Declarations of Trust

Co-ownership of Land
Protecting your interest in a property with a Declaration of Trust

When two or more people own a property together they need to consider how they want to hold it. There are two ways which jointly owned property can be held:

  • Joint tenants – this means that all the owners own 100% of the property together. There are not separate shares and if one owner dies the property will be owned by the surviving co-owners automatically.
  • Tenants in common – this allows the co-owners to have their own share in the property so for example 2 owners may own 50% of the property each. When a co-owner dies their share can be left to whoever the deceased owner chooses in their Will.

When property is held as tenants in common it is sensible to have a Declaration of Trust prepared to determine the shares of ownership.

A Declaration of Trust is a legally binding document which sets out the framework for how the owners hold the Property. It can be a comprehensive document or relatively simple depending on what matters the owners want to include.

A simple Declaration of Trust may just specify what percentage share each owner holds. A more complex Declaration of Trust can include many points including the following by way of example:

- Who will pay what towards the mortgage and bills;
- What will happen if one owner wants to sell the property but the other does not;
- What would happen if the property is in negative equity when it is sold;
- Who will pay for repairs and upkeep of the property;
- How the income would be split if the property is rented out.

Having a Declaration of Trust in place can help avoid disputes between owners of property in the future. Therefore, it is important to have one in place where a property is owned as tenants in common.

It is even more important to have a Declaration of Trust where someone has made a financial contribution to a property which was not a loan or a gift to the owners. This is because that contribution may make them a 'Beneficial Owner' of the property. This can considerably complicate working out who is entitled to what should a property be sold.

Examples of individuals who may have contributed to the costs of the Property but who are not registered as an owner at the Land Registry include:

  • A person who has contributed a lump sum towards the deposit such as the legal owner's parents;
  • The legal owner's partner who now contributes towards the mortgage and upkeep of the property but is not named as an owner on the title;
  • Someone who has added value to the property even if they are not an owner, such as the adult child of the legal owner who paid for the extension to be built in which they now live.

All of the above circumstances have individuals who have contributed to the value of the property even though they are not a legal owner as specified on the Land Registry title of the property. However, they are entitled to a share of the equity of the property even though they are not named on the title. These people are known as 'Beneficial Owners'. If you are a Beneficial Owner but not a legal owner you may find it difficult to prove how much you are entitled to if the legal owner refuses to acknowledge that you have contributed towards the value of the property.


For an example guiding you through how property ownership works please click here

Avoiding disputes

If a dispute arises between the owners of a property it can be extremely costly trying to sort out what each person is entitled to. As can be seen in Part 2(a) of the example, in some circumstances it can be extremely difficult to work out what each party is entitled to. Therefore, it is important to have a Declaration of Trust prepared when buying a property with other people.

If you are interested in entering a declaration of trust with the co-owners of your property or you would like more information about how such a document could help you, please contact the Dispute Resolution team on 01276 686222 or email .