElseIf you are buying a property with friends, a partner, relatives or business partners and are contributing different amounts to the price, deposit, fees or mortgage payments, you should consider a Declaration of Trust.

What is a Declaration of Trust?

A Declaration of Trust is a legally binding written agreement which records the financial arrangement between those who jointly own a property.

When may I need a Declaration of Trust?

If you are contributing a large share of the deposit/price – it will protect your financial contribution in the event that the property is sold

If you are making contributions towards the mortgage - it will set out how the contributions are to be made and how you wish the mortgage to be repaid if you wish to sell

If you are contributing towards the purchase expenses, such as stamp duty land tax and legal fees – it will set out what you have paid and how it is to be repaid if the property is sold

When should a Declaration of Trust be done? It should be done at a time when the owners of the property and other persons who may have contributed towards it are in agreement. This would usually be when a property is purchased by or transferred to the owners.

What are the benefits of a Declaration of Trust?

- Avoids prolonged legal disputes over finances if there is a disagreement between the owners

- Sets out what is to happen if and when the property is sold

- States how the proceeds of sale should be divided between the owners

For helpful and friendly legal advice please contact Trudie Nicholas or Heather Razvi on 01432 352121 who will be able to assist.

Gifting the Family Home

Gifting the Family HomeIf you are thinking of making an outright gift of your home during your lifetime, be cautious!

Why make an outright gift of your family home?

There are many reasons for considering making an outright gift of the family home such as:

  1. General affection – your recognition of the recipient’s love and affection
  2. Moral obligations - you feel that it is appropriate that a family member receives a gift of value from you
  3. Financial obligations – your recognition of the recipient’s financial contribution
  4. Family harmony – avoiding family issues or disputes
  5. Passing of the burden of owning property – to free you of the financial burden and responsibility that comes with owning a home

But you should consider such a decision with caution as your home may be your most valuable asset.

Some of the reasons for being cautious about making an outright gift of the family home

  1. Financial difficulties of the recipient  - if the recipient has financial problems or becomes bankrupt, your home may be lost to creditors
  2. Divorce of the recipient – if the recipient gets divorced, your home will become part of his/her assets in determining a divorce settlement
  3. False hopes about tax – Beware you may not save inheritance tax or other taxes
  4. Recipient in receipt of means-tested benefits – such benefits may be stopped or reduced
  5. Long-term care provision – it may not reduce the cost of long-term care fees
  6. Premature death of the recipient – if a child dies, the family home will pass by their Will or the ‘rules of intestacy’ which could be to a spouse who may then remarry.

Still wish to gift your family home? Please contact Amy Makaruk or Trudie Nicholas on 01432 352121 who will be able to assist

Entering into a Business Partnership

Business Partnership JigsawGoing into business with another person, or perhaps many more, allows you to be flexible and make sure the business operates to its full potential. It can be an exciting prospect, but at the same time it can also be risky. That’s why it is important to put all of the important details down in a written partnership agreement.

Get it in writing!

Partnerships can be made very easily even by verbal agreement or a mere handshake. But doing so and leaving your rights and liabilities to be decided by the default position under the Partnership Act 1890, can be undesirable. It is always a safer and more sensible option to put your partnership agreement in writing, as this allows you to avoid unnecessary conflict and costly legal proceedings. Producing a written partnership agreement adds certainty and structure to your business relationship with your partner/s in a document that will be legally binding.

What to include?

A typical written partnership agreement should include at least the following 10 things:

  1. Name of the partnership – make sure the name you use isn’t an existing business name!
  2. Business activities – what is the partnership for? What are the restrictions on the activities you can undertake?
  3. Allocation of profits and losses –will this be based on each partner’s share of ownership, or otherwise?
  4. Management of the partnership – partnerships are generally informal in how they are managed, but you should still clearly set out everyone’s responsibilities
  5. Capital contribution – recording how ownership of the partnership is divided is crucial for avoiding unnecessary disputes
  6. Authority/power distribution – it is always important to regulate how decisions will be made and what each partner’s voting rights are
  7. Withdrawal or death – you should consider setting up a buyout scheme for the remaining partner/s if this happens
  8. Resolving disputes – try and save costs by considering alternative dispute resolution like mediation or conciliation
  9. Transfer of interests – think about what procedure might be needed for transferring interests. Does everyone need to consent?
  10. Tax – it is vital to deal with your financial and tax responsibilities in a correct and structured manner

If you would like advice with your partnership agreement, please contact Trudie Nicholas or Derek Backhouse on 01432 352121

Protect Your Land

Protect Your LandProtect Your Land

Will your land have development potential in years to come? If so, you need to monitor the public use of the land and take any necessary steps to protect it for  future development.

So what is a village green, and how do you defend an application to register your land as one?

Where land has been used for informal recreation including dog walking and kite flying by local people for at least 20 years, it is possible for them to apply for the land to be registered as a town or village green (“TVG”).  A TVG does not have to be the run of the mill square of grass in the middle of the village. A golf course has been registered as a TVG. The use of the land must be without permission, force or secrecy. Once registered as a TVG, development cannot take place unless you apply to deregister the land.

You can take a number of steps to defend an application for the registration of your land as a village green including:

-          erecting fencing

-          displaying suitable signage, advising that access is by permission

-          getting the land earmarked for development in a draft development plan or neighbourhood development plan or submitting an application for planning. In certain planning situations, it is no longer possible to register land as a TVG.

If local people are using your land, it should be possible at the end of this year for you to deposit a statement and map with the Local Authority to bring to an end the period of use. But be aware. If at the time that the statement is made there is already 20 years use, an application can be made within two years of that statement for the land to be registered as a TVG.

 For advice on rural issues please contact Trudie Nicholas.

This article features in the August 2013 edition of Absolute Herefordshire.  The article can be downloaded here: Absolute Herefordshire August 2013 Protect Your Land