A Declaration of Trust is a legal document which is also referred to as a Deed of Trust, which records the financial arrangements between everyone who has a financial interest in the property. This document may be necessary if you are buying as a joint owner or getting help from parents or someone else. A Declaration of Trust protects everyone’s interests. If the house is sold or someone wants to be bought out, it ensures all parties get what they’re entitled to in accordance with the agreement set out in the Declaration of Trust. Without a Declaration of Trust, it wouldn’t be clear how much should be repaid and to whom when the property is sold.
Every situation is different; however, you should consider the following when requesting a Declaration of Trust: –
How much each party has contributed to the deposit
How the mortgage will be paid off and how much each party will be paying towards the repayments and other outgoings
What percentage of the property each party will own
How the proceeds of sale should be split
An agreed method of valuing the property
When you buy a property as joint tenants, it is assumed that you own the property equally. If one of you passes away, the other will automatically inherit the other’s share as you cannot pass it on in your Will. You may therefore wish to consider severing a joint beneficial tenancy to a tenancy in common so that you each own a share, and this will be evidenced on title at the Land Registry. In this case, if one of you passes away that share will be passed on as set out in your Will.
If you require advice regarding the above or related issues, please contact Marie Waters on 0207 703 5034.
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