Purchasing a property with your husband, wife or partner is an exciting milestone for many making it easy to look no further than getting your hands on the keys. How many of us stop to consider what happens to that property in the event the relationship breaks down in the future? It is not a particularly pleasant thought but nevertheless, it is a notion of importance, especially in the event of unequal contributions towards the property purchase.
When a property is owned by two parties there is an assumption that they own it in equal shares. In the event of a future sale, they are each entitled to 50% of the sale proceeds. But what if one party contributed 80% towards the deposit and subsequently paid for renovation work? If the relationship sours and the parties go their separate ways with the property being sold, is a 50:50 split just and equitable or is it the perfect foundations for a dispute?
Declarations of Trust can be used to help avoid such issues. A Declaration of Trust is a legally binding agreement making clear the parties’ interests in the property. It can serve as a record of the unequal contributions towards the property and state how the net sale proceeds are to be divided to reflect the circumstances accurately. A Declaration of Trust can also go further to document other agreements such as to contribute equally towards mortgage payments, the cost of utilities or future maintenance work. The value of having an agreement expressed in writing cannot be overstated especially if the parties are not seeing eye-to-eye.
Timing is important. It may not be pleasant to hypothesise about a future disagreement with your partner before you have even exchanged contracts, but it will be best for you both if you are on the same page before you have invested your life savings.
An additional legal cost is unlikely to be an attractive prospect when you are already budgeting for stamp duty, conveyancing fees, surveyor fees and that Persian rug that will look great in your new living room. That being said, it has to be more attractive than the idea of dragging your matter through the courts in an attempt to get what is rightfully yours.
If you would like to set up a declaration of trust, please get in touch with us on 0330 0945 500 or complete our Contact Form and we'll get back to you.