Protect Your Share of the House Deposit with a Deed of Trust

Sarah Ryan, Head of Private Client
Author:
Sarah Jones
Head of Property, Licensed Conveyancer
Date:
17/06/2020

If you’re buying a home with your partner and you’re paying more towards the deposit, you can protect your share of the deposit with a Deed of Trust, sometimes called a Declaration of Trust.

A Deed of Trust will ensure that your share of the deposit, and any other payments you make towards your property, will be protected no matter what happens.

You and your partner may pay different amounts towards your property, whether that’s for the deposit, the mortgage repayments or maintenance costs. So it’s important to make sure that you protect your financial interest in the property in case you decide to sell it, or your relationship comes to an end.

When you and your partner are buying a home together, protecting your deposit in the event that your relationship breaks down might not be at the forefront of your mind. But if your relationship does end, it’s important that your shared assets are divided fairly so that you have one less thing to worry about in what might be an already emotional situation. 

For free initial advice get in touch with our Conveyancing Solicitors.

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What is a Deed of Trust?

A Deed of Trust, or Declaration of Trust, is a legal document that states how much money each person has put in and how much each person will receive if you sell the property or your relationship ends.

The Deed of Trust can include:

  • How much money each of you put in and how much you’ll be repaid if you sell the property or one of you buys the other out
  • What percentage of the property you own and how the money will be divided between you if you sell the property
  • How the mortgage will be paid off and how much each of you will pay towards the mortgage

It’s best to get a Deed of Trust whilst you’re in the process of buying the property so that we can draw up the agreement for you during the conveyancing process. But if you have already been living in the property for some time you can get a Deed of Trust at any point of your tenancy.

How Can I Protect My Deposit if Someone Else Helped?

A Deed of Trust will also work well for you if you or your partner have received financial help towards your share of the deposit, for example from “the bank of Mum and Dad”. A Deed of Trust will make sure that you get your share of the money back if you choose to sell the property, so you can return Mum or Dad’s share back to them.

How Can I Protect My Share in the Property?

If you want to protect your share in the property beyond the deposit, then you should consider how you will divide ownership of the property. This could be as:

  • Joint Tenants or
  • Tenants in Common

If you and your partner are married you might want to consider getting a Prenup or Postnuptial agreement, or if you’re not married then a Cohabitation Agreement could work for you. This will ensure that your shares in the property are divided fairly should you decide to separate.

Joint Tenants Explained

If you own the property as Joint Tenants, then you both have equal share of the property. This means that if one of you were to die, the ownership of the property would automatically be passed onto the other person.

Owning a property as Joint Tenants also means that in the event that your relationship comes to an end, the property will be divided equally (if you don’t have a Deed of Trust in place). You should get a Deed of Trust if you own the property as Joint Tenants but don’t want to split all costs evenly.

Tenants in Common Explained

If you own the property as Tenants in Common then you will each be able to hold separate shares in the property. This means that if one of you dies, your share can be inherited by someone who is not your partner if you wish.

Owning the property as Tenants in Common means that one of you could have a larger share than the other, for example if one of you is going to pay more towards the mortgage repayments. If you are Tenants in Common then you should speak to us about getting a Deed of Trust to ensure you get a fair share of the property if you decide to sell it.

Our Conveyancing Solicitors and Conveyancers can advise you on how to protect your financial share in your property. The process of buying a property can be very stressful but our Conveyancing team can help you with every aspect of buying a new home and aim to make the process go as quickly and as smoothly as possible.

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