If you are involved in the process of jointly buying, selling, transferring or remortgaging a property, then you may be wondering what a Deed of Trust is and whether you need one.
If you are planning to or already jointly own a property with someone else, a Deed of Trust sets out who owns what proportion of the property.
This is often determined by who the legal owner is, what contributions each party makes to the property and agreements you already have in place such as a Cohabitation Agreement or Wills.
Having a Deed of Trust is often helpful in preventing disputes from arising further down the line as both parties have already agreed on how the property will be managed. A Deed of Trust can also outline how the property will be divided in the event of a sale.
This blog will look at what a Deed of Trust is, how long it lasts and how much it costs.
What is a Deed of Trust?
A Deed of Trust, also known as a Declaration of Trust, is a legal document outlining who owns a property and in what proportion.
It's commonly used in cases where multiple individuals jointly own a property, especially if they contribute unequally to its purchase or mortgage payments.
The Deed of Trust specifies each party's share of ownership and outlines their rights and responsibilities.
It safeguards the interests of co-owners and helps avoid disputes by providing a clear agreement for property ownership. It can also include provisions regarding the distribution of proceeds in case of sale or other circumstances.
Is a Deed of Trust legally binding?
Yes, a Deed of Trust is legally binding. It serves as a formal agreement between parties regarding the ownership and distribution of interests in a property. Once signed, it is legally binding and can be enforced in court if necessary.
As with any legal document, it's crucial to ensure that the Deed of Trust is drafted accurately, signed by all relevant parties, and properly witnessed to ensure its validity and enforceability under the law.
What is a Declaration of Trust?
Most conveyancing solicitors tend not to distinguish between a Deed of Trust and a Declaration of Trust. Generally, both terms are used interchangeably to refer to the same type of legal document.
A Deed of Trust is a legally binding document that includes a Declaration of Trust along with other statements (referred to as 'trusts') outlining how the assets held in trust should be managed.
When is a Declaration of Trust necessary?
A Declaration of Trust is recommended when multiple people purchase property together, especially if they contribute unequal amounts to the purchase price or ongoing expenses.
It can also be used in situations where one party provides financial assistance to another in purchasing property.
What information should be included in a Declaration of Trust?
A comprehensive Declaration of Trust should include details such as the names of the co-owners, their respective ownership shares, the property address, provisions for mortgage payments and expenses, procedures for selling the property, and any other conditions agreed upon by the parties.
How long does a Declaration of Trust last?
A Declaration of Trust typically remains in effect for the duration of property ownership. The parties involved can amend or terminate the Declaration of Trust through a Deed of Variation, but this may have legal and tax implications.
Upon the death of a property owner, the Declaration of Trust dictates the distribution of their share of the property, either in alignment with their Will or according to intestacy laws if no Will exists.
How much does a Declaration of Trust cost?
The cost of a Declaration of Trust can differ depending on the solicitor and typically ranges from £200 to £1000. Several factors can influence the price including your solicitor's fees, the complexity of the case, and the property's purchase price.
If you instruct one of our solicitors to create a Declaration of Trust, we will advise you of the cost once we have more information about what you require.
Does marriage affect a Declaration of Trust?
If a couple living together and holding a Declaration of Trust decides to marry, the Matrimonial Causes Act 1973 will take priority over the deed.
This essentially means that when you marry all of your assets including property become jointly owned and are liable to be divided equally should you divorce.
If a married couple splits and their divorce goes to court, the Declaration of Trust will still be considered as evidence of their intentions. However, the court is not obliged to uphold the terms of the deed.
To ensure your wishes are still legally enforceable once you marry, you should consider replacing your Declaration of Trust with a prenuptial or postnuptial agreement as soon as possible.
Get in touch with our Deed of Trust solicitors
If you are buying or selling a property and you would like to speak to one of our expert conveyancing solicitors, we will be happy to hear from you.
We offer a range of flexible fees for our conveyancing services. This includes fixed fees for straightforward work, giving you a clear indication as to how much you will need to pay from the outset. If additional fees are required to complete your transaction, your solicitor will let you know.
Please give us a call or fill out our online quote form and we will contact you shortly.
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