A Declaration of Trust, also referred to as a Deed of Trust, is a legally binding document which outlines how a certain asset is to be held by everyone who has an interest in it.
Declarations are most commonly used when purchasing a property with another person/s (or where other people are assisting you with the purchase) with all parties wishing to record their financial contributions legally.
More specifically Declarations are used to ensure that:-
- each party receives what they are entitled to should the property be sold;
- who is to be financially responsible for the property during ownership – such as mortgage payments and the day-to-day running of the property;
- to set out the procedure that must be followed in the event that the property is sold;
- to set out the procedure to be followed in the event that one party wishes to realise their investment in the property, whereas others may not;
- to protect parties who have contributed financially towards the property who have not been added to the Deed to the property;
A carefully prepared Declaration of Trust has the benefit of removing any ambiguity around what might happen to any interested party’s interest in the property going forward, and is designed to safeguard against any misunderstandings or disagreements. This is why we encourage Declarations to be as comprehensive as possible, with the same recording far more than simply ‘who owns what’.
If you are considering purchasing a property (or have already purchased a property) and any of the following are applicable to you:
- you are purchasing a property with other people and are contributing unequally towards the purchase price;
- you have taken out a joint mortgage although will be settling the monthly mortgage payments in an unequal way; or
- third parties contributing financially towards the property, such as the ‘bank of mum and dad’;
then we would highly recommend that you contact a member of the Private Client team here at Paul Robinson so that we can discuss the benefits of a potential Declaration of Trust in further detail with you.