Glossary · UK
What is Declaration of Trust?
A legal document recording how co-owners hold the beneficial interest in a property, including unequal shares reflecting different deposit contributions, separate from the property's legal title.
Full Definition
A declaration of trust is a legal document used when a property is owned by more than one person, recording how the beneficial ownership -- the right to the property's value and any sale proceeds -- is actually split between the owners, which does not have to match the legal title held at the Land Registry. Where co-owners contribute unequal amounts, for example one partner paying a larger deposit or covering more of the mortgage, a declaration of trust can record this by setting out that the property is held as "tenants in common" in specified, unequal shares (for example 70/30), rather than as "joint tenants," where the law presumes an equal 50/50 split and, on death, the property automatically passes to the surviving owner regardless of any will. A declaration of trust typically records the amount each party contributed to the deposit and ongoing mortgage payments, what percentage share of the sale proceeds each is entitled to, how outgoings such as the mortgage, insurance and maintenance costs will be shared while the property is owned jointly, and what happens if one party wants to sell or buy out the other's share. This is especially useful for unmarried couples buying together (since they lack the automatic financial claims spouses have on separation), for family arrangements such as parents contributing to a child's deposit without wanting to gift the money outright, or for friends or siblings buying a property together, since without a declaration, establishing an unequal beneficial interest later can require expensive and uncertain litigation under trust law. A declaration of trust is different from a mortgage or the property's legal title -- all named legal owners remain jointly and severally liable to the mortgage lender for the full mortgage regardless of what the declaration says about their beneficial shares -- and different again from a will, since it only governs the co-owned property itself and does not deal with the rest of a person's estate.