Whilst it certainly won’t be needed for every home purchase, this form can be a useful legal document in certain situations. Understanding what this document means will help you to decide whether it will be suitable for your needs.
When might it be used?
Also known as a declaration of trust, this document is designed for circumstances when two or more people own a property together or a party or parties other than the owner have a financial interest in the property. If the people buying the home together have contributed different sums towards the purchase, or if one of the registered legal owners cannot be recorded on the HM Land Registry deeds, a declaration of trust could be recommended. Generally speaking, it is advisable to have a declaration of trust in place for property purchases when the buyers will be acting as tenants in common or when they would not wish to split any costs or proceeds from a future sale equally between them. It is also advised when one party has children from a previous relationship, as these children could potentially be disinherited if the property is not held as tenants in common.
As with any legal document, it is essential to consult a specialist conveyancing firm, such as Sam Conveyancing, before making any decisions or signing any papers.
The purpose of the document
This legal document is intended to be used by people who are purchasing a property together; as such, it offers some useful protections. The document will record important information, such as how much money was contributed to the purchase of the property by each party and set out what would happen in the event of significant changes to the buyers’ circumstances. These changes could include a relationship breakdown between the purchasers of the property, a decision to sell the property, one owner opting to buy out the other, or other parties that have contributed funds towards the purchase wanting their investment back. The latter case can arise when parents have helped their offspring to get onto the property ladder.
As an example, if a couple were to make the decision to purchase a home together but one of them was able to contribute more money towards the deposit, the declaration of trust will protect the interests of the person who made the greater payment if they later broke up and wanted to sell the property. By recording the amounts each party contributed to the home’s purchase, the proceeds of the later sale would see each party receive the same amount returned to them along with an agreed proportion of any increase in the property’s value; for example, the profit each person receives could be determined as a percentage based on their original contributions.
You will find lots of information on how a declaration of trust works online.
A final note
When it comes to a declaration of trust, no two documents will be the same, as the details of a deed will vary according to the individual circumstances of the individuals purchasing the property. There can be many clauses within the deed that cover all aspects of the owners’ intentions, from setting down how they plan to use the property to individual maintenance obligations and how any future sale of the property will be carried out. This means that whilst it is certainly possible to buy a DIY declaration of trust online, it is always wiser to consult a qualified solicitor or conveyancer when crafting such a financially important document.