Declaration of Trust Form
A Declaration of Trust is a document that confirms the percentage shares by which co-owners own a property.
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To be used in England and Wales only.
Where two or more people purchase a property jointly, they may want to buy as tenants in common in equal or unequal shares. Our Declaration of Trust is for joint owners who own a property as tenants in common and outlines each owner’s share of the property that they own. This Declaration of Trust can also show contributions made by each party towards mortgage payments and maintenance.
This Declaration of Trust is an important document to have in place when purchasing a property as it ensures that when the property is sold, each owner gets the right portion of the sale proceeds. If there are additional people who have contributed to the purchase price, you may want to see our Declaration of Trust with beneficial interest.
Please note that no matter what is stated in this deed, the obligations by the mortgagee(s) to their lender will always remain joint and several.
Declaration of Trust? What is it?
Our Declaration of Trust is a legal document that registers the proportions which two or more people own a property. It has an express declaration that the property is held on trust by the co-owners for themselves as tenants in common.
The difference between a joint tenancy and tenants in common is that tenants in common hold a distinct share in the property, whereas joint tenants own the entire property together. Where a property is owned as joint tenants, the sale proceeds are divided equally between each co-owner upon the sale of the property. If one owner dies under a joint tenancy the property is automatically left to the remaining owner(s) and not in accordance with the deceased owner’s Last Will and Testament.
Our Declaration of Trust document lets each owner as tenants in common set out their respective beneficial interest based on their financial contributions to the purchase price, mortgage and ongoing maintenance.
In what circumstances should I use a Declaration of Trust?
You should use our Declaration of Trust in the following circumstances:
When you and other owners are buying a property as tenants in common and all the parties wish to record their contributions to the:
- the purchase price, including deposits;
- monthly mortgage payments;
- general maintenance of the property.
What does the Declaration of Trust achieve?
Our Declaration of Trust allows co-homeowners to have peace of mind to:
- create a legal document which records the actual proportions in which they jointly own the property.
- confirm the amount initially contributed by each party and records it as a percentage.
- establish the portion of sale proceeds to be repaid to each co-owner when the property is sold.
- confirm the mortgage and maintenance obligations and each parties’ contributions.
- help prevent any disagreement as to who contributed what when the property was purchased and who should get what when a property is sold.
The Declaration of Trust is a voluntary personal agreement, so no matter what is stated in this deed, the obligations by the mortgagees to their lender will always remain joint and several.
When do I need a Declaration of Trust?
You should use a Declaration of Trust if you purchase a property as tenants in common with one or more other person and you want to record the shares owned by each person. When you sell the property, you will receive your percentage share of the sale proceeds.
You can also leave your share in the property to someone in your Last Will and Testament, which you cannot do if you are joint tenants.
Is there a maximum number of people who can enter into a Declaration of Trust?
No, there is no maximum number of parties who can enter into a Declaration of Trust.
Where do I register this Declaration of Trust?
The completed Declaration of Trust should be registered at the Land Registry but it is not a necessity. You should also show evidence of the true owners of the property by submitting the Declaration of Trust in Form TR1 or Form JO and send it to the Land Registry.
When the property is currently owned as joint tenants and the co-owners want to change their ownership to tenants in common, an amendment has to be made to the title at the Land Registry. This is done by completing Land Registry Form RX1 asking for a Form A restriction should be added to the title and sent to the Land Registry.
If the Declaration of Trust is not registered with the Land Registry, it should be kept in a very safe place, perhaps with your Last Will and Testament. This could be in a safe at home or stored at your solicitor’s or bank.
What do I need to do before entering into this Declaration of Trust agreement?
All parties should consider and agree on the proportions that everyone will own the property. The owners should consider the costs of the purchase, initial contributions as well as everyone’s intended contributions towards mortgage repayment and maintenance when determining each co-owner percentage share. These can then be used to distribute the sale proceeds in the correct proportions when the property is sold.
Termination of the Declaration of Trust?
Four months’ written notice can be given to each co-owner to terminate the Declaration of Trust.
Our Declaration of Trust is governed by the law of England and Wales.
Declaration of Trust is known as:
Deed of Trust
Tenants in Common Agreement