Legal contract over Mortgage

Lucreto

I am not sure this the right place but here goes.

Myself and my brother are going 50/50 on a mortgage in the not so distant future.

I have been advised that we should get a legal contract in case something goes sideways like I get a girlfriend and she moves in or other problematic circumstances that may arise.

I haven't a clue what should be included in such contracts and I wonder if I can be pointed in the right direction or if someone has experience in contracts would be able to offer advice.

Any help would be much appreciated.

Witcher

What's the purpose of this contract?

Donald Trump

Could you go 50:50 on the girlfriend too and save a few quid?

Not legal advice

Or any kind of advice.

Princess Calla

I'd think long and hard on this.

Lots of my friends bought, at the height of the tiger, with siblings or friends.

At the start they were on the gravy train,house prices increasing all good. Few years later obviously met significant others etc and the crash happened.

Obviously no one wanted to sell with negative equity making a loss. However they did want to move on with their lives with significant others etc.

For some it got fairly messy.

What happens if one moves out, but either doesn't want to sell or other can't afford to buy and the room ends up being rented....you might end up in a house share you never wanted or having to sell your home.

Moving significant others into the house could also cause problems, it will definitely change the dynamics of the house.

While I do think buying is better than renting, you have to think long term too .

Lenar3556

https://www.boards.ie/discussion/2058287872/legal-contract-over-mortgage

If it was a second property that was to be rented out, it could potentially work as a joint investment.

A situation whereby you would both plan to live in this house, conceivably with partners in the future could get messy. To be honest in most cases I would advise against. If the property purchase was remarkably good value, and was to be primarily funded by equal amounts of cash from both siblings as opposed to borrowings, then maybe.

But in the general run of things these type of joint purchases can cause more trouble down the road than they are worth.

AndrewJRenko

Even with purchasing for investment, you'd want a clear exit strategy for one or other party to be agreed up front. What happens in one person wants or find they have to get out of the arrangement, and want to cash in their chips? This could be in a negative equity or positive equity environment. You'd need to agree how get out of it, as well as how to get into it.

ThreeGreens

As others said you need to agreed what will happen if (as is likely over the duration of the mortgage) one or both of you meet someone that you want to settle down with.

You need to agree what happens in the event of a dispute and one of you wants out and the other doesn't.

You need to agree what happens if one of you can no longer afford the repayments.

This things are a LOT easier to agree now, then they are when the events happen.

Also bear in mind that you might not just be dealing with your brother. Their (or your) partner could now be heavily involved and manipulating the situation. Or indeed, a receiver or court order could be involved over other debts meaning that you or your brother have lost their say in what happens.

Having these things specified in a legal agreement could make the situation a lot easier.

Peregrinus

The main value of a legal agreement in this situation is not so much that it's legally binding as that the discipline of negotiating and agreeing it will (1) oblige you both to consider what would happen in various scenarios that are possible but that at the moment you have not thought about, and (2) it will ensure that you each understand what the other thinks/expects about those scenarios.

Very, very few people buy their first house and then live in it for the rest of their lives, and this is especially true when the buyers are not one another's spouses. So the extreme likelihood is that this house will be sold, and you need to think carefully about when, and in what circumstances, it will be sold. One of you is almost certain to want to sell the house before the other does; you need to have a very clear understanding about what will happen when that situation arises.

3DataModem

I've done it with my brother. It went fine, but we got out after 5 years and made a little bit of money.

It often doesn't end well. You are tying your ability to borrow up with someone else. What if they want to get married and buy another place? What if you do? There's a lot of risk, and mortgages are expensive.

I purchased a very cheap apartment last year from two brothers who had fallen out over it. Mortgage unpaid for 5 years, service charges unpaid for over 10 years. They used seperate solicitors things had gotten so bad. The flipping place was only 145k.

flatty

https://www.boards.ie/discussion/2058287872/legal-contract-over-mortgage

I have a good friend who did it with a boat. They had the contract drawn up such that if either party wanted out, the other party either had to buy them out at market rate set by independent valuation unless agreed, or if unwilling or unable, the boat had to be sold for whatever they could recuperate. He said this arrangement worked very well, and in the end he amicably bought it outright a few year later.