If you intend to purchase a property in partnership with one or more other individuals, you will need to clearly define the division of ownership. A deed of trust is a legal document setting out each party’s share of the property so their rights and investment are protected.
What is a deed of trust?
In UK law, a deed of trust, also known as a declaration of trust, is the legal document that delineates each person’s percentage of a shared property, including how much money they invested in its purchase and maintenance, and how any proceeds will be distributed should it be sold. This is particularly important for tenants in common in cases where ownership is not split evenly, but each partner contributes a different amount to the deposit, mortgage and any other costs such as bills or renovations.
Why establish a deed of trust?
Without a deed of trust, you risk disagreements if you want to sell the property, or even just your share, but there is no official document recording your entitlement. A deed of trust ensures your return is proportionate to your investment. For unmarried couples or people who invest in a property but do not have their name on the mortgage, it offers significant protection.
How to obtain a deed of trust
The best way to obtain a deed of trust is to retain a solicitor or conveyancer with relevant expertise to draw up the paperwork. There will need to be a witness when you sign the deed. This should be done when you first purchase the property, alongside completing all other legal requirements.
It is also possible to establish a deed after purchase. The value of the property must first be assessed. A deed of variation can be used for minor modifications to the deed of trust, but for more significant changes, it may need to be rewritten.
Deeds of trust are a valuable way to protect your property interest when you share ownership and costs with other parties. Talk to a solicitor about ensuring that ownership and proceeds are fairly divided.
