When your solicitor asks for bank statements dating back months, please believe us when we say they are not just being difficult! Gemma Francis, a Conveyancer in WSP Solicitors’ Residential...
Protecting your interest in a property with a Declaration of Trust
When more than one person owns an interest in a property, they need to consider how they want to hold it. There are two ways in which a property can be held, as follows:-
- Joint tenants – all co-owners own 100% of the property together. There are no separate shares, and if one owner dies the property will pass by survivorship automatically to the surviving co-owners.
- Tenants in common – this allows the co-owners to have their own share in the property in whatever proportions they decide. When a co-owner dies their share can be left to whoever they choose by their Will or under the intestacy rules (if they die without a valid Will).
When a property is held as tenants in common, it is important to prepare a document known as a Declaration of Trust. This is a legally binding document which sets out the underlying beneficial ownership of the property. It can record the contributions made by the owners, or third parties. For example, a parent might contribute towards their child’s deposit for their first home, but may want to safeguard the investment in the property in case the property is ever sold (or if the child is co-habiting with a partner who could have some claim against the contribution in the future).
A Declaration of Trust can be straightforward, just setting out what percentage share each owner holds. Alternatively, it can be more complex, setting out, for example, who will pay what towards the mortgage and bills, what will happen if one owner wants to sell the property and the other does not, who will pay for repairs and upkeep of the property, how the income would be split if the property is rented out, and so on.
To find out more about Declarations of Trust or to discuss your personal circumstances, please contact us or phone 01453 847200.