Co-Ownership: The Importance of Declarations of Trust

25 Mar 2020 | Simon Nosworthy
london houses

Recent court decisions have demonstrated the benefits of joint owners of property declaring their beneficial interests. The beneficial interest is the amount of money that they both have in the property or their percentage share. Declaring interests at the outset of a transaction provides clarity about the parties’ intentions and may help to avoid disputes in the future.

Why are they necessary?

When a property is purchased in joint names, the parties will hold the legal estate as joint tenants and the beneficial interest in the property as either joint tenants or tenants in common. When the property is purchased as joint tenants each joint tenant has an indivisible share in the property and all of the tenants are equally entitled to the whole property. In contrast, where the property is purchased as tenants in common, each has a distinct beneficial share in the property. The need for a declaration of trust between co-owners only arises where the property is held as tenants in common.

The simplest method of recording whether the parties intend to own the property in equal or unequal shares is to make an express declaration to that effect using a Land Registry form or a separate trust deed. This may avoid disputes in the case of death, relationship breakdown or sale of the property. Most disputes in this area occur between unmarried co-habitees, but such disputes can also arise between family members, friends or business partners who purchase property together. 

What do they do?

The Land Registry Form JO can be used to set out the shares that each party owns but it does not provide any other information. A trust deed can be as simple or as complicated as the parties require. It can detail the amount of deposit each party has contributed and the redistribution of this upon sale. It can also specify the shares of the property each party owns and the amount each party is to contribute towards any mortgage over the property and to any other outgoings. Perhaps most importantly, the trust deed can also set out the procedure in the event of a sale or a dispute and can detail what happens if one owner wants to sell the property and the other does not. It is also possible to vary a trust deed if the circumstances of the relationship change.

When should they be created?

A trust deed is often prepared at the time the property is purchased. It is important that it is prepared before any disagreements arise as its purpose is to safeguard all parties and make it clear to everybody how the property purchase was funded and how the division of sale proceeds will be dealt with. If you have already bought your property a Declaration of Trust can still be drawn up provided that your co-owner agrees. Form JO can be prepared at the same time in place of the trust deed if something simpler is required.

Share this article


Residential Property News & InsightsVIEW ALL

  1. grand union walk camden

    First-time buyer stamp duty exemption – don’t get...

    Stamp duty is the bane of every home buyer, with only first-time buyers being exempt from paying the tax if...

    Read more
  2. 24.9.2021

    First Time Buyers Tax Relief Reminder

    First-time buyers have been urged to make the most of a ‘forgotten tax relief’ that could save them thousands of...

    Read more
  3. london houses

    Making Alterations to a Leasehold Property

    What is a Leasehold Property? There are two main types of property in England and Wales, freehold and leasehold property....

    Read more
  4. 10 top tips

    10 Top Tips to Avoid Delays When Selling Your...

    Thinking about marketing your property for sale? Simon Nosworthy, Conveyancing Solicitor at Osbornes sets out his top 10 tips of things...

    Read more
  5. 28.5.2020

    COVID-19 increases risk of Property Fraud

    Since the Government placed England in lockdown, in March, due to COVID-19 empty properties across England have likely gone unchecked....

    Read more
  6. 27.5.2020

    Post lockdown conditions have created a perfect time...

    A short-term drop in housing prices caused by Covid-19 and the existing low cost of borrowing have created the ‘perfect...

    Read more
  7. hampstead house

    To move or to improve? Legal considerations when...

    In an uncertain property market many of us are looking to stay put and make what we already have better...

    Read more
  8. 13.5.2020

    Property Market Gets The Green Light!

    Buyers, Sellers, Estate Agents, Solicitors, Mortgage Companies, Surveyors and many more have been waiting since March for the Government to...

    Read more
  9. 6.5.2020

    Let’s talk leasehold charges

    Buying a home warrants a financial commitment like no other. From needing cash for a deposit, mortgage fees, conveyancing fees,...

    Read more
  10. 27.3.2020

    Latest advice from Government – buyers urged not to...

    Speaking to the today Simon Nosworthy, Head of Residential Conveyancing at Osbornes Law said: “If parties have exchanged...

    Read more
  11. 27.3.2020

    COVID-19: Conveyancing Can Continue

    COVID-19 is causing confusion in all aspects of life including conveyancing. Thankfully the government has now issued clear guidance as...

    Read more
  12. london houses

    Co-Ownership: The Importance of Declarations of Trust

    Recent court decisions have demonstrated the benefits of joint owners of property declaring their beneficial interests. The beneficial interest is...

    Read more
  13. 30.1.2020

    Co-buying a property with friends – the pros and...

    For many young people getting on the property ladder is just a dream, with spiralling house prices making it impossible...

    Read more
  14. 25.3.2019

    London property ‘hotspots’

    Property professionals across the country have made their predictions as to what is in store for the property market over...

    Read more