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Types of Share
Please see below for information about each type of share and examples of their use. Please remember that all parties DO NOT have to select the same type of share
Monetary
Select this option if the party in question would like a set amount returned to them in the event that the property is sold. Their share in the property will consist of this fixed amount. If you would prefer this share to grow in line with any rise in property price then please state this in the remarks section.
Example:
Andy and Bernadine purchased a property for £250,000 in their joint names. Andy’s mother Carol contributed £50,000 towards the purchase price. Carol wants to protect her investment in case the relationship between Andy and Bernadine breaks down. She is not interested in making a return on the money she contributed.
In the event of the property being sold the first £50,000 of any proceeds of sale (after the redemption of any mortgage and payment of associated sale costs) would be owed solely to Carol. Anything remaining thereafter would be owed to Andy and Bernadine in equal shares (or differing shares if they so wished of course!)
In this scenario Carol’s share is a monetary one.
PLEASE NOTE: Each party is permitted to have a different type of share
Percentage
This is one of the most common types of share, very simply put the party in question would be entitled to a percentage of any sale proceeds after the redemption of any mortgage and payment of associated sale costs.
Example:
Fred and Gina are purchasing their first home together, unfortunately due to Gina’s lack of credit history she has been unable to join the mortgage application with Fred and so Fred will be the sole legal owner of the property as well as the only party to the mortgage. Fred and Gina are making equal contributions towards the purchase of the property and Gina would like to protect her investment as she will not be party to the mortgage or be on the title deeds.
In this scenario Fred and Gina can select percentage shares of 50% each. In practical terms this would mean that when the property is sold Fred and Gina would be equally entitled to any proceeds of sale after the redemption of any mortgage and payment of associated sale costs.
PLEASE NOTE: Each party is permitted to have a different type of share
Monetary and Percentage
Select this option where the party concerned would like a fixed amount returned to them in the event of a sale as well as a percentage of anything remaining thereafter.
Example:
Derek and Elizabeth are purchasing a property together for £125,000. Derek is contributing the sum of £20,000 towards the deposit and Elizabeth is contributing £5,000, the remainder of the purchase price is being provided with the aid of a mortgage that both Derek and Elizabeth are entering into. They both wish to find a fair way in which to hold the property.
One method is to use a combination of monetary and percentage shares in the property:
Derek’s monetary share would be £20,000 and Elizabeth’s £5,000. Their percentage share of anything remaining is 50% each.
In practical terms this would mean that in the event of a sale, any sale proceeds (and after the redemption of any mortgage and payment of associated sale costs) would be divided on the basis that the first £20,000 would be owed solely to Derek and the following £5,000 would be owed solely to Elizabeth (we can also express this differently to level the priority between parties, e.g. of the first £25,000 Derek would be entitled to 80% and Elizabeth 20%, this would cover the situation where the sale proceeds were less than £25,000). Anything remaining after the above would be divided between Derek and Elizabeth in accordance with their percentages, i.e. 50% each.
PLEASE NOTE: Each party is permitted to have a different type of share
All / Remainder of Beneficial Interest
This type of share is self explanatory and is quite often used in combination with the No Beneficial Interest type of share mentioned below. It can also be used with any other type of share to indicate that the party in question will be the owner of all of the beneficial interest AFTER the shares of the other party’s have been dealt with.
Example:
Henry and Ingrid have owned their flat together for the last 5 years, they have recently split up. Henry has agreed to relinquish his share in the property in consideration of £10,000. Unfortunately Ingrid has been unable to obtain mortgage finance in her sole name so they have decided to proceed by way of a deed of trust.
Ingrid’s share in this case will be All / Remainder of Beneficial Interest.
No Beneficial Interest
As mentioned above this type of share is most commonly used in combination with the All / Remainder of Beneficial Interest option.
Example:
Continuing the example from above Henry’s share will be No Beneficial Interest as he will be surrendering his share in the property in return for £10,000 as well as other assurances provided in the deed, these include a covenant by Ingrid to indemnify Henry against any action in respect of the use of the property by her as well as payment of the mortgage repayments.
