In all the excitement of a new home together, it’s easy for individuals to forget to take steps to formalise their legal position or more…
Purchasing a property: Do I need a Declaration of Trust?
In all the excitement of a new home together, it’s easy for individuals to forget to take steps to formalise their legal position or protect the money they have invested.
When purchasing a property, you should always consider what your interest in the property is and how you want to protect it. Your interest in a property will depend on how the property was funded at the point of purchase and/or what contributions have been made to the property and any improvements carried out during the period of ownership. It is important to be clear about each party’s interest in order to avoid a dispute arising at a later date.
We understand that this is not an easy conversation to have when buying a new property, but it’s an extremely important one. If you’re unsure of your position, it’s important to seek advice. If matters are unclear and left to be interpreted at a later date, a long and costly legal battle can ensue.
For example, should you not be the homeowner but someone who contributes significantly to the property, you would need to take steps to protect your interest. Your name and/or your interest will not be noted against the property in anyway, unless you take steps to formalise your interest.
When more than one person is contributing to a property, whether that be in unequal shares of the purchase price by way of mortgage payments or any other significant financial contribution, the advice is always to take advice and consider entering into a Declaration of Trust, detailing each party’s respective share in the property.
If you are seeking to realise your interest in a property where there is a dispute as to the extent of your interest and your interest has not been protected by way of a Declaration of Trust, or any other method, the burden will be on you to evidence your interest. This is a much harder exercise than simply relying on a Declaration of Trust or similar.
In the absence of a Declaration of Trust, an interest can be established in the property by way of a ‘resulting trust’ which requires evidence of a direct financial contribution to the property; by way of a ‘constructive trust’, where a common intention between the parties can be used to evidence an interest or by proprietary estoppel where there has been an assurance given and relied upon to a party’s detriment.
Claims of this nature are often complex, resulting in lengthy and costly legal proceedings. It is therefore advisable to formalise your position as soon as possible.
If you’d like to speak to someone in our dedicated Trusts team about formalising an interest in a property, or to contact our Litigation team about any disputes surrounding your interest in a property, call us on 0117 905 9763 or contact us through our online enquiry form.