A declaration of trust is a legal document used to establish the way a property is financially divided between two or more individuals as tenants-in-common or to establish an individuals’ beneficial interest in a property.
Where two or more people own a property they may have different shares or may have made different contributions to the purchase of a property. Owning a property is one of the biggest financial steps you can take and often, you will certainty about that investment and what you will receive if it is sold in future. Similarly, you may inherit a share of a property and want to have evidence of the share of equity you now own.
A declaration of trust can also be useful in establishing where a loan has been made, for instance where parents assist in the purchase of a property but wish to recover that investment if the property is sold. This can also protect their investment where a couple is loaned money but ultimately separate as it makes it clear that part of the property is owned by the parents giving the original deposit monies.
A declaration of trust is only between the parties owning a beneficial share of the property. It does not affect your mortgage in that your obligations to your mortgage provider are joint – both parties will still be equally liable for ensuring the mortgage is paid.
The land registry is mainly interest in the legal title of the property. You can have up to 4 owners listed on the land registry but you could have more people who are entitled to a beneficial ownership. Usually, a restriction will be registered with the land registry if not already in place and it is beneficial to provide them with a copy of the signed declaration.
We can assist with drafting a declaration of trust to suit your needs and specific circumstances. We will discuss the options available in terms of fixing shares or floating shares and how you wish to take into consideration contributions such as mortgage payments or improvement works.
Details of our charges can be found here.