The indemnities from Ingrid will provide Henry with some comfort as he will have a course of action in the event Ingrid failed to keep up mortgage payments for example.
PLEASE NOTE: When the above 2 types of share are used together they usually have an approximate date recorded to indicate a timeframe within which the owner of the beneficial share will endeavour to change the legal title to the property to remove the party with no beneficial interest.
Mortgage/Equity Split
This type of share is used when the mortgage and equity elements of the property are required to be treated independently and each party’s share in both of the mortgage and equity elements defined separately.
Example:
Julie and Kirsty Purchased a property together last year for £400,000. They took out a mortgage for £300,000 and Julie contributed £70,000 towards the deposit with Kirsty providing the remaining £30,000. The costs of purchasing the property including stamp duty and land registry costs were shared equally.
Based on the figures above the mortgage/equity split is 75% mortgage / 25% equity. They both agreed to contribute to the mortgage repayments equally meaning their respective shares of the mortgage element are 50% each. However due to the differing amounts contributed towards the deposit the equity element is divided between them with 70% owned by Julie and 30% by Kirsty.
Property sold in 7 years time for £608,000.00
LESS
Agents Fees and associated sale costs: £8,000.00
£600,000 divided in accordance with the mortgage/equity split:
Mortgage Portion (75%): £450,000
Equity Portion (25%): £150,000
Mortgage redeemed from the Mortgage Portion:
MORTGAGE PORTION: £450,000
LESS
Mortgage outstanding on property: £200,000.00
Leaving £250,000 in the mortgage portion which is to be divided equally between Julie and Kirsty in line with their respective shares of the mortgage element (50% each = £125,000 each)
Equity Portion to be divided between Julie and Kirsty in accordance with agreed shares:
EQUITY PORTION: £150,000
Julie’s share (70%): £105,000
Kirsty share (30%): £45,000
TOTAL DUE TO Julie and Kirsty:
Julie:
Amount left in mortgage portion divided equally: £125,000
Equity Portion: £105,000
TOTAL for Julie: £230,000
Kirsty:
Amount left in mortgage portion divided equally: £125,000
Equity Portion: £45,000
TOTAL for Kirsty: £170,000
PLEASE NOTE: All parties must select this type of share as it cannot be combined with any other type of share.
Commensurate
This type of share can be used when each party will be (or has been) contributing differing amounts to not only the initial purchase price but to any mortgage going forwards.
Sophie and Tom are purchasing their first property together and will be contributing unequal amounts towards the property purchase price, with Sophie contributing £90,000 and Tom £10,000. They will be paying for all of the associated costs of purchase, including Stamp Duty Land Tax, in equal shares of £5,000 each.
As Sophie is not working (and Tom has a well paying job) she will not be contributing as much to the mortgage as Tom going forwards.
Sophie would like the fact that she is contributing more towards the purchase price recorded in the deed and reflect any return she makes when the property is sold. Likewise, Tom would like the fact that he will be contributing more towards the mortgage to be reflected in the deed ensuring that his return is appropriately increased.
This kind of situation is becoming more and more common and a standard deed will not usually be able to do justice to Sophie and Tom’s requirements. The issue is that there is no fixed percentage which is going to be declared in the deed to reflect each party’s share. Rather, the deed will contain a formula to use when calculating each party’s share.
This formula will take into consideration the contributions made by both Sophie and Tom to not only the initial purchase price and costs, but also contributions towards reducing the capital mortgage debt (be this through normal monthly mortgage repayments or lump sum capital payments) and also any agreed improvements or renovations to the property.
This method allows the share of each party to be dynamic and at any given point in time it will reflect the total contributions made by each party to the property, and therefore will accurately reflect their respective shares.
