A Declaration of Trust is a legally binding document that details the ownership rights and responsibilities of unmarried people who own property together. They are most commonly used in situations when individuals contribute unequally to the deposit, will own different shares in the property or simply want certainty at the outset of how any unforeseen eventualities would be handled should they no longer wish to cohabit.
What is in a Declaration of Trust?
Every Declaration of Trust is tailored to the unique circumstances of the people who request it. Usually, these documents specify each owner’s equity percentage in the property, who will reside in the property, who will assume responsibility for maintaining or funding maintenance of the property and how each person’s share in the property would be sold or transferred in the event that the occupiers no longer wished to live together.
In order to obtain a Declaration of Trust, the owners must be recorded as tenants in common rather than joint tenants, meaning that in the event that either owner dies, their share in the property will be distributed in accordance with their particular wishes, rather than transferring automatically to their co-owner. If a Declaration of Trust is being created retrospectively, it will sever a joint tenancy and replace it with the legal status of tenants in common.
What is the purpose of a Declaration of Trust?
The fundamental purpose of a Declaration of Trust is to ensure that people are on the same page when they make a significant investment without the legal protection of marriage. This document aims to clarify expectations and prevent disputes from arising in the future as to the legal ownership status of the property.
Should a solicitor write the Declaration of Trust?
It is highly recommended that a solicitor be engaged to write a Declaration of Trust, as they are experienced in this area, can provide impartial professional advice and ensure that the document complies with legal requirements.
What does a Declaration of Trust cost?
The cost of engaging a solicitor to write a Declaration of Trust varies based upon the complexity of each individual case but is usually not more than £500 including VAT. Online specialist conveyancing firms such as https://www.samconveyancing.co.uk/news/conveyancing/declaration-of-trust-definition-294 usually offer a fixed-fee service with a free initial consultation to ensure that clients select an appropriate service for their particular circumstances.
Summary
Though it is not mandated, it is strongly recommended that anybody buying a property with a third party to whom they are not married engage the services of a solicitor to draft a bespoke Declaration of Trust for them, thereby safeguarding their investment and mitigating the risk of future ownership disputes.