Deed of Trust to Protect Money In Property
06/11/2019
(Last Updated: 15/06/2023)
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A deed of trust is primarily used to protect money in a property, however it can also be used to set out the intentions for the ownership of the property including its use, maintaining it and when to sell it.
A deed of trust is drafted by a solicitor, normally during the conveyancing process when buying, however you can draft a deed of trust after you purchase. You can only have a deed of trust to protect your money in a property if you hold it as tenants in common.
The cost to prove how much you are owed from a property can go into the tens of thousands, so it is advisable that all joint owners of property draft a deed of trust to confirm what they own and how they can get their money when they want to.
The money in the property is better known as your beneficial interest in the property and it is shown as a percentage.
Find out more - Does a deed of trust need to be registered at the Land Registry?
What happens if joint owners don't have a deed of trust?
Much like any financial agreement, if it isn't written down on paper, signed and witnessed, it is for the parties to prove how much money they are due from the property. It can be very costly to prove how much money you are owed and often requires legal support through mediation or even going to court.
Where there is no express deed of trust that confirms the money share, beneficial interest, of the joint owners - which if there is then this is indisputable - then the co-owners must look to prove their ownership in the property.
If the property is held as joint tenants then it is shared equally and this is unchangeable. If the property is held as tenants in common then the joint owners can look to prove what money they have invested, what their original intention was and then look to agree a beneficial interest share.
It may even be the case that the parties look to force a sale to get their money from the property.
What money can be protected?
Deeds of Trust can protect more than just the original deposit invested on purchase. This can include:
- Purchase Deposit - each joint owner's deposit used when buying the property can be protected.
- Mortgage Repayments - the joint owners can agree to share the mortgage repayments in unequal shares to allow them to grow a greater beneficial interest in the property.
- Renovations - you can agree about how renovation works, how you contribute toward any and how they can increase your individual financial stake in the property. Read more about what renovation works add value to your home.
- Household bills - agree who pays for what household bills.
Within the deed of trust you can state how each of the above effects your beneficial interest, in essence what money you get on sale of the property.
Some standard deed of trusts will just have a fixed percentage sharing the beneficial interest 50%/50% or 70%/30%, however there are more complex agreements such as a floating deed of trust that allow for the beneficial interest in the property to increase or decrease reflecting the joint owners' contributions to the property.
How to get a deed of trust?
We offer a number of different deed of trusts based on the circumstances of the joint owners. These include:
- Deed of Trust for buying a home for anyone looking to declare their individual beneficial interest and confirm their intentions such as how to sell the property or what happens if you break up
- Deed of Trust for Tax Purposes for a landlord sharing property income in a tax efficient way with their partner (if married, to be filed alongside a Form 17 declaration to HMRC). If this is a property you already own as joint tenants then we can help sever the joint tenancy
- Floating Deed of Trust) for joint owners looking for a floating beneficial interest that goes up and down during the life of the ownership and reflects what you put in including mortgage repayments, costs of purchase/sale and developments
- Deed of No Beneficial Interest for clients buying with a joint mortgage sole proprietor mortgage product where they need to declare a zero beneficial interest to avoid second home stamp duty tax
Our deeds of trust are drafted by experienced solicitors within Drafted within 1-2 days Often on the same day for a fixed fee, starting at £299. Talk through your needs and options with one of our specialists on 0333 344 3234 (local call charges apply) or click the button below to get a quote.
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Written by:
Andrew Boast
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Reviewed by:
Caragh Bailey
Caragh is an excellent writer in her own right as well as an accomplished copy editor for both fiction and non-fiction books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey and mortgage related articles.
