Considerations for joint tenants
When you buy a property as joint tenants, it’s assumed you own the property equally. If one of you passes away, the other will automatically inherit the other’s share. You can’t pass it on in your will.
However, you might still want to register – and protect – a beneficial interest. In other words, to record your respective contributions to the purchase price and ongoing costs. You can still use a declaration of trust to achieve this.
In fact, it’s commonplace for joint tenants to do this. Ever since 1998, the Land Registry has included a declaration of trust panel on its form and in 2012, a voluntary joint owners form was introduced. It gives homeowners the option to declare interests from the start – otherwise they are assumed to have equal shares in the property.
Considerations for tenants in common
When you buy a property as tenants in common, you each own a share – something which will be evidenced on title at the Land Registry. In this case, if one of you passes away, that share will be passed on as set out in their will. Without a will, the rules of intestacy apply. This means it won’t necessarily go to the co-owner of the property. For couples with children from a previous marriage, for instance, this would be beneficial as their share can be left to their kids.
A declaration of trust is still useful because precise shares – including contributions to the deposit and plans for ongoing repayments – should be set out at the start. As an unmarried couple, if you don’t do this, complex property laws will apply if you separate.
As both joint tenants and tenants in common, a deed of trust is a way of securing the financial contribution with a legal agreement.
Can you change or challenge a deed of trust?
First things first, a declaration of trust is in place to make sure no-one can change their minds about how the money is split when the property is sold. But situations change, and such legal documents might need updating. The deed can be re-written to reflect changes, but it needs the consent of both parties.
If you want to make substantial changes to the deed, it’s typically best to get a new one written. If changes are only minor, you can enter a deed of variation. It refers to the existing declaration and adds the new clauses you need. It should clarify which details are replaced by this new deed of variation, whereas if you had a new deed written, as soon as it was filed, it would replace any conflicting information in the original document. You might want to change your declaration of trust if:
- You’ve made home improvements and increased the value of your home
- There’s a change in beneficiaries e.g. someone is bought out
You can’t backdate a deed of trust, though. If you want to include your intentions, it can be useful to reference past events. For example, if you own a house and wish to give some ownership to a new party, you could include a simple narrative of events. That way, someone reading the deed would understand the motivations for all details.
When intentions are clear, there’s less room for anyone to go back on the agreement. In fact, it can be difficult to challenge a declaration of trust in court – the only cases which tend to be represented are on the grounds of fraud or misrepresentation.
What happens if you get married?
Of course, many cohabiting couples will get married. If this is you, check your original declaration of trust. It might include provisions about what happens when you get married – but they won’t be conclusive, as section 25 of the Matrimonial Causes Act 1973 applies once you’re married, or in a civil partnership.
The deed of trust will give a good indication of your intentions, though, and can be considered in court. However, we recommend a pre-nuptial or post-nuptial agreement to capture the details of what would happen if you were to separate.