A declaration of trust (sometimes called a deed of trust) is a legal document that sets out how you and someone else own a property together. It can be especially useful if you are buying a home with a partner, friend, family member, or even as an investment with someone else.
Here is a plain English guide to the benefits of having one:
1. Protects each person’s financial contribution
If you are putting in different amounts towards the deposit, mortgage, or improvements to the property, a declaration of trust records this clearly. For example, if you paid 70% of the deposit and want to get that back first if the house is sold, it can say so.
2. Reduces disputes later on
It sets out what happens if one person wants to sell, move out, or take their money out. This helps avoid arguments and misunderstandings because everyone knows what they agreed to from the start.
3. Shows who owns what share of the property
The document can show whether you own the property 50/50 or in different shares (for example 60/40). This is especially important if you want the property value or profits divided fairly if it is sold in the future.
4. Helps with life changes
It can include what happens if your circumstances change – for example, if one person loses their job, gets married, or passes away.
5. Useful for unmarried couples
If you are not married or in a civil partnership, the law does not automatically protect your financial interest in the property. A declaration of trust can give you evidence of what you own.
6. Supports mortgage agreements
Lenders often ask for clarity about who owns what if more than one person is named on the mortgage. A declaration of trust can help reassure them.
7. Can include extra agreements
You can add rules about:
who pays the bills
how much each person contributes to the mortgage
what happens if one person wants to buy the other out
8. Makes inheritance clearer
It can say who gets what if one owner dies. This can work alongside a will to make your wishes clear and avoid complications for your family.
Why is it important?
Without a declaration of trust, the law may assume that you own the property in equal shares, even if one person paid more. This could lead to one person losing out if the property is sold or if there is a dispute.
Call 01253 629300 for futher information.