Declaration of Trust for Co-owned Property – Fixed Shares, Mortgage, Pre-emption Rights
This Declaration of Trust for Co-owned Property – Fixed Shares, Mortgage, Pre-emption Rights can be used by the owners of residential property that is in shared ownership. The Declaration of Trust sets out the owners’ respective rights and responsibilities. This document is suitable for a range of joint ownership scenarios including friends, partners and former partners.
The Declaration of Trust – also known as a Trust Deed – confirms each owner’s fixed percentage share in the property. It should be used where the property is subject to a mortgage and the owners wish to grant each other pre-emption rights (the right of first refusal if an owner wishes to sell his or her share).
Alternative Declaration of Trust templates are available where the owners’ shares are “floating” rather than fixed percentages, and for properties with no mortgage or where pre-emption rights are not required.
This template contains fields for three owners’ details. If there are only two owners, you should omit the references to Owner 3. If there are four owners, you can add a reference to Owner 4.
The law of co-ownership of property is complex and you should seek independent legal advice if you are unsure of the nature and effect of this document or if there are more than 4 owners.
There may be stamp duty land tax (SDLT) to pay as a result of entering into a Declaration of Trust and it is usually necessary to apply to the Land Registry for a restriction to be entered on the registered title. Further information is available in the Land Registry section of the www.gov.uk website.
The main details are set out at the beginning of the document, being the owners’ names, their percentage shares in the property, the address of the property and particulars of the mortgage.
Clause 1 is the declaration of trust. This sets out that the owners hold the property on trust for themselves as tenants in common in the percentage shares mentioned above. A tenancy 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. The alternative – a joint tenancy – gives each owner an indivisible share in the property and on death their share passes to the surviving co-owners.
Clause 2 deals with the contents of the property. There is a statement that the contents are owned in the same proportions as the property itself. Any items that are not jointly owned can be listed.
Clause 3 sets out arrangements for payment of the mortgage.
Clause 4 relates to expenditure on the property. Expenses can be paid for by the owners in proportion to their shares in the property or other payment arrangements can be made.
Clause 5 contains covenants by the owners as to use and maintenance of the property.
Clause 6 and Schedules 1 and 2 relate to sales of the property and sales of an individual owner’s share. The owners have rights of pre-emption over each other’s shares, i.e. a right of first refusal if an owner wants to sell their share.
Clause 7 deals with service of notices by the owners on each other and incorporates section 196 of the Law of Property Act 1925. This means that notices should be delivered by hand or sent by recorded or special delivery post. If the notice is sent by recorded or special delivery post, service is deemed to occur at the time at which the letter would “in the ordinary course” be delivered.
Clause 8 contains standard legal interpretation clauses and clause 9 is a jurisdiction clause.
The Declaration of Trust should be executed as a deed by each owner signing in the presence of a witness.
Optional phrases / clauses are enclosed in square brackets. These should be read carefully and selected so as to be compatible with one another. Unused options should be removed from the document.
This Declaration of Trust for Co-owned Property – Fixed Shares, Mortgage, Pre-emption Rights is in open format. Either enter the requisite details in the highlighted fields or adjust the wording to suit your purposes.
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Declaration of Trust for Co-owned Property – Fixed Shares, Mortgage, Pre-emption Rights is part of Property Documents. Just £35.00 + VAT provides unlimited downloads from Property Documents for 1 year.