Declaration of Trust
Property Ownership Trusts / Declarations of Trust protect the interests of those who contribute to the cost of purchasing a property.
What is a declaration of trust between joint owners?
A declaration of trust is a legally binding document which sets out and clarifies the financial arrangements between everyone who has a financial and beneficial interest in the property. Otherwise known as a deed of trust, it could be crucial for your property purchase particularly if you’re buying as joint owners or getting help to buy a property from someone else.
A declaration of trust often relates to the purchase of freehold or leasehold property. If the property is bought in one person’s name, the declaration will help to protect another person (such as parents) who have contributed towards such costs as the deposit, the stamp duty or the mortgage payments and who may wish to recoup these contributions when the property is sold. If the house is bought in more than one name, a declaration of trust will set out the required division of any net proceeds of sale between the parties (usually in unequal shares). The declaration will be recorded at the Land Registry by reason of the entry of a Restriction against the relevant title. The Restriction will let a buyer know that the arrangement exists.
A declaration of trust is strongly advised where unmarried couples purchase a home jointly, but contribute to the deposit or the subsequent mortgage repayments in unequal shares. In the event of a relationship breakdown, the declaration of trust will document the proportions or percentage of the proceeds of sale which will belong to each of the individuals. Please note that your mortgage lender will probably require information regarding the interest split.
There are two ways in which you can own a property jointly:
- Joint tenants- Each joint tenant is an owner and they own an equal share in the property and has an equal right to keep or dispose of the property should they wish to. Should one tenant die, the property passes on to the remaining tenant. Ownership of the property cannot be passed on in wills.
- Tenants in common- Each of the co owners owns separate shares in the property. The property won’t necessarily pass to the remaining party following death as you are able to pass on your shares in your will. A deed of trust is particularly important where people have unequal interests as tenants in common.
What can our expert solicitors do for you?
Buying a property is stressful and declarations of trust are complex. You’ll need a conveyancing solicitor to guide you through the process.
At Eric Robinson Solicitors we will talk to you in a language you understand and guide you through the process from start to finish. Should you need a declaration of trust written up our team of expert lawyers can help. We have years of experience and can create something of beneficial interest to both parties.
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