Declaration of trust on property: what is a deed of trust for tenants in common? How does it protect the money given to us and do we need a solicitor?
Question: My girlfriend's parents want to help us by letting us have £50,000 so that we can get a mortgage and buy a house together. They say they want there to be a declaration of trust so that the money is protected, and that we need to speak to our solicitor about this.
Though I have heard of a declaration of trust I don’t really understand what it is. Can you please explain?
Answer: Sometimes known as a deed of trust, a declaration of trust is a legally binding document which confirms or declares that two or more people own a property as tenants in common; that they hold the property on trust for themselves, and details the financial arrangements between them and/or anyone else who has a financial interest in the property.
You and your girlfriend need to establish whether her parents are intending the £50,000 to be a gift to both of you or to your girlfriend, or whether they intend it to be a loan that must be repaid on a future date, with or without interest.
When discussing her parents’ proposed gift or loan, it would also be prudent to reach an agreement with your girlfriend regarding each of your responsibilities for paying the usual outgoings, what will happen if your relationship breaks down, and so on.
Once you have decided on these matters they can all be included in a declaration of trust.
Speak to the solicitors who conduct the purchase for you and ask them to draw up a declaration of trust incorporating the agreed terms.
These answers can only be a very brief commentary on the issues raised and should not be relied on as legal advice. No liability is accepted for such reliance. If you have similar issues, you should obtain advice from a solicitor.
If you have a question for Fiona McNulty, please email legalsolutions@standard.co.uk or write to Legal Solutions, Homes & Property, Evening Standard, 2 Derry Street, W8 5EE. Questions cannot be answered individually, but we will try to feature them here. Fiona McNulty is a solicitor specialising in residential property.