If you are considering buying a property with someone else and are a co-habiting couple, co-habiting friends or relatives or maybe business partners, you may consider having a Declaration of Trust drawn up.
A Declaration of Trust is a legally binding document that sets out the financial agreements between the joint owners. If one party is contributing more financially than the other towards the property it will protect their investment in the event that the property is eventually sold.
A Declaration of Trust will encompass:
- The percentage of the property each person will own
- The percentage of the deposit each person will pay
- How much each party will contribute towards mortgage payments
- How much each owner will contribute towards purchase expenses such as legal fees, stamp duty and removal costs.
Heather Varley, an Associate in our Wills & Tax Team, explains “Consideration should also be given to what will happen if one owner wants to sell the property and the other one does not and what proportion of the equity each owner will receive. This can be incorporated into the agreement along with the basis on which sale proceeds are divided between the owners. Having a Declaration of Trust in place will avoid prolonged and acrimonious legal disputes in the unfortunate event of a relationship breakdown.”
Arrangements contained in the Declaration of Trust are protected by an entry on the title register of the property, so that the property cannot be sold unless the sale is in accordance with the terms of the Declaration.
For a free initial consultation please call 01202 499255 and Heather will be happy to discuss any questions you may have.