Interesting question - Does a 'lodger' have claim over a property?

[muppet]

Interesting question:
Does a 'lodger' have claim over a property?

Q Our daughter is planning to buy a property with her savings and a substantial deposit from us. Our concerns are as follows:

1 The mortgage application will only be in her name and she will service the mortgage payments. Is it possible to include one of us as co-owner on the title deed?
2 Are there any tax issues if we transfer funds from our savings for the deposit?
3 She and her boyfriend plan to live in the property, although his name will not be in the title deed and he will not be making any mortgage payments. They will work out some way between them to split the living expenses, which could involve him paying rent. If they split up does he have any legal claim to the property?
4 What is the best way to safeguard our daughter's interests in the property?

[Baron Silas Greenback]

3 She and her boyfriend plan to live in the property, although his name will not be in the title deed and he will not be making any mortgage payments. They will work out some way between them to split the living expenses, which could involve him paying rent. If they split up does he have any legal claim to the property?

Yes, depends on a number of factors like length of relationship and contribution to the expenses. He will def not be considered a 'lodger'

4 What is the best way to safeguard our daughter's interests in the property

I would say that a seperate legal entity would be best, no reason it cant go into a trust or even a company?

[Xav]

1 The mortgage application will only be in her name and she will service the mortgage payments. Is it possible to include one of us as co-owner on the title deed?

If you do you will have to be party to the loan documentation, which I presume you want to avoid. In my experience the banks do not accept mortgages over only one of the owners share in the property except in very exceptional circumstances.

2 Are there any tax issues if we transfer funds from our savings for the deposit?

If you gift it all to her at once gift duty will apply if it is in excess of $54K ($27K each for you and wife). You can avoid this using the usual gifting strategy.

3 She and her boyfriend plan to live in the property, although his name will not be in the title deed and he will not be making any mortgage payments. They will work out some way between them to split the living expenses, which could involve him paying rent. If they split up does he have any legal claim to the property?

Once they have been living together for 3 years then it is very likely (almost certain) that he will get a share of whatever part of the property is in her name.

4 What is the best way to safeguard our daughter's interests in the property?

You have a couple of options. Either set up a trust or have your daughter and her partner sign a relationship property sharing agreement. Legal costs are probably similiar for either. The property sharing agreement would usually be a bit cheaper from your daughters point of view but the partner would need to have independent advice and once you add that on they are probably comparable.

If you did want to be on the title but not a party to the mortgage, a trust is the easiest way I can think of off the top of my head to acheive that. Some of banks' definition of a professional trustee is any trustee who is not a beneficiary of the trust. So if you set up a trust with yourselves and your daughter as trustees of which your daughter (and other kids, grandkids etc) are beneficiaries but not yourselves, then the bank may be willing to limit your liability to the assets of the trust.

Hope that helps.

[k1w1]

Whichever route you take to keep the property "separate" and in the hands of your daughter, keep in the back of your mind what would need to happen (costs etc) to undo the arrangement (if that is what you'd want to happen) should they marry and want the property to be shared.

If the relationship is at all serious, wouldn't it be cheaper to 50/50 the purchase and mortgage and be done with it? I presume he's no dead-ender, mind.