As property prices increase and mortgage interest rates rise, buying a property is becoming a challenging process. There are fewer single first-time buyers, and even they may have a financial contribution being made by family, putting them in the same category as couples or friends who are buying a property together.
In all the above circumstances, individuals may feel they have an interest in the property, but this may not be reflected in the title deeds, and that is why a deed of trust should be drawn up to protect everyone’s interest.
It is important to know that there are two ways of owning property with other people. These are as joint tenants or as tenants in common.
What is a deed of trust?
It is a document which explains how the ownership of the property was divided when it was bought. It should record the financial contributions everyone has made at the time of purchase and beyond. For example, has a parent contributed to the deposit, were the deposit contributions unequal, and are the mortgage repayments divided equally between the parties?
If the property is sold and there is any conflict over how the sale money should be divided, the deed will help the courts to understand the intentions of the parties at the time of purchase.
You will find plenty of information online about these documents, including at sites such as https://www.samconveyancing.co.uk/news/conveyancing/deed-of-trust-4378.
What does a deed of trust do?
The purpose of this legal document is to protect anyone who has an interest in the property. This means it helps everyone to get their entitlement if the property is sold at a future date. Without a deed, it can be difficult for a court to establish who is owed what, since the Land Registry documents may not reflect contributions.
So, who should consider a deed of trust?
- A couple who are buying a property but are not married may wish to consider this. There is no such thing as common law marriage in the UK, and they need to make sure their interests are protected legally, which a deed of trust can help with.
- If you contribute towards the mortgage on a property but your name is not on the title deeds, you can protect your interest by entering into a deed with the person or people whose names are on the title at the Land Registry.
- You may have contributed to the deposit as a parent or friend. Again, your name is unlikely to be registered as having an interest in the property, and a deed of trust is a good way of recording whether and how your money should be repaid.
- You can avoid legal disputes by clearly setting out your interest in a property. This will help to avoid disagreements which could prove costly for all parties.
Each deed of trust is different and you should take legal advice before entering into one.