If you’re new to the concept of a Declaration of Trust, you’re likely to wonder if it’s legally binding. In this short blog, we’ll cover what you need to know.
What is a Declaration of Trust?
Sometimes called a Deed of Trust, a Declaration of Trust is a document that sets out the financial arrangements and obligations of joint property owners. The purpose of the document is to formally record each individual’s:
1. Initial contribution to the property, such as the house purchase deposit.
2. Ongoing responsibilities for financing the mortgage, which may be at different percentages.
3. Details of what should happen if the property is to be sold, or if one of the owners wants the other(s) to buy them out.
The Declaration of Trust might be in place between two individuals, but there could be additional parties recorded also. For example, parents might offer a deposit to buy a house, and then record their interest.
Is a Declaration of Trust legally binding?
Yes, a declaration of trust is legally binding. It will usually be completed by a solicitor to ensure it is done correctly and accurately in case it needs to be drawn on at any point in the future.
How to create a Declaration of Trust?
It can be a complex process to organise the particulars of a Declaration of Trust because of the decision-making that must happen and the agreements that must be secured before the administration of the deed is progressed. It makes sense to use a solicitor to ensure the resulting document is legally watertight and to avoid any issues further down the line.
Once in place, a Declaration of Trust can be a valuable way of protecting different interests and providing financial certainty to partners involved in the property purchase.