What does a declaration of trust do?

Buying a property is a milestone moment. Few feelings compare to getting the keys to a first home or finally being in a position to acquire a commercial property to grow a business. That said, things can very quickly become complicated, especially if you aren’t taking over sole ownership.

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Whether you’re buying a home or an office building, embarking on property ownership with a third party can be fraught with pitfalls. A declaration of trust can help to alleviate some of those potential issues and avoid a lot of stress and heartache further down the line.

What’s the point of a declaration of trust?

While we all want to think that things will continue to go well with our romantic partners and business partners, the sad fact is that sometimes relationships do sour, and people grow apart. That can lead to co-owners of a property wanting different things or having a different take on what was previously agreed.

A declaration of trust is a legal document which clearly states the financial contributions of each party. It also removes ambiguity about what should happen if one person no longer wishes to retain their share of the property. It’s an invaluable document that can help you avoid a lot of stress and anxiety in the future.

Who should get a declaration of trust drawn up?

Declarations of trust relate to property purchases and should be considered when:

• You’re buying a property with a partner but aren’t married (please note that if you do later get married to that person, the declaration of trust will become void but may be referenced in any financial disputes in the event of a divorce)

• You’re buying a property with someone else but are contributing more or less money than that person

• You’re investing in a property with a business partner

• Someone else is investing in a property you’re buying

At what point should it be considered?

You should ideally have a declaration of trust drawn up by a lawyer before you complete on the property in question. This ensures that everything is clear to both parties before the purchase becomes legally binding.

What should a declaration of trust contain?

To avoid any confusion or disagreements in the future, the declaration of trust should very clearly set out what each person’s financial contributions are. This document should also detail what should happen if one person no longer wishes to own the property.

If you’re about to embark on property ownership with a third party, our experienced family solicitors can help you to protect your interests and safeguard against misunderstandings and disagreements further down the line. Please contact us to discuss your situation in confidence.