What is a declaration of trust and when do you need one?

A declaration of trust is a written document that records who owns what share of a property bought by more than one person. If you are buying with a partner, friend, sibling or parent and the money going in is not equal, it is the document that settles who is owed what if things change later. This guide explains what a declaration of trust is, when it is worth having, how it sits alongside the Land Registry and what it costs, so you can raise it with your solicitor at the start of the purchase rather than the end.

What is a declaration of trust?

When property is bought jointly, the legal title records the registered owners, while the beneficial ownership determines how the value of the property is shared between them. The legal title says who is on the register. It does not say who owns how much of the value. That second question is called the beneficial interest, and a declaration of trust is the document that answers it.

In practice it is a short document, usually signed as a deed, stating that the owners hold the property on trust for themselves in set shares. A 50/50, 70/30 or 90/10 split is typical. It can also cover what happens if one owner buys the other out, or if a sale leaves one person owed their deposit back first.

People often search for this as a declaration of trust property form or a declaration of trust on property. Both mean the same document.

When do you need a declaration of trust on a property?

You do not need one for every joint purchase. Where buyers are contributing equally and want the survivor to inherit automatically, they may decide that a beneficial joint tenancy meets their needs without a separate declaration of trust. A declaration of trust earns its fee when the split is not simple. Common examples include:

• one buyer putting in a larger deposit than the other
• a parent contributing towards a purchase where the parties want to record clearly whether that contribution is a gift, loan or beneficial interest
• friends or siblings buying together as an investment
• an unmarried couple where one person pays more of the mortgage
• a buy to let owned with relatives who contribute unequally

Without one, a court may have to work out each person's share from who paid what and what everyone intended, which is slower and costlier than writing the split down on day one. Married couples and civil partners can use a declaration of trust too, particularly where one side brings in a large deposit or an inheritance.

If someone is being added to the title of a home that is already owned, that is usually a transfer of equity rather than a new purchase, and it often involves its own declaration of trust.

If a relationship has ended and the home needs dividing, our guide to conveyancing after divorce or separation covers how the sale or buy-out is handled.

How does a declaration of trust work for joint tenants and tenants in common?

Since 1925, the legal title to jointly owned land can only be held as joint tenants. Co-owners can still choose how they hold the beneficial interest, either as beneficial joint tenants or as tenants in common. HM Land Registry's own guidance sets this out.

As joint tenants, you own the whole property together and the survivor takes it automatically. As tenants in common, each owner has a defined share that can pass under their will or, if there is no will, under the intestacy rules. A declaration of trust for tenants in common is where the document does most of its work, because those shares have to be recorded somewhere.

In a declaration of trust tenants in common arrangement, the percentages are written into the document itself. Our guide to joint tenants vs tenants in common explains how to choose between the two, and joint ownership and declarations of trust are usually settled together at the start of the purchase.

Is a declaration of trust legally binding, and can it be challenged?

A declaration of trust of land has to be in writing and signed to be enforceable as an express trust. That rule comes from section 53(1)(b) of the Law of Property Act 1925. Trusts that arise by operation of law, for example from how the owners have behaved, sit outside it, which is one reason disputes over unwritten arrangements end up in court.

Once the owners have signed a clear written declaration, the courts have generally treated it as conclusive about their shares unless there was fraud or mistake. So can a declaration of trust be challenged? A clear written declaration will usually carry significant legal weight. Whether it can be challenged, rectified or varied depends on the circumstances, with issues such as fraud, mistake or a later valid agreement potentially being relevant. Legal advice should be taken where ownership shares are disputed or where the owners want to vary an existing declaration.

Does a declaration of trust go on the Land Registry?

The shares themselves are not recorded on the register. HM Land Registry's guidance says references to trusts should be kept off it where possible. What happens instead is simpler.

When a property is transferred to two or more people, the transfer form (the TR1) has a panel where the buyers state how they hold it. If that panel is not completed, the Land Registry enters a Form A restriction by default.

The restriction is designed to stop a sale being registered on the signature of a single owner. Joint owners can also use Form JO, a voluntary form for declaring the trust at the point of purchase. Our overview of how the Land Registry affects a property purchase covers the wider process.

How much does a declaration of trust cost?

There is no fixed national price. A declaration of trust solicitor will normally quote a fee for drafting it, and if the declaration is prepared as part of a purchase, ask whether the drafting is included in the conveyancing fee or charged separately. Fees vary by firm and by the complexity of the ownership arrangement, so check whether it is included in your conveyancing quote or priced as an add-on.

If you are asking how much is a declaration of trust before you instruct anyone, compare fixed-fee quotes first. Our guide to conveyancing fees when buying shows what a standard quote covers, and fees also differ by area, so it is worth comparing quotes for your own city, for example in Birmingham or Leeds. Declaration of trust solicitors are often the same conveyancers handling your purchase, but not every firm includes the drafting as standard.

Can you write your own declaration of trust from a template?

Free declaration of trust template downloads exist, and one can help you understand the structure. The risk is in the gaps. A generic template may not deal adequately with issues such as a buy-out, separation, death, remortgage or the treatment of unequal contributions. For a home that may be worth hundreds of thousands of pounds, a document drafted around your own facts is usually the safer route.

Is a declaration of trust the same as a deed of trust?

In the UK the two phrases are often used interchangeably. What matters is the document itself, a written statement of how the beneficial ownership is split, usually signed as a deed.

Getting a declaration of trust arranged with your conveyancing

If you are buying with someone else and the contributions are not equal, raise a declaration of trust with your solicitor at the start, not just before exchange. When you compare fixed-fee conveyancing quotes, check whether drafting the declaration is included and ask the firm to confirm in writing. That way the cost is clear before you instruct anyone.

Questions people ask about a declaration of trust

Can you do a declaration of trust after you buy the property?

Yes. The owners can sign a declaration after completion. It is usually simpler and cheaper to settle it at purchase, while the conveyancer is already dealing with the transfer and the Land Registry application.

Do married couples need a declaration of trust?

Not automatically. It is worth considering where contributions are unequal, for example when one partner puts in an inheritance or a much larger deposit. A solicitor can advise on what fits your circumstances.

Can a declaration of trust be changed?

The owners can agree to vary it by signing a new written document. Because the position affects the Land Registry entry and may affect your lender, ask your solicitor to handle the change rather than amending it informally.

Does a declaration of trust affect your mortgage?

Your conveyancer will check the arrangement against your lender's requirements, so tell them about it before exchange rather than after.