A Declaration of Trust may also be known as a Trust Deed. Couples, friends or relatives who live together, and contribute to household expenses should consider having a deed in place.
Conveyancing Executive, Natalie Crowhurst, explains, “A Declaration of Trust is a legally binding document that sets out the financial arrangements between joint owners of a property. If one party is contributing more financially than the other towards the property, it will protect their investment in the event that the property is sold.”
A Declaration of Trust will encompass:
- The percentage of the property each person will own
- The percentage of the deposit each person will pay
- How much each party will contribute towards mortgage payments
- How much each will contribute towards purchase expenses such as legal fees, stamp duty and removal costs
- How property expenses will be paid
- Insurance payments
- Repairs and maintenance
Consideration should be given to what will happen if one owner wants to sell the property and the other does not, and what proportion of the equity each owner will receive. This can be incorporated into the agreement along with the basis on which sale proceeds are divided between the owners.
Having a Declaration of Trust in place will avoid prolonged and acrimonious legal disputes if the relationship between the cohabitees breaks down. Arrangements contained in the deed are protected by an entry on the title register of the property, co that the property cannot be sold unless the sale is in accordance with the terms of the declaration.
If you would like to discuss setting up a Declaration of Trust please contact our Property Conveyancing Team who will be happy to advise you.
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