Buying a house with someone else? Whether it’s with a partner, a sibling, or a business partner, one big question often gets overlooked: What happens if things change down the line?
You might both start with the same intentions, but if one of you puts in more money or wants to sell the property later, the waters can get murky fast. Setting up a Deed of Trust (also called a Declaration of Trust) is a clear, legally binding way to protect everyone’s interests in a property from day one.
What is a Deed of Trust?
A Deed of Trust is a legal document that records who owns what share of a property, and what should happen if things change.
It’s useful when you’re not all putting in the same amount. Maybe one of you is covering most of the deposit, a parent’s lending some money, or you’re buying with someone who won’t be on the mortgage. A declaration of trust sets it all out clearly, so there’s no confusion later on about who owns what.
By law, you don’t need a Deed of Trust, but without one, there’s no official record of who paid what or what should happen if circumstances change. That leaves a lot of room for misunderstandings (and legal headaches) down the line if someone wants to sell, move out, or stop contributing financially.
How to Set Up a Deed of Trust (Step by Step)
Setting up a Deed of Trust might sound formal, but it doesn’t need to be complicated. Here’s how the process works with Triangle Legal Services:
1. Initial Chat
We’ll start with a no-pressure conversation to understand what you’re trying to protect. Regardless of if you’re buying as a couple, getting help from family, or investing in a property with someone else, we’ll listen to your plans and talk through what’s important to include.
2. Gathering the Details
Once you’re ready to proceed, we’ll collect information like how much each person is contributing, who’s named on the mortgage and the title deeds, and any specific terms you’d like included. These might include gift repayments, how sale proceeds should be split, or future buyout options.
For example, if two joint owners buy a home together but one person is putting in a much larger deposit, the Declaration of Trust can confirm their larger share in the property from the start. If they later sell the shared property, the deed can make sure they’re repaid fairly, even if the ownership split or mortgage payments have changed over time.
3. Drafting Your Agreement
We’ll then prepare your Deed of Trust, written in plain English and bespoke to your situation. You’ll have time to review the draft, ask questions, and make any changes before signing.
4. Signing & Storing
Once everyone’s happy with the final wording, we’ll guide you through the signing process and explain how to keep the document safe. It doesn’t need to be registered anywhere officially, but it should be stored with your property and mortgage paperwork.
5. Optional Land Registry Restriction
In some cases, we’ll recommend registering a restriction on the title with the HM Land Registry. This adds a simple note to show a trust deed exists, which helps protect everyone’s interest if the property is sold or remortgaged in the future. We’ll let you know if this step is needed and handle it for you.
What does a Declaration of Trust for property include?
Before your deed is drafted, you’ll need to decide what you want it to cover. This means thinking ahead to how you’d like things to work if circumstances change later on.
We appreciate that you don’t have a crystal ball, so we will talk you through common scenarios to plan for and details you might want to include:
Decide How Ownership Will Be Split
Start with the numbers. How much is each person contributing towards the deposit, mortgage payments, legal fees, and stamp duty land tax? If one person is putting in more, do you want that reflected in their percentage of ownership? The deed will record these contributions so they’re clear from the start.
Agree What Happens if the Property is Sold
You can set out how the sale proceeds should be divided. Should it match your original shares? Or should it adjust if one of you pays more of the mortgage over time? You can also include a clause confirming if anyone gets repaid first, for example, if a deposit was loaned rather than gifted.
Work Out How Ongoing Costs Will Be Shared
The deed can cover how you’ll split regular payments like the mortgage, buildings insurance, maintenance and repairs. This helps avoid future misunderstandings and keeps things fair.
Decide What Happens if Someone Wants to Sell or Move Out
This is one of the most important points to talk through. You can include terms for what happens if one of you wants to sell, buy the other out, or leave the property. The deed can also set timeframes for valuations, how a sale would be managed, and what happens if there’s a disagreement.
Plan For What Should Happen if Someone Passes Away
It’s not a pleasant thing to think about, but it matters. Your deed can clarify if someone’s share passes to the other owner(s) or stays with their estate. This is particularly important if you’re not married or in a civil partnership.
Be Clear If You Need to Repay a Gift
If a family member is helping with the deposit, the deed can confirm whether that money should be repaid. This protects everyone, especially if relationships change or if something happens to the person who gave the money.
How to Set Up a Declaration of Trust After You’ve Bought a Property
If you’ve already completed your property purchase but want to put something in writing to reflect who owns what, it’s not too late.
It’s a sensible step if financial contributions have changed since completion, or if you simply didn’t get round to it at the time. It’s always better to put an agreement like this in place sooner rather than later, especially while everyone’s intentions are still clear and relationships are good.
Ready to make a Declaration of Trust?
If you’re ready to make a Declaration of Trust, or just want to check if it’s the right step for you, we’ll talk you through it clearly and simply. We’ll explain everything in plain English, take care of the paperwork, and make sure you feel confident about what’s in place.
Fill out our Declaration of Trust enquiry form today, and we’ll contact you to discuss the next steps.
FAQS About Creating a Declaration of Trust
Is a Declaration of Trust legally binding?
A Declaration of Trust is a legally binding document as long as it has been properly drafted by a licensed conveyancer or solicitor and signed. It acts as a formal agreement between the owners and will be used as evidence if there’s ever a dispute over ownership or finances.
Do we have to be tenants in common to make a Declaration of Trust?
A Declaration of Trust only works if the property is held as tenants in common, not joint tenants. Tenants in common each own a defined share, which the deed can reflect. If you’re joint tenants, the law treats you both as owning 100%, and your shares can’t be split unless you change how the property is owned.
Does a Declaration of Trust affect how a will is enacted?
A Declaration of Trust sets out who owns what during your lifetime, but it doesn’t automatically control what happens when someone dies. If you want your share of the property to be passed on to someone specific, you should update your will to match what’s written in the deed.
Can a Declaration of Trust be used alongside a prenuptial agreement?
A Declaration of Trust sets out who owns what in a shared property, while a prenuptial agreement can deal with wider financial arrangements in the relationship. If you’re planning to marry and want to protect your share in the property, we can work with your family solicitor to make sure both documents are aligned and support each other.
Can you make changes to the Deed of Trust?
A conveyancing solicitor can change a declaration of trust if all parties agree. This is usually done by signing a deed of variation, which updates the terms of your original agreement. You should do this if one person has contributed more money, circumstances have changed, or you want to adjust how the shared property is owned in the future.
A deed of variation lets you keep everything up to date without having to create a brand new trust. We’ll make sure it’s drafted clearly and accurately so your updated agreement is legally sound.
Can we terminate a Declaration of Trust?
A Declaration of Trust can be ended, but only if all parties agree. You’ll usually need to sign a written agreement confirming that you want to terminate the Declaration of Trust, particularly if the property is sold or transferred into one person’s name. We can draft this for you and make sure it’s legally clear and final.