The example below shows the practical effect of Sophie and Tom’s situation:
Example:
Property purchased in 2014 for: £310,000
Mortgage of: £210,000
Property sold in 2018 for: £440,000
Remaining Mortgage: £110,000
Estate Agent Fees: £10,000
Balance to be split: £320,000
Over the course of ownership of the property, it was established that Tom redeemed £75,000 of the capital mortgage debt and Sophie £25,000. They also improved the property and contributed to the improvements in unequal shares: Sophie contributed £5,000 and Tom £25,000.
Using the figures and timings above Sophie and Tom’s respective shares of the balance of £320,000 would be calculated in the following way:
Contributions towards:
Purchase Price: Sophie: £90,000 | Tom: £10,000
purchase costs: Sophie: £5,000 | Tom: £5,000
mortgage debt: Sophie: £25,000 | Tom: £75,000
improvements: Sophie: £5,000 | Tom: £25,000
Total Contributions: Sophie: £125,000| Tom: £115,000
(£240,000 contributed in total by both)
Expressed as percentages: Sophie: £125,000/£240,000 = 52.08%
Tom: £115,000/£240,000 = 47.92%
Therefore the balance would be split thus:
Sophie (52.08% of £320.000) = £166,656
Tom (47.92% of £320.000) = £153,344
As you can see from the above illustration, Tom has managed to increase his share through the larger contributions he made to repayment of the mortgage debt and also to improvements to the property.
PLEASE NOTE: All parties must select this type of share as it cannot be combined with any other type of share.
Our deeds encompass definitions and operative terms, they can govern how and when the property is to be disposed of as well as in what proportion each party is to hold the property on trust.
The deed is applicable under the laws of England and Wales.
As mentioned above the deeds we prepare also contain numerous sections dealing with a variety of matters pertinent to your particular circumstances based on the information you provide in your application form and in other contact with us. Some provisions include the proportions in which the property is held, each parties contributions towards the ongoing upkeep of the property, responsibilities for outgoings and who is entitled to live at the property, as well as any specific requirements you may have.
If you have any specific requirements, for example, you need to specify further matters please indicate this in the remarks section of the application form.
Please note that if you require any amendments to the deed after it has been sent to you we will be happy to do this for you until you are entirely satisfied with the deed.
No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court.
This type of restriction should always be entered on the register when a trust of land comes into existence which limits the power of a registered proprietor, in fact the Land Registry explicitly state this to be the case, below is an extract from Rule 94 of the Land Registration Rules 2003:
When an application for a restriction must be made
94.—
(1) A proprietor of a registered estate must apply for a restriction in Form A where—
(a) the estate becomes subject to a trust of land, other than on a registrable disposition, and the proprietor or the survivor of joint proprietors will not be able to give a valid receipt for capital money, or
(b) the estate is held on a trust of land and, as a result of a change in the trusts, the proprietor or the survivor of joint proprietors will not be able to give a valid receipt for capital money.
(2) A sole or last surviving trustee of land held on a trust of land must, when applying to register a disposition of a registered estate in his favour or to be registered as proprietor of an unregistered estate, at the same time apply for a restriction in Form A.
(3) Subject to paragraph (6), a personal representative of a deceased person who holds a registered estate on a trust of land created by the deceased’s will, or on a trust of land arising under the laws of intestacy which is subsequently varied, and whose powers have been limited by section 8 of the Trusts of Land and Appointment of Trustees Act 1996(1), must apply for a restriction in Form C.
(4) Subject to paragraphs (6) and (7), a proprietor of a registered estate must apply for a restriction in Form B where—
(a) a declaration of trust of that estate imposes limitations on the powers of the trustees under section 8 of the Trusts of Land and Appointment of Trustees Act 1996, or
(b) a change in the trusts on which that estate is held imposes limitations or changes the limitations on the powers of the trustees under section 8 of the Trusts of Land and Appointment of Trustees Act 1996.
(5) Subject to paragraphs (6) and (7), an applicant for first registration of a legal estate held on a trust of land where the powers of the trustees are limited by section 8 of the Trusts of Land and Appointment of Trustees Act 1996 must at the same time apply for a restriction in Form B.
