NSW Tenants in Common and Mortgage - Options under Property Law?

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emma jones

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28 September 2015
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Hi,

A pickle I am trying to assist my partner and his elderly mother work out...

A home is owned outright by a 70-year-old pensioner who lives with her son and has an unwritten agreement that upon sale of the property she would give him anything left over after purchasing a new, smaller home. The son would then use this money to purchase a mortgage for his own home. They would thus be living apart.

A number of years ago they looked into adding the son's name to the deed but decided it was too expensive at the time.

The son pays a weekly rent and has done for many years. As both people live in the home as their primary residence with no other properties owned by either, what are the costs, implications (tax and otherwise) and legalities of changing the deed from sole ownership to tenants in common as opposed to simply adding him to the deed?

If this is not a good idea, what are the legal options under property law in this case so as to, hopefully, have the mother in a paid for smaller home, the son having his share of the sale to put towards a mortgage of his own and the least expense and risk in doing so?

Thank you and I apologise if the question is a confused and silly one!
 

Rod

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27 May 2014
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Simplest way is to have a written and signed agreement stating what both parties intend to do. Needs to be properly drafted to ensure it is legal, considers any tax implications, considers what happens if either party dies etc. Not hard to do but cheaper and easier paying for some good legal advice now rather than changing property titles and getting it wrong.

Recommend talking to a solicitor who can outline all alternatives - changing property to joint names, tenants-in-common or writing a legal agreement.

One problem with tenants-in-common is deciding what share to allocate to each party in advance of knowing how much the mother may need in the future.

Suspect the son is concerned what happens to himself if his mother changes her mind/develops dementia etc before the sale happens. This is not unreasonable as no-one likes being kicked out of home. Can be tricky to arrange a written agreement though if the mother feels like she is being forced to do something she doesn't want to do. Family dynamics may come into play during this process so I advise treading carefully and with sensitivity.
 

emma jones

Member
28 September 2015
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Thanks for your reply, rod :)

The mother and son are in full agreement - she has all her marbles and had always planned on giving him what was left over. But now that they are actually about to begin the process of selling all these issues have come up in terms of tax implications, pension implications etc. The research I did indicated that making them tenants-in-common might be a cheaper and easier option that adding his name to the deed.

You make a good point about the allocation though - we won't know until she finds a place, how much the mother will need....

If they are to write up a legal document with the help of a lawyer, would that be cheaper that the costs of becoming tenants-in-common?
 

Rod

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27 May 2014
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If they are to write up a legal document with the help of a lawyer, would that be cheaper that the costs of becoming tenants-in-common?

Sorry, can't comment on costs, I'm not a lawyer and I haven't had to change names on a title.