what is declaration of trust

What is a declaration of trust?

What is a declaration of trust?
If you’re thinking of buying a property with a partner or someone else, you may well benefit from a Declaration of Trust. This document outlines each parties’ share in the property and explains the rights and obligations of each owner. Rights and obligations may refer to outgoings, mortgage repayments and more. A Declaration of Trust also explains what the situation will be if an owner decides to give up their share of the property and gives the remaining owner the chance to buy the remaining share. When a buyout doesn’t occur, the property will be sold on the open market, with the money from the sale being paid back to the owners. The document also explains how the value will be worked out if there is a disagreement between the owners.
‘Joint tenants’ and ‘tenants in common’
When properties purchased jointly, the owners can be treated as ‘joint tenants’ or ‘tenants in common’. When you own as joint tenants, you both own the property in its entirety together, so if the one person passes away, the property is still held in the names of the remaining owner or owners. The terms of the will have no effect on this. If you are tenants in common, each person owes distinct shares. The property will be divided into shares, which may be split 50/50 but could also be split 60/40 or any way you decide. The shares will pass in line with your wills. If you do own a property as tenants in common but don’t have wills in place, it’s wise to resolve this situation at your earliest opportunity.
A legally-binding document
Declarations of trust are also called deeds of trust. They are often used when unmarried couples decide to live together, or when one party moves into a home already owned by their partner. If a third party like a parent that doesn’t feature on the title but has helped fund the home’s purchase, their investment can be covered. The document can include information such as provisions for children, how outgoings are covered and how much of the mortgage needs to be paid by each individual. The document is legally-binding and can help resolve disputes should they arise later, particularly when a relationship comes to an end. The document can also be amended or even waived later if both or all parties agree to this.
Making sense of matters
This area of the law can become very complex, so if you are thinking about drawing up a declaration of trust, talk to Miller Reeves today. We have vast experience when it comes to helping couples draw up declarations of trust and can take much of the stress and strain out of purchasing a property together. We can provide you with accurate, up-to-date information from market-leading legal experts, and you are welcome to contact us at any point if you do have any queries about what we can do for you. To get in touch today, simply send an e-mail to info@millerreeves.com or call 0333 300 1882.