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Joint ownership of property, particularly for those cohabiting, can bring with it very specific issues and problems.

The purpose of a Declaration of Trust, also known as a Deed of Trust, is to record and define the rights and obligations of each co-owner of the property and how the property is to be dealt with in certain circumstances, death or relationship breakdown for example.

Declarations of Trust can be simple or more complex to cover issues such as responsibility for mortgage payments, improvements and repairs.

What is a Declaration of Trust?

A Declaration of Trust is a legally binding agreement which sets out respective parties interests in a property.

The document can set out how net sale proceeds would be divided as well as other terms that property owners may want to include, such as:

  • Payment of mortgage and bills
  • Payment of costs of maintenance of the property
  • What will happen if one party wants to move out of the property
  • What will happen if one party wants to sell the property
  • Taking out future mortgages and/or re-mortgaging the property

How our Declaration of Trust solicitors can help

We consider in detail the objectives of the co-owners and work to refine those objectives into a written document capable of binding the parties to it. There are many issues to consider depending on your personal circumstances and our team of solicitors and legal experts can raise these issues with you, issues that perhaps you haven’t even thought of.

Who do we help

  • We help those investing different amounts into a property.
  • We help those cohabiting to define the rights and obligations of each individual co-owner.
  • We help those wishing to secure their investment in the property and provide a mechanism for dealing with the property if a relationship were to fail.

How does a Declaration of Trust/Deed of Trust work?

The first step is a conversation or meeting with you to discuss your ideas. Using our knowledge and experience, we advise and direct you to a few simple options. Once objectives are agreed, we draft a Declaration of Trust and liaise with you to refine it until it accords with your wishes. We provide detailed advice before finalising the documents. Sometimes, it may be necessary for the parties to be independently advised.

How long does it take to do a Declaration of Trust?

Depending on the scope and depth of your objectives and your personal circumstances, the meeting, advice, drafting and execution phases can be completed in a few weeks. We can give you time estimates at the time of clarifying your instructions.

Do I need a Declaration of Trust?

It is always recommended that co-owners of a property obtain advice about the need for a Declaration of Trust. This is particularly important if you are not making equal contributions to the purchase of the property, to the payment of the mortgage and household bills and/or maintenance and renovation of the property.

As an example, A and B are purchasing a property together. A contributes £50,000 to the deposit and B contributes £25,000 to the deposit. A and B need to consider whether they want the equity in the property to be split equally between them or whether they would want to document their respective contributions to ensure that these are protected if their relationship breaks down.

As another example, you may be purchasing a property with the help of a friend or family member. A Declaration of Trust can document and protect their contribution.

A Declaration of Trust helps to avoid any uncertainty that may arise in the future. It minimises the risk of dispute (which could result in costly litigation) and sets out your intention.

A Declaration of Trust is usually put in place when purchasing a property but, it can be done at any time.

Frequently Asked Questions

Whilst you do not need a solicitor to prepare a Declaration of Trust, it is always advisable to seek professional advice.

For many people, your home is your biggest asset and having a Declaration of Trust in place is the best way to protect your investment.

There can also be other factors to be considered when putting a Declaration of Trust in place. For example, looking at whether there would be any unintended tax consequences or other possible risks involved.

A solicitor will be able to advise you as to your position, the best way to draft the Declaration of Trust and ensure that it has been validly completed.

A Declaration of Trust does not override a Will. The Declaration of Trust will set out your interest in the property but the Will will set out what will happen to your interest in the property after you have passed away.

As well as putting a Declaration of Trust in place, you should also ensure that your Will is up to date or, make a Will if you have not previously made one. This is of particular importance to cohabiting couples or friends who purchase a property together. Unless provision is made in a Will, the survivor would have no rights under the rules of intestacy.

A Declaration of Trust in a property, or any interest in a property, must be evidenced in writing. However, it does not necessarily have to be by deed.

In reality, Declarations of Trust are usually prepared as deeds to avoid any suggestion that there is not a valid contract between the parties.

A Declaration of Trust is a legally binding agreement between the parties. It is important that the Declaration of Trust is clear and unambiguous.

If circumstances change and all parties are in agreement, a Declaration of Trust can be varied or a new Declaration of Trust can be put in place. For example, if one party has paid for an extension to the property, a new Declaration of Trust can be prepared to reflect this.

If a cohabiting couple later marry or if you are already married, the Declaration of Trust will be superseded by the Matrimonial Causes Act 1973.

The Court has the power to determine the distribution of assets between the married couple and this could mean overturning the Declaration of Trust. However, the Court would consider any Declaration of Trust in place as evidence of the couple’s intentions.

In some cases, the best way to seek to protect your interests would be to enter into a pre and/or postnuptial agreement.

This will also apply to civil partnerships.

Property ownership can be complicated. Co-owners of a property can hold the property in one of two ways:

  1. Joint tenants; or
  2. Tenants in common

As joint tenants, co-owners will own the whole of the property and will not have any identifiable share. Their interests in the property will pass automatically to the survivors and not in accordance with the terms of your Will. It is assumed that you own the property equally, regardless of contributions.

If a property is held as tenants in common, each co-owner has an identifiable share in the property, even if it is an equal split. The interests in the property will not pass by right of survivorship but instead, in accordance with the terms of your Will.

If you wish to enter into a Declaration of Trust, the property needs to be held as tenants in common.

If you hold a property as joint tenants and want to enter into a Declaration of Trust then the joint tenancy can be severed to enable you to do this.

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