If you’re buying your property jointly with someone else, a Declaration of Trust is essential for protecting your interests. A legally binding document, the Declaration details the financial interests of all joint owners, legally known as the beneficial ownership of the property.
This ownership sets out the ‘true’ owner(s) of the property, not just the legal owners, and in what proportion each individual has rights over the house. Any Declarations should be sent to the Land Registry to be held alongside the deed so you know it’s protected should any disputes arise.
What does a Declaration of Trust cover?
The Declaration of Trust seeks to clearly set out the key contributions and financial responsibilities of everyone involved in the transaction. This can include acknowledgment of financial contributions and any repayments, what happens if your co-owner dies, what if one party wants to sell the property without the others’ consent, who is responsible for financial aspects of the purchase such as mortgage repayments, repairs, maintenance, and insurance costs, how the property will be valued when it comes time to sell, and how the proceeds will be split, plus the background of the purchase and what contributions were made.
When should I consider a Declaration of Trust?
If a Declaration of Trust is required, it’s a good idea to do this at the house conveyancing stage so you can clearly outline rights and responsibilities straight away. Check out https://www.samconveyancing.co.uk/news/conveyancing/buying-a-house-4380 for other things you might want to consider at this stage.
Declarations of Trust are particularly important if your name will not be going on the deed but you contributed to the purchase, or if you haven’t contributed equally to the purchase. Below are some specific examples of when a Declaration of Trust would be a good idea:
-You made financial contributions to your child’s property and want to protect your interests or are expecting repayment
-One owner has paid more towards the purchase price or will be making unequal contributions towards the mortgage repayments
-You improved the value of someone else’s property, commonly if your partner already owned the property you’ve moved into
-You are buying a share of jointly owned property (for example, taking over an ex-partners’ share of the ownership)
-You intend to rent the property and derive an income from it