Here at Homeward Legal we understand that buying a house can be an exciting yet daunting experience. We know that some of the legal terms can be a bit overwhelming. That's why we're here to help demystify the process.
If you're buying a house with someone else, you may want to think about getting a deed of trust to protect your money in the property.
Whether you're a first-time buyer, current homeowner or looking to remortgage your home, we'll help you understand what a deed of trust is, so you can make the right decision for you.
What is a deed of trust?
What is a deed of trust?
A deed of trust in the UK, also known as a declaration of trust, is a legally binding document stating the division of ownership of a property. It is used by ‘tenants in common' who have paid different amounts into the purchase of the property.
Once the deed of Trust is in place, both parties will know exactly where they stand if the property is sold, or one person wants to be bought out in the future.
Setting out these financial arrangements from the outset in a deed of trust removes any uncertainty as to what will happen to each person's financial investment in the property and will hopefully reduce any future disagreements.
Why do I need a deed of Trust?
Why do I need a deed of trust?
A deed of trust is a bit like a prenuptial agreement - it keeps the assets of one or both partners safe in the case of a break-up or dispute. It is a valuable tool for a variety of people; it offers that peace of mind.
Without a deed of trust, both owners would own an equal share (50%/50%) of the property regardless of their contributions.
Because everyone's situation is different, having a deed of trust contract drawn up by a conveyancing solicitor not only protects each parties' investment, it alleviates the risk of disputes should the relationship come to an end.
Joint tenants or tenants in common
When you buy a property with another person, you will be asked whether you want to be joint tenants or tenants in common. It is entirely up to you which one you choose depending on your individual circumstances.
The right choice for you will depend on a number of different factors, including your own situation and the relationship you have with your co-purchaser.
Ordinarily, when you buy a property, you will be listed as joint tenants. It means that if something were to happen to either owner, the other would inherit the property outright.
If you'd rather share the property with family however, or if you're contributing different sums of money, you can opt to be tenants in common and have a deed of trust created to protect your individual shares.
For example:
Sam and Paul buy a house together for £250,000.
Sam has put in 60% of the deposit, whereas Paul has only contributed 40%.
A deed of trust will ensure that if they come to sell the property, Sam will get back 60% and Paul will get 40%.
If there was no deed of trust in place, the couple could enter a dispute over who owns what share of the property. There would be nothing to legally stop Paul claiming 50% instead of his 40% as the property is owned jointly.
In addition, if Paul contributed more towards the monthly mortgage payments than Sam did and also paid to have the house decorated, this can be recorded on the deed of trust. The resulting amount will be divided to reflect these extra payments.
What is a deed of trust used for?
What is a deed of trust used for?
The most common use for a deed of trust is to keep a legal record of the different contributions made towards a property. But it can be used for a number of other purposes.
These include recording:
- How much each party has paid towards the property
- What each person's share in the property is
- If one person has put extra money in at a later date, for example in renovations
- How much each person is responsible for in outgoings such as mortgage payments, bills and maintenance
- If a third party, such as a relative, has invested money and is not listed on the title deed but still wants to protect their contribution
- If one party is unable or unwilling to buy the other out and wants to officially surrender their interest in the property
How to get a deed of trust quote?
If you are looking for a deed of trust quote, we can help you. At Homeward Legal, we work with licensed conveyancing solicitors across England and Wales.
They'll draft a personalised document based on your needs and ensure it's tailored to your specific contributions.
Simply fill the form below and we'll provide you with a free deed of trust quote.
How much does a deed of trust cost?
How much does a deed of trust cost?
Costs for a deed of trust vary based on complexity and professional involvement. It will cost you a few hundred pounds, depending on the number of parties involved. The cost includes the legal fees and an ID and AML check.
Get in touch with us today
If you think a deed of trust is right for you, or you would like further information about the different trust agreements, get in touch with us today. You can call us on or request a callback and we'll be happy to speak to you.
Frequently asked questions...
Yes, a deed of trust is a legally binding document that outlines the ownership structure or beneficial interests in a property. When properly executed and signed by the involved parties, it holds legal validity and can be enforced in accordance with the terms stated within the document.
Legal ownership is typically confirmed through official documents like those held by the Land Registry in the UK. However, a deed of trust can specify beneficial interests or ownership structure among parties involved.
A Deed of Trust that doesn't affect the mortgage lender's security and doesn't require the lender's consent. When drawing up the Deed of Trust, your solicitor has an obligation to act in the best interest of you, their client, and also the mortgage lender during the purchase of property.
Because the Deed of Trust can be drafted either during the conveyancing process when you bought the property, or at a later date during your ownership, the question of whether your mortgage lender needs to be informed of the deed is one that only your Deed of Trust solicitor can answer. This is because each situation is different.
Yes, you can have a deed of trust as joint tenants. A deed of trust can specify the ownership shares or interests of joint tenants in a property. It outlines each tenant's rights and responsibilities regarding the property.
It's important to ensure the deed accurately reflects the intentions and agreements between joint tenants to avoid potential misunderstandings or disputes.
A deed of trust can be overturned as long as all parties are in agreement. If the parties agree, the deed of Trust can be amended, or even waived completely.
If situations change, the deed of trust should be updated to reflect this change, but it cannot be backdated. The deed can be rewritten to reflect the changes, but it needs consent. If you want to make substantial changes to the deed, it is best to get a new one written.
While it is possible to create your own deed of trust for your property, you might find it includes mistakes or is not recognised in a court of law. We recommend you hire a conveyancing solicitor to create your deed of trust, as this way it is legally binding.
When you hire a solicitor to draw up your deed of trust, you're giving yourself complete peace of mind knowing that you're protecting your investment.
