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What is a deed of trust?
Also known as a ‘Declaration of Trust,’ a deed of trust is a legal document, which states how a property is held between joint owners.
What does a deed of trust do?
Essentially, the purpose of a deed of trust is to specify the split of any proceeds of sale when a property is sold.
A deed of trust provides written confirmation of the true state of property ownership in the proportions contributed by each party – irrespective of the title entries made at the Land Registry.
The deed itself cannot be filed at the Land Registry, but it can be noted there so that it forms the basis of a notice to prospective purchasers that the registered owner does not have sole ownership of the property.
Do you need a deed of trust?
A deed of trust is a flexible legal document, which can be adapted to suit most circumstances.
If you are buying a property with someone else or you have already done so, it may be worth considering entering into a deed of trust.
It can be used to hold property in joint names in different proportions or to impose obligations or restrictions on the use of the property.
A deed of trust is commonly used where:
There are different contributions towards the property purchase price
A third party (who is not listed on the title deeds) has provided money. Such a person may want to protect their contribution should the legal property owners decide to bring their relationship to an end
One party would like to relinquish their beneficial interest in the property.
In the latter situation, the remaining owner may not be in a position to buy-out the surrendering party, therefore they issue an indemnity to the departing party to cover mortgage payments and general outgoings.
What provisions should be included in a deed of trust?
A deed of trust is a unique document, which can consist of any number of provisions including:
- Contributions towards the purchase price, associated costs, renovations or improvements
- Each person’s property share
- Responsibility for payment of outgoings, such as mortgage repayments
- Pre-emption rights
- Conflict resolution
- Mediation provisions
- Rental and other income distribution
- Use of the property
- The people who can live at the property
- Visitors and guests at the property.
How do you execute a deed of trust?
To execute a deed of trust, you need to:
- Understand its contents
- Sign and date the deed
- Have the signatures of all parties to the deed independently ‘attested’ (witnessed).
Can your solicitor prepare a deed of trust for you?
Your solicitor can draft a deed of trust for you.
You can also have a licensed conveyance do so. A number of online companies also offer this service.
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