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 the joint owners.

Are you buying a property with someone else? You may fit into one of the following categories:

  • Cohabiting unmarried couple
  • Cohabiting friends
  • Cohabiting relatives
  • Business partners

Are you contributing differing amounts to the deposit, fees, or mortgage payments? If so, you need a Declaration of Trust to clarify:

  • The percentage of the deposit each person will pay
  • 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

Have you ever thought about what will happen if you want to sell the property? Have you given any thought as to what will happen to the property if there is a relationship breakdown or if one party simply wants to sell up? You need a Declaration of Trust to clarify:

  • What happens if an owner decides to sell their share
  • What proportion of the sale proceeds each owner will receive if the property is sold
  • How any mortgage on the property will be paid off

You may need a Declaration of Trust:

If you are contributing a large share of the deposit for the property
A Declaration of Trust can help you protect your financial contribution in the event that you decide to sell the property or your share in the property.

If you are contributing towards purchase expenses, such as legal fees, stamp duty or removal costs
A Declaration of Trust can set out your financial contribution and specify how you wish to be repaid in the event that the property is sold.

If you are making contributions towards the mortgage
A Declaration of Trust can set out how you wish to contribute to mortgage payments and how you wish to be repaid for your contribution, should you come to sell the property.

Have you considered any mechanism for buying out your joint owner’s share in the property?
A Declaration of Trust can specify the terms upon which you transfer the property.

If you want to avoid prolonged legal disputes over finances if your relationship breaks down
A Declaration of Trust can set out if and when the property should be sold and how the sale proceeds should be divided between the owners.

When should a Declaration of Trust be created?

It is important to create the Declaration of Trust at a time when the owners of the property and other persons who may have contributed towards it are in agreement.

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