When two or more individuals purchase property together, it can be beneficial to draw up an explicit agreement that clearly sets out how much each person is contributing and who owns what.
A deed of trust is a legal document designed to explicitly clarify the details of how two or more individuals retain ownership over a single property. It can contain a range of different details, including how much each party has contributed to the deposit and who has ownership over what share.
Do I Need a Deed of Trust?
This important legal document is designed to protect the interests of each party purchasing property and will help to ensure that if the property is sold in the future, the contributions of each party are properly recognised and protected from a legal standpoint.
Even if you have an excellent relationship with the person you are purchasing a property with, it is always a good idea to think about what might happen if that relationship becomes difficult or strained in the future, if one of you wants to sell the property or if one of you is declared bankrupt.
When Is a Deed of Trust Specifically Advised?
There are a number of different scenarios in which drawing up a declaration of trust is particularly advisable, and it is important to discuss your situation with an experienced legal team, such as Parachute Law.
Firstly, if you and your co-buyer are making different contributions to the initial deposit, a deed of trust will acknowledge this fact and provide some protection for your investment. Additionally, if you have been loaned or gifted a sum of money to purchase the property, this contribution should be documented in the deed.
A declaration of trust can provide a level of financial protection for individuals purchasing a property as tenants in common, should any changes to the relationship occur.
A declaration of trust is also advisable if you are purchasing an investment property, as it can clearly set out the ways in which any profits or losses will be split between each party.