Declaration of Trust (Deed of Trust)
A Declaration of Trust is a legally binding agreement which records the financial arrangement between owners. It can set out who put in what and who pays for things such as the mortgage, bills, home improvement and costs and how the proceeds will be divided upon sale.
When should I make a Declaration of Trust?
You should consider making a Declaration of Trust if you are buying a property with another person and, for example:
You are not married or in a civil partnership
You are buying with friends or relatives
You are helping someone else buy a property, such as your children
You own a property and wish to add another as a legal owner without updating the legal title at the Land Registry
You own the property as a trustee of a trust
You wish to alter the way the property is owned for tax planning purposes
You should also consider making a Declaration of Trust if you hold a property in your sole name, but someone else has a financial interest in it and this needs to be recorded, for example, they have paid a lump sum, paid for an extension or have started to contribute towards the mortgage.
The Declaration of Trust can clarify things such as:
The percentage of the deposit each person paid
The percentage of the property each person will own
How much each owner will contribute towards mortgage payments
How much each owner will contribute towards fees
What happens in the event of a relationship breakdown