If you’re a first-time buyer, different types of contracts and deeds can be confusing to understand. When buying a house with someone else, or if someone else has a beneficial interest in the property you purchase (such as a parent who has contributed towards the deposit), one option available to you is a declaration of trust. Find out more about this below, and see if it’s a suitable option for your circumstances.


When is a declaration of trust used?

A declaration of trust can be used when more than one person wishes to buy a property together. A declaration of trust defines and records the financial arrangements between the owners of the property, and anyone else who has a financial interest in it too. Along with the percentage of a property owned by each party, a declaration of trust may also outline:

  • How much each person contributed to the deposit
  • How profits will be split should the property be sold
  • How much each person will contribute towards the mortgage, household bills, etc.
  • What will happen if the owners divorce, or if one or more parties passes away
  • What happens when the mortgage is fully paid off


What does ‘tenants in common’ mean?

The term ‘tenants in common’ is often used to describe people who have bought a house together using a declaration of trust. Following a declaration of trust, tenants in common both own the property. However, unlike joint ownership, tenants in common may not own equal shares of the property. The tenants in common may own different proportions of the property, for example, if each person contributed a different amount to the deposit, they may own a percentage of the property that is proportional to their deposit amount.

When a tenant in common dies, their percentage of ownership will be transferred into their estate to be distributed to the beneficiaries in their will. This differs from joint ownership where the ownership of the property would simply pass to the remaining living owner.


Is a declaration of trust legally binding?

Any terms set out in a declaration of trust are legally binding, and all parties involved in the purchase of the property must abide by the terms set out by the declaration.


Can a declaration of trust be revoked or amended?

A declaration of trust can be amended, provided that all parties named on the declaration are in agreement. For example, if two people named on the trust get divorced, one may wish to buy the other out of their share of the property. Once this has happened, the declaration of trust should be amended to reflect the new ownership of the property.

It is unlikely that a declaration of trust would need to be revoked, as there are no limits to the number of amendments that can be made. However, if, for example, due to a change of circumstance the property becomes wholly owned by one person, your solicitor would need to make sure provisions are made to bring the trust to an end.



Drawing up a declaration of trust after purchasing a property

If you already own a property, you are still able to draw up a declaration of trust, such as making a declaration of trust after marriage. This will contain the same details and conditions as a normal declaration of trust and can be amended in the future.

If you’re a first-time buyer, or you’re considering a declaration of trust, it’s important to get expert advice to make sure you’re making the correct decision for your circumstances. Our specialist first-time buyer lawyers will be able to support you throughout the purchase process and beyond. Contact our Manchester solicitors or our solicitors in Warrington today to find out more about how we can help you.