Individuals are increasingly looking for alternative ways to buy a home as housing costs continue to outpace income growth. For example, you could pool your resources with friends or a partner to purchase a property as joint owners, or you could seek financial assistance from your parents or other family members. When several people have a stake in a property and there are no existing legal agreements between them (for instance, a cohabitation agreement) to specify what each person is entitled to and what should happen if the property is sold, a Declaration of Trust (also known as a Deed of Trust) is frequently taken into consideration.
What is a Declaration of Trust?
A Declaration of Trust is a legal document that confirms the conditions under which an asset, such as a property, is held in trust. The document typically registers the percentage of ownership of property as well as any other conditions agreed upon by the parties. As beneficial owners, the owners usually hold the property in trust for themselves. Individuals may, however, hold the property in trust for someone else even if they do not profit from it.
What Purpose does a Declaration of Trust Serve?
A Declaration of Trust documents the terms under which a beneficial interest in a property is held. It also serves as proof of the agreement. The document is used to verify how the net sale proceeds or shares to be transferred will be distributed or transferred in the event of a future sale or transfer of the property. It also aids in determining the possession and shares passing to an estate when one or more of the owners has died. It can also outline the administration of property ownership, such as mortgage payments, expenses, renovations, and other utility services.
Why is a Declaration of Trust Important?
A declaration of trust is significant because it protects your property investment if situations do not go as intended. It also documents how the property is owned, avoiding any assumptions or uncertainty about the shares and overall ownership of the property. This also guarantees that funds are safeguarded, and contributions are legally documented if the owner divorce or separates.
It documents the situation if one owner contributes more to the purchase price, mortgage payments, or property improvements. As a result, when the property is sold, the funds are returned as agreed in the declaration of trust documentation.
Are Declarations of Trust Legally Binding?
Yes, the owners of the property in question are legally bound by the declaration of trust. However, when dividing financial assets in divorce proceedings, a Family Court may disregard this. A Declaration of Trust protects owners because it is a legally binding document. This is especially comforting if a situation arises between owners who have divorced.
Can a Deed of Trust be Amended?
A declaration of trust cannot be changed, but it can be supplemented. As a result, the terms of the original agreement are altered. It refers to the original document while describing what has changed since and the current share value. For example, after more contributions or completed works.
What Happens to a Deed of Trust after Death?
In the estate administration of a deceased Trustee, a Declaration of Trust will be considered. The deceased’s share of the property will be distributed to the beneficiary named in their Will. In the absence of a Will, intestacy rules will apply. The deceased’s share of the property does not simply transfer to the other owner(s). This only occurs if the deceased’s Will states that the co-owners shares in the property will be inherited.
Wills must be in place for unmarried couples who own real estate as tenants in common. According to intestacy laws, the deceased’s spouse would be entitled to none of the property’s portions. As a result, the beneficiaries of the decedent’s estate, who now co-own the property with the deceased’s partner, may disagree.
About Van Eaton Solicitors
Van Eaton Solicitors in London are experienced, civil litigation solicitors. Our team can handle declaration of trust disputes on behalf of individuals who believe they have a right to a portion of a property but that interest has not been officially recorded. Contact us today to find out how we can help you with your claim.