Buying a home with someone else is a big step, whether you are doing this with a partner, a sibling, a friend, or as a parent helping a first-time buyer onto the property ladder. Often, the excitement of finding the right property means the legal details of how you own it together are left to the last minute or forgotten about altogether.
A Declaration of Trust is one of the most useful documents you can have in place at the point of purchase. It sets out who owns what and what happens if circumstances change. For unmarried couples in particular, it is often the single most important protection available, because currently (despite cohabitation reforms on the horizon), you do not have the same legal rights as a married couple if the relationship ends.
In this blog, our conveyancing team in Alton looks at how joint ownership works, what a Declaration of Trust does, and the situations where having one can save a great deal of stress later.
Joint Tenants or Tenants in Common: A Choice You Have to Make
When two or more people buy a property together in England and Wales, they must decide how they will hold the legal title. There are two options.
Joint tenants. If you own the property as joint tenants, you own the whole property together. You do not have defined shares, and if one of you dies, your interest passes automatically to the surviving owner or owners under the rule of survivorship. The property would only pass to someone else under the Will of the last surviving owner. This is the option many married couples and civil partners choose when they expect everything to pass to the other on death.
Tenants in common. With tenants in common, you each own a distinct share of the property. The shares do not have to be equal. They can be 50/50, 70/30, or any other split that reflects what you have agreed. If you die, your share passes under your Will, or under the rules of intestacy if you do not have one, rather than automatically to the other owner.
For unmarried couples, friends, business partners, and family members buying together, holding the property as tenants in common is usually the right approach. It lets you record clearly who owns what, and you can leave your share to whomever you choose in a Will.
What is a Declaration of Trust and What Does it Do?
These are particularly important for owners holding a property as tenants in common. The Land Registry record will show that you own as tenants in common, but it does not normally show the actual size of each person’s share or who paid what towards the purchase of the property. That is where a Declaration of Trust comes in.
A Declaration of Trust (sometimes called a Deed of Trust) is a written agreement signed by all the owners that records:
- How much each person has contributed to the deposit.
- How the mortgage repayments will be split.
- Who is responsible for running costs, repairs, and other outgoings.
- What share of the equity each person owns.
- What should happen to that share if the property is sold, if one of you wants to buy the other out, or if someone dies.
If a dispute later ends up in court, the Declaration of Trust will usually be the starting point for working out what each person is entitled to.
Why Unequal Contributions Make This So Important
It is not uncommon for co-buyers to contribute to a purchase, mortgage, or ongoing expenses in slightly different amounts. It is not always split exactly 50/50. One person may pay the entire deposit, or the other may earn more and cover the majority of the mortgage. It is also quite common for a parent to help financially, paying towards the purchase of their child’s first home.
Without a Declaration of Trust, the law tends to assume that joint owners own the property equally, even where the actual contributions were very different. That can lead to outcomes nobody intended, particularly if a relationship breaks down.
A few common scenarios where a Declaration of Trust matters:
- One partner pays the deposit, the other pays more of the mortgage. The Declaration can set out how those contributions translate into equity shares, either as fixed percentages or as a formula that adjusts over time.
- Parents help fund a house deposit. The Declaration can record whether the money is a gift, a loan, or an interest held by the parents, and what happens to it if the couple separates or the property is sold.
- Friends buy together as a stepping stone onto the ladder. The Declaration can record what each person has put in and how the sale proceeds will be divided when one or both want to move on.
What Happens if Things Change
A Declaration of Trust really comes into its own when something unexpected happens. Relationships can end, jobs can change, families can grow, and sometimes a sudden illness can cause financial difficulty. Without a clear written record, working out who is entitled to what can become difficult and expensive.
If a couple separates and there is no Declaration of Trust, the dispute may have to be resolved under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA). That can mean court proceedings, professional valuations, and high legal costs, often for an outcome that everyone could have agreed in writing at the outset for a fraction of the price.
If one owner wants to sell and the other does not, a Declaration of Trust can set out how that situation will be handled, including any first refusal arrangement or buy-out formula.
If one owner dies, the Declaration of Trust works alongside their Will and the type of joint ownership to determine what passes to whom and on what terms.
The Link with Cohabitation and Family Law
Unmarried couples do not have the legal status of “common law husband and wife” in England and Wales. Despite the popular myth, there is no such thing, regardless of how long you have lived together. If you split up, you have no automatic claim on each other’s assets in the same way a married couple does on divorce. While the government has confirmed its consultation on cohabitation reforms, there are no guarantees as to when any changes will come into effect.
A Declaration of Trust, often used alongside a cohabitation agreement, is one of the few ways unmarried couples can give themselves clear legal protection. The two documents work together.
The Declaration of Trust deals with the property itself, while the cohabitation agreement deals with the wider arrangements between you, including how outgoings are met and what happens to other assets.
When Should a Declaration of Trust Be Put in Place?
The best time to set up a Declaration of Trust is at the point of purchase, alongside the conveyancing process. Our private client team can help you prepare it as part of the overall transaction, so the document reflects the actual figures going through on completion.
While it is possible to put one in place after you have collected the keys and moved in, it is more straightforward to do it at the start, while everyone is on good terms, in agreement, and the figures are fresh. If your circumstances change later, for example, because one of you remortgages or makes a significant financial contribution, the Declaration of Trust can be updated to reflect that.
You may also find our previous blog on buying a leasehold property useful if you are looking at a flat as a first home.
How Bookers & Bolton Can Help
Our residential conveyancing team, led by Jaeda Moayedi-Azarpour, Head of Property, will talk through how you want to own the property and discuss putting a Declaration of Trust in place alongside your purchase.
The Declaration of Trust itself is drawn up by our Private Client Team, led by Emma Bell, who can prepare it to reflect your actual contributions and intentions. They can also ensure your Wills are up to date and advise on any inheritance tax implications, so your property and wider estate planning work together.
Where other factors are involved, for example, where unmarried couples are buying together with children in the household, or you would like to include decisions over a pet, we work with our family law team to combine a Declaration of Trust with a cohabitation agreement, so the property and wider relationship agreements work in unison.
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For legal advice from experienced residential conveyancing solicitors, please contact us on 01420 558 335, email enquiries@bookersandbolton.co.uk, or fill in an enquiry form today.
This blog post is for information purposes only and details may have changed since publication. It is not intended to be taken as advice or acted upon. If you are seeking legal advice, please contact our team of solicitors.
