Declaration of Trust

Declaration of Trust – Do I Need One?

What Is It?

A Declaration of Trust is a document that clearly outlines the ownership shares where there is more than one owner of the property. This could be identified as a percentage, or this can state the specific amounts that each person has contributed to the purchase price and associated purchase costs, such as legal fees and stamp duty.

In addition to this, the Declaration of Trust will also confirm how any net proceeds are to be split on the future sale of the property, following repayment of any mortgage and payment of fees associated with the sale, such as legal fees and estate agent fees.

Who Is This Suitable For?

Where you are buying with someone else, or someone else will have an interest in the property being purchased, and you are wishing to identify unequal ownership shares, you should ensure a Declaration of Trust is put in place prior to completion of your purchase. Listed below are examples of groups of purchasers, although this is not an exhaustive list:

·         Married couples, or couples in a relationship.

·         A purchase by friends or family members.

·         Someone buying on their own (a legal owner, who will be registered on the property title held with Land Registry), but someone else is contributing to the purchase price and it is agreed that they will have a corresponding share in the property (a beneficial owner).

Why Is This Needed?

The main reason is to ensure that the ownership shares or specific amounts paid by each owner are formally documented, as this tends to prevent disputes in the future. A Declaration of Trust is a clear record of each purchaser’s intention at the time of acquiring the property, and requires each person named within the document to sign confirming their agreement. When we prepare our draft and send this to clients, all clients are provided with the opportunity to ask questions or request amendments before signing.

Furthermore, where we have buyers who are receiving gifted money (usually from the bank of mum and dad), having a Declaration of Trust in place does also provide those who are providing such gifts some comfort that in the event of a separation, the individual person who they have gifted money to will receive those funds back following the sale of the property. Please note this is on the understanding that there are sufficient funds to distribute accordingly from the net proceeds of sale.

When Do I Need to Decide If I Need A Declaration Of Trust?

Not all clients will advise us initially that they require or need advice on a Declaration of Trust. Sometimes, once we have reviewed your proof of funds paperwork, we may recommend for you to consider a Declaration of Trust based on the information we are provided with.

We tend to draft our Declarations of Trust to send to you as part of our report on title before exchange, but you can advise us at any time prior to completion if you would like us to deal with this for you. Understandably, the sooner the better so we can ensure all paperwork is correct.

We hope this has been useful. If you have any questions or would like a conveyancing quote for your purchase, please give us a call on 01403 613161 or email info@carrcobb.co.uk