(6) Paragraphs (3), (4) and (5) do not apply to legal estates held on charitable, ecclesiastical or public trusts.
(7) Paragraphs (4) and (5) apply not only where the legal estate is held by the trustees, but also where it is vested in the personal representatives of a sole or last surviving trustee.
(8) An application for a restriction must be made where required by paragraphs (2) or (3) of rule 176 or paragraph (2) of rule 178.
Cost
There is no charge by the Land Registry to enter a restriction in standard Form A. In addition there is no charge levied by us in completing the application for the restriction on your behalf, applications are made by completing Form RX1
Effect of Registration
It is important to note that if there is only one registered proprietor of the property shown at the Land Registry then the presence of a Form A restriction may affect their ability to sell, lease or remortgage the property in the future.
No disposition [or specify details] by the proprietors of the registered estate is to be registered unless they make a statutory declaration, or their conveyancer gives a certificate, that the disposition [or specify details] is in accordance with [specify the disposition creating the trust] or some variation thereof referred to in the declaration or certificate.
This type of restriction is more onerous than a standard Form A restriction and may be appropriate where you wish to stipulate that a transaction involving the property (it can be specific, e.g. a disposition or a charge) made by the registered proprietors cannot be successfully registered without a statutory declaration from them or their conveyancer that the terms of a deed of trust have been complied with.
You may wish to limit the ability of the registered proprietor to mortgage the property or indeed sell it without the consent of all parties to the deed of trust and this type of restriction may be appropriate in such circumstances. The deed itself may contain a provision that any new mortgage or charge to be secured on the property requires the consent of all parties to the deed, therefore in order to make the statutory declaration or for the conveyancer to provide a certificate such consent will need to obtained.
Cost
We do not charge for the preparation of an application to register a Form B restriction but the Land Registry do levy a charge which currently stands at £40 for the entry of a standard restriction, further details of fees can be found here.
Effect of Registration
Similar to a Form A this restriction may affect the registered proprietors ability to sell, lease or remortgage the property in the future. This restriction will also result in details of the deed of trust including the parties to it and the date it was executed, being shown on the title register at the Land Registry. The consent of all parties to the deed of trust will usually be needed in order to register a disposition (or a certificate from a Conveyancer), therefore this restriciton offers a far greater degree of protection to the parties to the deed. You will also be required to send a cheque for £40 directly to the Land Registry with the application we provide you with on completion.
No disposition [or specify details] of the registered estate [(other than a charge)] by the proprietor of the registered estate [or by the proprietor of any registered charge] is to be registered without a written consent
[signed by [name] of [address] (or [his conveyancer] or specify appropriate details)]
or
[signed on behalf of [name] of [address] by [its secretary or conveyancer or specify appropriate details]].
This type of restriction is different to a Form B restriction in that there is no requirement for a statutory declaration or a certificate of compliance with the deed of trust. The restriction merely imposes a demand to obtain the written consent of a specified person (or their conveyancer) before the mentioned change can be made to the register (this may limit the ability to sell, lease or just mortgage the property).
Cost
We do not charge for the preparation of an application to register a Form N restriction but the Land Registry do levy a charge which currently stands at £40 for the entry of a standard restriction, further details of fees can be found here.
Effect of Registration
A Form N restriction will not necessarily detrimentally affect the registered proprietors ability to deal with the property (for a example a future remortgage) as long as written consent is obtained from the beneficiary of the restriction. The Beneficiary will usually be the party or parties to the deed of trust who are not also registered proprietors. This restriction therefore provides a degree of protection for those parties to a deed of trust who are not automatically protected by virtue of registration as proprietors of the property.
Please complete as much information as possible (if there is anything you are unsure of or don’t know please leave blank and we will contact you whilst drafting your deed), please also ensure you are familiar with the contents of the deed and let us know of any specific requirements you may have in the comments section at the end of the form.
We offer a fixed fee service meaning all of our deeds are charged at the rate of £150 plus disbursements with no nasty surprises later on!