Deed of Trust Solicitors

People who purchase a property together, or who help a relative to buy a home with a lump sum, should legally record what contribution has been made by each person if they wish to protect their investment. This can be done in a document known as a deed of trust, or sometimes a declaration of trust.

If you are thinking of purchasing a home with a partner and need legal advice on how best to protect your investment, the expert deed of trust solicitors at JMW can help. It is important to seek legal advice on the terms and structure of a deed of trust, because what such a document says about your financial contributions and obligations can have significant consequences if you later sell the property or separate from the other joint owner.

For many years, we have guided friends and partners through this area of the law, and we enable you to buy a property together in a stress-free and happy process. To speak to one of our specialist solicitors, call JMW on 0345 872 6666 or complete our online enquiry form.

How JMW Can Help

When you purchase a property with someone else - whether a partner, a parent or simply a friend - a deed of trust is a vital way to protect your financial interest in the property. It recognises your contributions to the property's purchase price, which is especially important if you are paying in unequal shares, and can contain provisions to make sure sale proceeds reflect the share that each party owns based on their payments.

At JMW, our solicitors have extensive experience helping people draw up a declaration of trust that suits each party. We will create a deed of trust that helps you to avoid disputes by clarifying the terms of your situation in specific detail.

We aim to guide you through the matter with clear legal advice that is free from complex legal jargon, resulting in a hassle-free process. From the start of the process, we will discuss your circumstances in detail and draw up a deed of trust that contains all the required information to fully and legally protect your investment. With a long track record of success and a thorough understanding of deeds of trust from all legal angles, JMW is in a strong position to deliver the right document for your needs.

Meet Our Team

JMW’s team provides expert guidance and support for individuals setting up a declaration of trust. With many years of experience, we can help you to protect your property interests with legal clarity when you decide to purchase a property with someone else.

What is a Deed of Trust?

A deed of trust can be used when two or more unmarried parties choose to move in together, or decide to live in a property already owned by one of the prospective tenants. It is a legally binding document that outlines the proportion of a property that is owned by each tenant, how it was funded and how the proceeds of a sale will be dealt with in the future. It can also be used to protect the investment of a third party (such as a parent) who is not in the title but has contributed to the purchase of the home. In the event of a dispute, the document can be produced by the legal owner to demonstrate the original agreement that was in place when the property was purchased.

While a property's title deeds record legal ownership, there is no breakdown of the specific percentages that each party owns based on their contributions in the Land Registry's view. This can result in one party contributing significantly more money to the property than another, but being forced to split sale proceeds 50/50 when the property ownership changes hands. By acting as a legal document with evidence of each party's contributions, a deed of trust can minimise this risk and create a fair financial arrangement for all parties.

A deed of trust is separate from a trust deed. The latter is a broad term for a document that sets out the terms of a trust. A deed (or declaration) of trust is a subtype of a trust deed and is a document wherein the person or people owning an asset (usually a property) affirm that they hold it on trust, in designated shares for themselves and/or other parties.

A declaration of trust is particularly useful for avoiding disputes relating to ownership of the property if a couple later splits up, or if one party wishes to move out and reclaim their financial contributions.

How Can a Declaration of Trust Protect Financial Contributions?

A deed of trust safeguards all parties' interests in a property and confirms that each person receives their rightful portion based on their initial investment when the property, or any portion of it, is sold.

There are several scenarios in which this type of document may be used to protect someone's financial interests:

Purchasing property as an unmarried couple

Couples who are not married or in a civil partnership lack the legal protections given to those in legally recognised relationships. This lack of protection can lead to unfair treatment when dealing with a jointly-owned property in case of a relationship breakdown. A declaration of trust can eliminate this uncertainty by clearly defining what each party is entitled to if the relationship comes to an end.

Safeguarding an individual not listed on the mortgage

Various circumstances may lead to someone having a stake in a property and making payments towards it without their name being on the mortgage. This can arise due to poor credit, existing debts rendering the person unsuitable for another mortgage, or because they are moving into a home already owned by someone else. Alternatively, a parent or family member may contribute a deposit or other amount of money to support the purchase of a property.

A deed of trust documents this particular arrangement and guarantees that the rightful parties maintain their beneficial interest if it's relevant. This can be a way to protect a parent's interest or that of someone who is making financial contributions without being named on the property title deeds.

Minimising conflict-related risks

A house represents a significant investment, and everyone with a stake in it deserves to have their funds secure. The Land Registry records legal ownership but does not reflect the specific percentages each party has contributed to a property. This discrepancy can result in stakeholders potentially losing out when selling without a legal document evidencing their contributions. Implementing a deed of trust helps to prevent any such disagreements or misunderstandings. Without a declaration of trust, it becomes complicated to determine who should be compensated and how much they should receive upon selling the property. This is because mortgage payments and other contributions will not be suitably accounted for in any legal documentation. Speak to the expert team at JMW to learn how a deed of trust could provide clarity for you and your loved ones when purchasing a property together.

