What is a Declaration of Trust?

In many situations when two or more people to buy a house together, they split the price equally. However, there are some cases where one person may pay more than the other(s) and want a proportionally bigger share of the property as a result.

In these cases, the best way to accurately reflect how much each tenant owns is by creating a Declaration of Trust. In this post, our experienced conveyancing solicitors explain what a Declaration of Trust does and whether you need one.

What is a Declaration of Trust and what does it do?

A Declaration of Trust is a document that establishes true ownership of a property with two or more owners, and sets out financial arrangements and procedures should the ownership arrangement change. It also covers anyone who has a financial interest in the property, such as parents who have helped to buy a property but do not want to be listed as owners. Under the Trustee Act 2000, a Declaration of Trust is legally binding, and allows an individual to be treated as the owner of a property even if they are not listed on the land registry. In essence, it’s a ‘just in case’ document; it sets out what will happen should the current arrangement change, and prevents any arguments about who owns what, or how much money one owner is owed compared to the other.

A Declaration of Trust is typically used by joint owners to decide who gets what if their partnership doesn’t work out. As a result, it confirms how much of a property each owner is entitled to, and sets out the exact details of the purchase arrangement.

Other things a Declaration of Trust can cover include:

  • How much each person must contribute to the mortgage, and how it will be paid off.
  • How the value of the property will be split should it be sold, and procedures to govern the sale if the relationship breaks down.
  • How to divide payments such as council tax, household maintenance, insurance and damages.
  • Provisions if one owner wishes to pay the other owner for their half of the property, and provisions for any children if this occurs
  • An adjustment mechanism if one party pays above what they would normally for a period of time.

Who should get a Declaration of Trust?

New homeowners often use a Declaration of Trust. This is because it acts as a legal and permanent testimony to their ownership of the property, showing exactly how much they have paid and what they own as a result. A Declaration of Trust can be used by both joint tenants and tenants in common.

It’s also a useful option for cohabiting couples, as cohabitation agreements are not always legally binding – something that can lead to arguments if the relationship ends. A Declaration of Trust is legally binding and clearly states who owns what, preventing arguments over who is entitled to the property.

Contact Foys today – we can help you make a Declaration of Trust

Making a Declaration of Trust isn’t always simple, mainly because you need to think of every single eventuality. Whether you’re looking at a personal or commercial property, getting expert help is vital. At Foys, we have many years of experience drafting these Declarations, and our expert conveyancing solicitors can help you plan for the future, no matter what it entails.

To find out more, get in touch using our Online Form, or contact your local office:

Doncaster – 01302 327 136
Retford – 01777 703 100
Worksop – 01909 500 511
Clowne – 01246 810 050
Rotherham – 01709 375 561
Sheffield (Waterthorpe) – 0114 251 1702
Sheffield (Chapeltown) – 0114 246 7609

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