What is a Declaration of Trust?
When purchasing property with another person, financial contributions and ownership rights can sometimes become unclear. A Declaration of Trust is a legally binding document that helps define each party’s stake in a property, ensuring transparency and protection for all involved.
Understanding a Declaration of Trust
A Declaration of Trust, also known as a Deed of Trust, is a formal agreement that outlines how a property is owned and managed. It is commonly used when multiple individuals contribute financially to a property purchase but do not necessarily hold equal shares.
This document specifies:
- The percentage of ownership each party holds
- Responsibilities for mortgage payments, maintenance, and expenses
- Rights to occupy the property
- Procedures for selling or transferring ownership
Why might you need a Declaration of Trust?
A Declaration of Trust is particularly useful in situations such as:
- Buying with a partner: If one person contributes more to the deposit, this document ensures fairness in case of separation or sale.
- Investing with a friend or family member: It clarifies ownership proportions and prevents disputes.
- Receiving financial help from parents: If parents contribute to a deposit, the document can specify whether it is a gift or a loan.
Is a Declaration of Trust legally binding?
Yes, a Declaration of Trust is legally enforceable in the UK. It goes beyond what is recorded in the Land Registry, ensuring that financial contributions and ownership rights are protected.
How we can help
A Declaration of Trust provides clarity and security for property owners, preventing misunderstandings and ensuring fair treatment for all parties involved. Whether purchasing with a partner, friend, or family member, this document can safeguard financial interests and simplify future transactions. Speak to our professional and experienced Private Client team today on 01525 378177 or email info@ommlaw.co.uk.
