Declaration of Trust: Protecting Your Property Interests

Buying property with another person — whether a partner, family member, or friend — can be an exciting endeavour, but it also raises significant legal questions. What happens if the relationship deteriorates? Who owns what share of the property? How are costs divided? Without clarity, these issues can lead to disputes and even court proceedings under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA). 

A Declaration of Trust is one of the most effective ways to protect your interests when purchasing a property with someone else. It works hand in hand with the conveyancing process, offering legal clarity and peace of mind when making a major financial commitment. 

In this blog, we address frequently asked questions regarding how to manage the purchase of property with another individual, assist you in understanding the importance of protecting your assets, and are pleased to help you obtain the legal documents you need to proceed. Safeguarding everyone involved is your best course of action if you are considering buying a property with someone else. 

If you need to make a TOLATA claim, we are here to help make the process as smooth as possible. Contact our Brighton solicitors wherever you are located, and we’ll review your case.

What Is a Declaration of Trust?

A Declaration of Trust (also known as a Deed of Trust) is a legally binding document that sets out each party’s financial interest in a property (not to be confused with Trusts used in end-of-life planning). It details:

• How much each person contributed to the purchase price
• How the equity will be split if the property is sold
• Responsibility for mortgage repayments and other costs
• What happens if one party wants to sell or leave
• Outlines arrangements for dealing with rental income or improvements made to the property. 

The declaration is usually drafted during or shortly after the conveyancing process — the legal work involved in buying or selling a home — but it can also be put in place later.

Why Is a Declaration of Trust Important?

Many people assume that their property ownership is clear-cut based on whose name is on the title deeds. However, this isn’t always the case — especially if the property is owned jointly, but the financial contributions have been unequal.

A Declaration of Trust provides written evidence of each person’s beneficial interest, which may be different from the legal title registered with the Land Registry. This protects your share of the property if the relationship breaks down or if one party dies.

Without a clear agreement, disputes can arise, often leading to costly and stressful legal action under TOLATA.

When Should You Use a Declaration of Trust?

When buying a property with someone else, it’s easy to focus on the excitement of the purchase and overlook the legal complexities. However, one of the most important steps to protect your investment is to clearly set out who owns what. That’s where a Declaration of Trust comes in.

This type of agreement is not just for unmarried couples or friends; even married couples may benefit from setting out their individual interests, especially where family money or investment is involved or unequal contributions are made. Understanding when a Declaration of Trust is necessary helps you make informed decisions during the property purchase process and ensures that everyone’s financial interests are properly protected from the outset.

You should consider setting up a Declaration of Trust if:

• You’re buying a property with someone but contributing different amounts to the deposit or mortgage.
• One party is putting in significantly more money (e.g., a gift from parents).
• You want to formally document who is responsible for outgoings like mortgage repayments, maintenance or renovations.
• You are buying a home with someone who isn’t a spouse or civil partner.
• If you should die, you do not want your share in the property to automatically pass to the other joint owner.

How Conveyancing and Trust Declarations Work Together

During the conveyancing process, your solicitor will conduct searches, liaise with the seller’s solicitors and register the legal title with the Land Registry. This is also the ideal time to put a Declaration of Trust in place so everything is properly recorded from the outset.

A good conveyancing solicitor will ask whether you’re buying jointly and if contributions are equal. If not, they can draft a Declaration of Trust alongside the transaction. This helps to avoid misunderstandings later on and keeps the property deal running smoothly.

What Happens Without a Declaration of Trust?

If there’s no formal agreement, disputes over property ownership can end up in court. This is where TOLATA comes into play. TOLATA allows a co-owner to apply to the court to determine:

• The extent of each party’s interest
• Whether the property should be sold
• Who is entitled to occupy the property

TOLATA claims are often complex, expensive and emotionally draining. They usually involve assessing verbal agreements, contributions, and intentions, which can be hard to prove after the fact. A Declaration of Trust can prevent this by making your agreement crystal clear.

Can You Change or Update a Declaration of Trust?

Yes. If your circumstances change, such as one party investing more into the property or refinancing the mortgage, you can update your Declaration of Trust to reflect the new arrangement. This ensures your document remains accurate and continues to protect everyone’s interests. Get in touch if you need help updating your Declaration of Trust.

Do You Need a Trust Solicitor?

While it’s possible to find template declarations online, using a qualified property solicitor to draft your Declaration of Trust is strongly advised. This ensures that:

• The document is tailored to your situation
• All legal requirements are met
• The trust accurately reflects the parties’ intentions

At Burt Brill & Cardens, our experienced conveyancing and property lawyers can help you draft a Declaration of Trust that gives you peace of mind and long-term protection. We also advise on TOLATA disputes if issues arise later on.

Final Thoughts

A Declaration of Trust is a simple yet powerful tool for anyone buying property jointly. Whether you’re protecting an investment, sharing a home or helping a loved one onto the property ladder, a properly drafted declaration ensures your contribution is safeguarded.

By working with your conveyancing solicitor during the purchase process, you can ensure the document reflects your needs from day one. In the event of a dispute, having this in place can help you avoid stressful and costly court proceedings under TOLATA.

If you’re buying property with someone else or want to update your existing arrangements, contact the friendly team at Burt Brill & Cardens today. Call us on 01273 604 123, email us at enquire@bbc-law.co.uk or make an enquiry.