If you are buying a property with friends, a partner, relatives or business partners and are contributing different amounts to the price, deposit, fees or mortgage payments, you should consider a Declaration of Trust.
What is a Declaration of Trust?
A Declaration of Trust is a legally binding written agreement which records the financial arrangement between those who jointly own a property.
When may I need a Declaration of Trust?
If you are contributing a large share of the deposit/price – it will protect your financial contribution in the event that the property is sold
If you are making contributions towards the mortgage - it will set out how the contributions are to be made and how you wish the mortgage to be repaid if you wish to sell
If you are contributing towards the purchase expenses, such as stamp duty land tax and legal fees – it will set out what you have paid and how it is to be repaid if the property is sold
When should a Declaration of Trust be done? It should be done at a time when the owners of the property and other persons who may have contributed towards it are in agreement. This would usually be when a property is purchased by or transferred to the owners.
What are the benefits of a Declaration of Trust?
- Avoids prolonged legal disputes over finances if there is a disagreement between the owners
- Sets out what is to happen if and when the property is sold
- States how the proceeds of sale should be divided between the owners
For helpful and friendly legal advice please contact Trudie Nicholas or Heather Razvi on 01432 352121 who will be able to assist.