What is a declaration of trust?
Declaration of trust is used where you own a property jointly with another person as Tenants in Common, rather than Joint Tenants. Tenants in Common is chosen where you and your co-owner(s) each wish to have distinct shares in the property.
Declaration of trust is the document, which sets out the respective beneficial shares held in the property, financial contributions to the purchase and the individual contributions towards the mortgage payments and defines the shares you each hold in the property.
The importance of a declaration of trust in property co-ownership
Our expert Residential Property Team will work with you to draft this document to safeguard your interests and ensuring you have peace of mind, in that it also deals with the procedure for a sale of the other co-owner’s share in the property or sale of the property, if one owner wishes to sell and the other co-owner does not want to sell.
In the absence of a Declaration of Trust, there is a risk of uncertainty at a later date should a dispute arise between the property co-owners over the distribution of the future sale proceeds or the procedure to sell the property or transfer ownership of a share in the property to the other.
Depending on your circumstances, there can be other matters, such as inheritance tax planning or cohabitation arrangements, which you need to consider alongside, or as an alternative to, a Declaration of Trust.
If you are considering a Declaration of Trust, contact our Residential Property Team to discuss whether this is the right option for you.