Buying a property with your partner is an exciting step, but it’s also a huge financial commitment. Whether you’re married, in a civil partnership, or cohabiting, it’s important to think ahead and protect both of your interests. One way to do this is by having a declaration of Trust.
What is a Declaration of Trust?
A declaration of trust lays out the financial contribution each party has made to a property, as well as plans. It will officially record how much each person is contributing to the payment of the house, including the deposit, mortgage and legal fees. It then states what share of the property each person owns. It will then go on to create plans for if one person wishes to sell or move out, and how the proceeds of a future sale should be divided.
Why may you want one?
A declaration of trust is especially crucial if you and your partner are contributing unequal amounts to the property. This could include one person paying more toward the deposit, one person planning to pay more of the mortgage, as well as other unequal financial contributions. You may also want one if you are aiming to avoid disputes in the future. The final reason for wanting one would be if the property is in one person’s name but you both want some form of rights/claim to the property.
What happens without one?
If there’s no declaration of trust and you later disagree on who owns what, it could lead to a legal dispute. Courts will look at financial records, intentions and contributions, but this can be stressful, expensive and uncertain. A declaration of trust helps avoid all of this.
Can I update a declaration of trust in the future?
Yes. They can be updated as one’s financial situation changes. For example, if one person pays off a large chunk of the mortgage or pays for something significant within the dwelling, such as an extension, the declaration can be changed to reflect this.
Do I need a solicitor?
As this is a legal document, it is highly recommended to use a solicitor. It needs to be drafted correctly to be enforceable in the future. For peace of mind, it is worth instructing a solicitor to help.
Final Thoughts
While it may not be the most romantic part of buying a home, a Declaration of Trust can give you peace of mind and help prevent misunderstandings later on. It’s about protecting your investment and your relationship.
If you’re buying a property with your partner and want to understand your legal options, get in touch with our expert property team at Heppenstalls today. We’ll guide you through the process and ensure everything is handled properly from the start.