Buying a property is an enormous financial investment – for many people, it is the largest sum of money that they will ever spend. It is, therefore, essential that when a second party is involved, each understands their input to that property and what they will get back should they either choose to forfeit or sell their share, or if the property is sold in its entirety.
When a couple purchases a property together, they can choose to be recorded on the title deeds as joint tenants, meaning they each own 50% of the equity in the property and would receive the same split back upon sale. Alternatively, they may be tenants in common where they can elect to own different percentages of the equity, based upon the amount of money that they put into the purchase or how they plan to make mortgage payments, household improvements and other financial decisions.
Formally Recording Ownership
A deed of trust is usually drafted during the conveyancing process, when the property is purchased. It can be created or revised after purchase should a new person be added to the title deeds of a property already owned by their partner through the process of transfer of equity or through creating a cohabitation agreement.
It allows co-owners of a property to formally record their financial interest in the property, including how any income earned from the property will be divided. If the property is an investment property and to be rented out to generate an income, a Form 17 will also need to be completed for tax purposes
Why Should Ownership Be Formally Recorded?
Formally recording ownership is important to ensure that all parties understand their legal and financial obligations. It is much easier to make decisions of this magnitude at the outset of the cohabitation arrangement rather than trying to untangle finances and assets during a relationship breakup.
A deed of trust is the most appropriate way of legally recording ownership of a property for married couples, unmarried couples who are already cohabiting, or when gifting a child or other family member the money for a deposit on a home of their own or to purchase with their partner.
Who Can Create a Deed?
DIY templates are available online, but to ensure that you receive the appropriate legal advice and fully understand the implications of agreements made, it is recommended that you engage the services of a suitably experienced conveyancing solicitor such as https://www.samconveyancing.co.uk/news/conveyancing/deed-of-trust-4378 who will be able to tailor a deed to your specific circumstances.
In Conclusion
Formally recording each owner’s share of a property is a sensible way of guarding against future potential break-ups or disputes. It safeguards gifted deposits and formalises the intentions of the co-owners with regard to the use and maintenance of the property, as well as the division of any income generated from it, including in the event of its future sale.