What is a Declaration of Trust and Why is it Beneficial When Selling a House?
Buying a property with someone else can be exciting, but the financial commitment often raises important questions about clarity, fairness, and future security.
Many people don’t realise there’s a simple legal document that can help prevent confusion and protect everyone’s interests down the line. If you’re buying a property with someone else, whether that’s a partner, friend, family member or business partner, you’ll probably hear the term “Declaration of Trust.”
But what is a Declaration of Trust, and why is it important when it comes to selling a house? We break down why this extra step can make all the difference, the situations where it becomes especially valuable, and what you should know before putting anything in writing.
We break down everything you need to know about a Declaration of Trust, how long it lasts, if a Declaration of Trust be challenged and whether you can have a Declaration of Trust as joint tenants.
What is a Declaration of Trust?
A Declaration of Trust (often referred to as a Deed of Trust) is a legally binding document that outlines who owns what share of a property. It sets out each person’s financial contribution, how equity should be split if the property is sold, and any agreements related to future payments.
A Declaration of Trust might not be the most exciting document you’ll ever sign, but it’s one of the most important. Think of it as a safety net that protects everyone’s financial interests.
When should you get a Declaration of Trust?
You may want one if:
- You’re contributing unequal house deposits
- You’re buying a house with a friend or partner
- One person pays more towards the mortgage or cost of renovations
- A family member is gifting or loaning money for the purchase
- You want financial protection if you’re selling after a divorce or separation, or if you simply decide to move out
Why is a Declaration of Trust beneficial when selling a house?
When it comes to selling a house, a Declaration of Trust is important because it provides a clear, legally recognised record of how the proceeds should be divided. For example, if one buyer pays a bigger deposit, or contributes more to mortgage repayments, a Declaration of Trust can make sure that person gets a fair and proportionate share back when the property is sold, avoiding disagreements.
When a Declaration of Trust is already in place, the sale process is far smoother. Solicitors know exactly what each person is entitled to, expectations are clear from the outset, and there’s far less room for disputes or delays. Without one, splitting proceeds can quickly become complicated, especially if contributions weren’t equal.
Can a Declaration of Trust be challenged?
Yes, a Declaration of Trust can be challenged but only in certain situations. A Declaration of Trust is a legal document, so it’s generally upheld by the courts. However, it can be challenged under certain circumstances such as:
- Someone signed it under pressure or duress
- The agreement is unfair or unclear
- Circumstances have changed significantly, making the agreement unreasonable
- There is evidence of fraud, mistake, or misrepresentation
Most challenges happen during separations or disputes over property value. To avoid this, it’s always best to have the document drafted professionally and signed with independent legal advice. Having it drafted at the time of purchase is ideal, but you can also put one in place later.
How long does a Declaration of Trust last?
A Declaration of Trust lasts indefinitely, unless the property is sold or in the event all parties agree to change or cancel it. It can also be cancelled if the court orders.
So if you signed a Declaration of Trust years ago, it still applies today, unless it’s been formally updated. Many homeowners choose to revise it when refinancing, adding a partner to the mortgage, or adjusting financial contributions.
Can you have a Declaration of Trust as joint tenants?
This is a common question. Yes, you can still have a Declaration of Trust as Joint Tenants, but it acts differently.
While joint tenants own the whole property together equally, and a Declaration of Trust is designed to record unequal shares, it can still be used to record things like who contributed what to the deposit or how you agree to handle certain financial matters further down the line, but it can’t override the fundamental rule of equal ownership under joint tenancy.
If you want to protect unequal contributions, you’ll need to change your ownership type to tenants in common, which allows ownership shares to be split however you wish.
Want to sell your property hassle-free?
If you’re planning to move on quickly or need a fast, hassle-free sale, having your ownership and contributions clearly documented can make the process even smoother. At Sell House Fast, we offer cash for your house and help homeowners navigate these situations with confidence and sell faster than with traditional estate agents. Whether you’re selling with a Declaration of Trust in place or need guidance on how to sell your property, our team is here to make the process quick, transparent and stress-free. Reach out today for a no-obligation free cash offer.
