Declarations of Trust for Residential Property
If you are a joint owner of residential property, or are giving professional advice to joint owners, you are likely to need a Declaration of Trust (or Deed of Trust or Trust Deed) to formalise the arrangements between the co-owners.
Different types of co-ownership
Jointly owned property can be held as joint tenants or as tenants in common. Joint Tenants means that each owner has an indivisible share in the property and on death their share passes to the surviving co-owners. This arrangement may suit couples who are married or in a long term relationship but it is not usually suitable for other joint ownership arrangements.
Tenants In Common means that the co-owners each have a distinct share in the property which can be disposed of by sale or by will. A tenancy in common is therefore ideal for co-owners who are friends, ex-partners or business partners. Sometimes married couples opt for a tenancy in common instead of a joint tenancy for tax planning reasons.
What does a Declaration of Trust do?
Our Declaration of Trust documents are suitable for co-owners who want to own a property as tenants in common.
Most importantly, a declaration of trust will set out each owner’s share of the property. This can be a fixed percentage (e.g. 45%) or can be a variable percentage which is calculated by reference to the owner’s financial contributions over time. We call this a “floating” share.
The declaration of trust can also set out practical arrangements for the property, e.g. who is to pay the bills and look after the property.
A declaration of trust can include pre-emption rights. This means that the owners have a right of first refusal if a co-owner wishes to sell their share of the property.
Declaration of Trust templates
Our templates cover a range of scenarios including fixed shares, floating shares, mortgaged property and pre-emption rights.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.