Due to the way that the economy and society has changed over the years, the majority of houses are no longer bought by married couples. There are a variety of ways that property can be bought, including between partners, friends and with assistance from parents.
This change to the way in which property is purchased has seen more and more couples using a Declaration of Trust. Here is what they are, how they help and what needs to be included:
What is a Declaration of Trust (DoT)?
A DoT is a legally binding document which can be used to set out and define each individual’s contribution to the price of purchase. Typically, this will also include any additional costs and contributions to the property – such as who paid for furniture or solicitors fees and what the mortgage split will be.
Why is this used?
A DoT makes it much easier to figure out how much each party should receive if the property is sold and legally holds them to fairly sharing the equity. This is especially important if the parties have not split the cost of the property equally, as it stops either party from taking advantage of the situation.
If you are living with your partner or friend and are contributing to the cost of the home, then you are not legally entitled to an equal division of the property in the case of a relationship breakdown. Here a declaration of trust will ensure that the share that you have put into the property will be returned to you.
What needs to be included in a Declaration of Trust?
When drawing up an agreement you will need to include all relevant information, which tends to change from case to case. The main elements to be included are:
• Your joint intentions
• Each individual’s share in the property
• Individual’s entitlements if the property is sold
• Whether one party can buy the other party’s share
• Who is paying the mortgage
• Who pays for stamp duty
• Cost of surveyor and solicitors
• If the mortgage is split – to what ratio?
• What is to happen in the breakdown of a relationship
• Ownership of furniture
• Cost of decorating/ refurbishing/ remodelling
• Who pays for insurances
• Ratio for splitting bills
You are also able to include other agreements based on your unique requirements, such as whether the people living in the home are allowed to keep pets or smoke. This type of thing can be covered either by the Declaration of Trust or in a separate co-habitation agreement.
If you have any specific concerns regarding finances, the property or related costs then this will need to be explicitly state in the Declaration of Trust in order to be legally binding.
Finding a Solicitor for a DoT
At Howells Solicitors, we specialise in the fields of trusts and estates, meaning that we are well placed to help you create a Declaration of Trust. It is best to have this contract laid out prior to the purchase of a property as this is the time where both parties are the most agreeable and aware of potential consequences.
To find out more about how Howells can help you, give our team of legal experts a call on 02920 404 034.