A Declaration of Trust, sometimes known as a Deed of Trust, is a legal document which outlines the ownership structure of a property whose owners are not married. It is a document that is tailored to each person’s unique circumstances but typically addresses the same points:
1. Each owner’s proportion of equity in the property, or how much each contributed towards the deposit
2. How property maintenance will be funded
3. The circumstances in which either party can sell or transfer their share
4. How the property will be valued in the event of a sale
5. How sale proceeds will be divided in the event that the property is sold
6. What would happen in the event that either party contributed a larger amount towards refurbishments or maintenance which increases the property’s value.
Who needs a Declaration of Trust?
The two main scenarios in which people obtain a Declaration of Trust are when an unmarried couple purchases a home together, and when a parent or family member is financially supporting someone to buy a share in a property and wants their contribution to be protected.
When should you get a Declaration of Trust?
You should ideally get a Declaration of Trust at the point of purchase of a property. However, it is possible to create one retrospectively if need be and if the mortgage lender is agreeable.
Given the significant financial responsibility associated with buying a property, ensuring that all parties are on the same page with regard to how the property will be maintained or sold in the event of a relationship breakdown is highly recommended.
How to get a Declaration of Trust
If you are in the process of buying a property, your conveyancing solicitor may assist you in drafting a Declaration of Trust. Doing it this way also allows for the title to be accurately reflected with the Land Registry.
If your conveyancing solicitor is unable to write a Declaration of Trust for you, or you have already completed your purchase, you should seek the services of a specialist lawyer such as https://www.parachutelaw.co.uk/deed-of-trust to write one for you.
In Conclusion
A Declaration of Trust ensures that all parties involved in a house purchase understand their responsibilities and acknowledge their cohabitees’ expectations. It helps to avoid disagreements from arising in the future and safeguards your investment.