What Is the Process of Implementing a Trust Deed?

The process of creating a deed of trust begins when you contact the team at JMW. We can discuss the specifics of your situation and whether or not a deed of trust is the right option for your needs. After you meet with our solicitors and explain your financial situation, we will compose a draft declaration of trust and forward it to you for review.

The deed of trust should outline the following, where they apply:

• How much of the mortgage is to be paid by each party
• How utilities and other outgoings will be paid for
• A method of valuing the property
• Arrangements that will apply in the event that you buy each other out

Once finalised, a final copy is drawn up and executed. Executing the deed requires it to be signed, dated, attested by a witness and then ‘delivered’, which simply means indicating that you intend to be bound by the deed. A declaration of trust will not always impact a property's mortgage, but if it does, the parties involved in drafting the deed must secure the lender's consent before the document is signed.

If restrictions are to be recorded at the Land Registry, we will then submit the necessary Land Registry application on your behalf. Registering a Deed of Trust as a restriction on the Land Registry serves to safeguard the interests of all parties involved in the Deed of Trust.

Q

When should I establish a deed of trust?

A

Ideally, the declaration of trust should be agreed and signed by all parties before a property purchase, and dated to begin when the purchase is complete. While it is possible to complete the deed of trust after the completion, no party can be compelled to sign it at this stage, which makes it potentially less effective.

As long as all parties are in agreement, the deed of trust can be amended or even waived completely, so there is no risk involved in preparing it early. It is also possible to produce a new deed of trust if the parties wish to amend their shares of the property later. For example, the parties may adjust the share of rental income each party receives or wish to account for contributions made since the property was bought. Care should be taken in these circumstances as tax charges can apply.

Q

Is a declaration of trust legally binding?

A

A declaration of trust that has been prepared correctly is a legally binding document. Like any other legal agreement, it must satisfy several criteria to be legally recognised. It must be drafted as a formal legal document by a legal professional, and all involved parties must prove that they willingly entered the agreement with full understanding of its implications. Finally, all parties must sign it with witnesses present.

In some instances, there is a differentiation between a declaration of trust and a deed of trust. The former may be seen as a less formal document that simply outlines the division of the property ownership into shares, without including additional legal ownership clauses or sale provisions. A declaration of trust must fulfil the requirements of a deed for execution as outlined above to be legally sound.

Q

Can I draft my own declaration of trust?

A

A declaration of trust is intended to be a unique document detailing the financial arrangements between co-owners of a property and other interested parties. While you can find templates online, these will not contain any of the crucial details that are specific to your property purchase and may not be legally binding if not executed correctly.

To make your deed into a formal legal document requires accurate wording, and it must be signed and witnessed before execution. A solicitor can guarantee that the document is legally robust and accurate, and help you to avoid uncertainty.

Finally, engaging a solicitor who can provide advice on the arrangements proposed in the declaration of trust can potentially save on legal fees by preventing disputes from arising later.

Q

Can you overturn a deed of trust?

A

A deed of trust aims to eliminate any confusion about the future of each party's investment in a property. It is a legally binding document designed to contain clear provisions that safeguard against misunderstandings, disputes and changes of mind, so it is intentionally challenging to dispute in court and difficult to alter.

As such, you will need the unanimous consent of the original signatories to amend or rewrite the deed of trust. For small changes, a deed of variation can be added to the original document to incorporate extra clauses. As long as the new deed clearly states which portions of the original document it is replacing, this can be a straightforward method to update minor details.

For larger modifications, it might be necessary to create a new deed of trust, which will nullify any older versions.

Q

What are the different ways a property can be owned jointly?

A

There are two different ways in which you can own a property jointly:

Joint tenants

Property held as joint tenants means each party owns an equal share of the property and one party has the equal, undivided right to keep or dispose of the property. This also means the property automatically goes to the other owners if you die, and that you cannot pass on ownership of the property in your will.

Tenants in common

Property held as tenants in common means that each tenant owns separate and distinct shares of the property. In this case the property will not automatically go to the other owners if you die, and you are able to pass on your share of the property in your will.

Q

What happens to a deed of trust if you marry?

A

If a cohabiting couple with a declaration of trust decides to marry, matrimonial law supersedes the deed. The court then has authority in settling a divorce, and it can determine the handling of property owned by the married couple.

If a married couple separates and the divorce proceedings reach court, the deed of trust will be considered as a reflection of the couple's intentions. However, the court is not required to adhere to the conditions outlined in the deed.

Married couples should think about substituting a deed of trust with a prenuptial or postnuptial agreement if they want to establish legally enforceable agreements that differ from the default terms of matrimonial law.