Declarations of Trust.
If you decide to buy a property in unequal shares, drawing up a Declaration of Trust is a sensible idea and will help protect both parties if things don’t turn out as planned. Our expert team can help you create a Declaration of Trust that will protect you, should you need it.
What is a Declaration of Trust?
A Declaration of Trust is a legal document that sets out the financial arrangements between two parties buying a property jointly and those with an interest in a property. A good example is where an unmarried couple is buying a house together and both putting different amounts into the deposit or paying more of the mortgage every month.
As well as outlining the deposit each person paid, the document can specify the percentage of the property that each person owns, how much each person will contribute towards the mortgage repayments, and the agreement for the division of sale proceeds if the property needs to be sold.
If a third-party gift is provided to fund some of the property purchased, for example a deposit amount from a parent or grandparent, the Declaration of Trust can be used to specify that, if the property is sold, the gift will be repaid first before the proceeds of the sale are split.
How does a Declaration of Trust protect me?
A Declaration of Trust means you are clearly setting out your intentions and removes the possibility of a dispute should the worst happen.
If a dispute did arise and a Declaration of Trust wasn’t in place, you could face additional solicitors’ fees and the inconvenience and emotional stress of time spent negotiating and agreeing the sale of the property and how the sale proceeds are to be split.
If you want to make a Declaration of Trust when buying a property, you should inform your solicitor at the beginning of the purchase process so they can arrange to get one drawn up for you.
Read our blog on making a Declaration of Trust here.