A Deed of Trust, or a Declaration of Trust as it is also known, is an important legal document that can recognise and protect financial investments in a property. It can ensure that financial contributions, both in terms of ongoing payments and initial investments, are formally acknowledged, and help to prevent disputes in the future. Read on to find out more about these deeds and why you might need one.
The Purpose of a Deed of Trust
The aim of a Deed of Trust, compiled by specialist solicitors such as https://www.samconveyancing.co.uk/news/conveyancing/deed-of-trust-4378, is to legally document financial arrangements in the case of joint property ownership. It records initial contributions and ongoing financial arrangements and sets out what should happen if one party wants to buy out another or if the property is sold.
When do you need a Deed of Trust?
Deeds of Trust are needed if you are buying property where all parties will not own equal shares. This could be in the case of cohabiting but unmarried couples, or in the case of property purchases involving family members, friends, or investors. They are not generally needed when the proceeds of a property sale would be split 50/50 anyway.
A Deed of Trust can be needed in a wide range of circumstances, however, from cases of parents paying a deposit for children to when one person cannot have their name on a mortgage, such as if they have another mortgaged property.
The Deed of Trust records how much all parties have contributed to a deposit, ongoing mortgage commitments, and how shares should be divided if the property is sold. It supersedes land registry records and mortgage records.
When should a Deed of Trust be made?
There is no set time that you have to make a Deed of Trust but, in general, it should be created as soon as possible in the property ownership process. This helps to ensure security in the event of unforeseen occurrences.
The deed is legally binding and changes a property’s ownership, and should therefore only be made after careful consideration. All parties must be in agreement on the deed and its contents. There are no rules about what it must contain and so it is important to get professional legal advice to ensure that everyone’s investments and wishes are protected. You can read more about these deeds on the Homeowners Alliance website.
Why do I need professional help?
Getting professional legal help will ensure that all future and initial financial contributions are accounted for. This may include ensuring that ‘floating shares’ are included for owners who want ongoing financial contributions to be reflected.