Sam Edwards
Senior Writer & Researcher
When two or more people enter into the legal ownership of a property, a Declaration of Trust (also known as a Deed of Trust) can be a useful document to have around. But a trust deed is a legally binding document - that's why it's worth understanding the bigger picture before you take one out.
In simple terms, a Declaration of Trust is a roadmap for shared property ownership. So if you and someone else are buying a house together, it's a smart move. It serves to protect your interests in the property.
The document spells out who owns what, how costs are split, and what happens if things change, like selling the property. While not a must-have, getting a Declaration of Trust clarifies the nitty-gritty details, avoiding potential disagreements and keeping your partnership on solid ground.
As a legal document, a Declaration of Trust is fairly extensive, covering all of the terms and financial arrangements associated with the management and ownership of a property. It outlines info on:
A Declaration of Trust is designed specifically for individuals who are looking to purchase a home together, including:
A Declaration of Trust can vary in price from solicitor to solicitor, with some deeds costing £200 and others £1000. The price is dependent on the solicitor in question, the complexity of the case, and the purchase price of the property.
In the purchase of a property, the declaration itself is usually drafted as part of the legal services provided by a solicitor, and the associated fees for drafting this document are included in the solicitor's overall fee structure rather than listed separately as a disbursement.
Get in touch with a solicitor's private client team to find out more about their legal fees. Or if you want to know more about the costs associated with conveyancing specifically, check out our handy guide to conveyancing fees.
Yes, a declaration is a legally binding document. A declaration is a formal legal agreement that outlines the terms and conditions regarding financial interest, management, and distribution of assets, typically in the context of shared ownership, investments, and estate planning.
As with most formal legal documents, a declaration is designed to be unambiguous and comprehensive, which makes it pretty difficult to challenge in court. Only where fraud or misrepresentation can be proved to have occurred will a court consider disregarding the contents of a declaration.
However, it is possible to amend or update the contents of a Declaration of Trust with a Deed of Variation - or replace the old declaration entirely with a Deed of Surrender.
If circumstances change and an existing Declaration of Trust no longer meets the requirements of the parties involved in the property, the parties can agree to take out a Deed of Variation.
This legal document allows the parties to make changes to the original terms without rewriting the entire agreement. Once all parties agree on the changes, they sign the deed of variation, making the adjustments legally binding.
Unlike a Deed of Variation which amends parts of a Declaration of Trust, a Deed of Surrender allows a party to surrender their rights or interests to the property mentioned in a declaration. Depending on the circumstances, the parties involved might need to create a new agreement or update the existing one to reflect the changes resulting from the surrender.
With a Deed of Variation and a Deed of Surrender being two ways one can amend or withdraw from a Declaration of Trust, what are your options for actually getting rid of the declaration?
A Declaration of Trust is solid evidence of the intentions of all parties at that single period in time. You can't just get rid of it if you decide you want a different share of things.
However, circumstances do change, and if all parties agree that they want to change the terms in light of present circumstances, this can be achieved through a Deed of Variation.
This can happen if the court determines that the declaration is fundamentally unfair and would cause serious detriment to one or more parties in divorce or dissolution proceedings. The court can then change your beneficial split when awarding shares and assets.
The proceeds are split according to the deed. When your conveyancing solicitor is satisfied that the terms have been met, they'll remove the restriction placed on the legal title at HM Land Registry.
A new marriage can prompt changes in your ownership of your primary residence. For instance, you may wish to transfer from sole ownership to joint tenancy with your spouse. This, of course, will affect the relevance of the Declaration of Trust.
If you have a prenuptial or a postnuptial agreement, their terms can influence the impact of the marriage on the Declaration of Trust. As such, the declaration should be consistent with the terms in the marital agreements to avoid any conflicts.
In the event that the marriage dissolves, other factors can be given weight over the declaration. For example, if children are involved, their needs must be met and assets can be used to maintain their upbringing.
Regardless of the declaration, the Matrimonial Homes Act 1983 provides certain rights to spouses regarding the matrimonial home. This includes the right to live in the home unless a court order or agreement specifies otherwise. So even if one of you owns the property outright, your spouse has the right to occupy it.
When it comes to owning property with more than one person in the UK, the most common types of co-ownership are joint tenants and tenants in common. So, how does a Declaration of Trust give a boost to these owners?
In a joint tenancy, each owner has an undivided interest in the whole property, and if one owner passes away, their share automatically transfers to the surviving owner.
While joint owners have the right of survivorship, a declaration can still be useful to outline specific arrangements, such as the division of responsibilities, financial contributions, or how the property will be managed.
With tenants in common, each owner holds a distinct and separate share of the property. This share can be unequal, and it can be transferred or inherited independently.
A declaration can be particularly valuable for tenants when they want to specify the percentage ownership of each co-owner, outline responsibilities for property expenses, or establish what happens to a share in case of death or sale.
If you're venturing into joint homeownership, securing a Declaration of Trust is a non-negotiable step. This essential document not only clarifies ownership details but also serves as a safeguard for your shared interests.
Remember: your first crucial step is to seek legal advice from a seasoned solicitor or conveyancer. Your home-buying conclusion deserves the assurance that comes with a thoughtfully crafted and legally sound agreement.
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