Is a legally binding document made at the time of buying a property. It records the financial arrangements of everyone who has an interest in the property, detailing what share of the property they own and what should happen in various eventualities, such as if all owners agree to sell the property or if one owner wishes to buy out another.
What does a Declaration of Trust do?
A Declaration of Trust protects everyone’s interests in a property, ensuring each party gets what they are entitled to by their initial investment when it comes time to sell the property or sell a share of it. If there is no Declaration of Trust in place, it becomes more difficult to tell who should be repaid and how much they are entitled to when the property is sold.
When buying property as an unmarried couple
Despite the pervasive myth that couples who are cohabiting are covered by something called ‘common law marriage’ couples who are not married or in a civil partnership do not have any of the legal protections afforded those whose relationship has been recognised by law. This means there are no guarantees that each party will be treated fairly should the relationship break down and their co-owned property need to be dealt with. A Declaration of Trust can prevent uncertainty by specifying who will be entitled to what should the relationship end.
Protecting someone whose name is not on the mortgage via a Declaration of Trust
There are many reasons why someone might have an interest in a property and contribute payments towards it but not have their name on the mortgage.
Whether because they have poor credit or other debts that make them ineligible for another mortgage, or because they moved into a house already owned by another party, a Declaration of Trust will record the specific arrangement and ensure that the right parties retain their beneficial interest, if appropriate.
Signing a Declaration of Trust to reduce the risk posed by disagreements
 A house is a significant investment, and as such all persons who have a stake in it should have their money protected.
While the Land Registry records ownership, it doesn’t take into account the specific proportions each party has contributed to a property, meaning that when it comes to selling, some stakeholders could find themselves out of pocket without a legal document recording their contributions.
Putting a Declaration of Trust in place protects against any disagreements and misunderstandings that may arise later down the line.