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If you're a small business owner planning to buy or invest in property, you may have come across the term Declaration of Trust. But what exactly is it, and why is it so important in the UK property landscape? 

In this guide, we'll walk you through the ins and outs of a Declaration of Trust, its legal implications, and why it’s such a key document for property co-owners. 

How does a Declaration of Trust Work?

A Declaration of Trust is a legally binding document that sets out the ownership and division of ownership rights over a property. It’s commonly used when multiple parties, such as business partners or family members, purchase a property together. The Declaration of Trust clarifies the ownership percentages, rights and responsibilities of each co-owner. This document ensures transparency and helps prevent disputes in the future. 

For example, imagine two business partners decide to buy a property to expand their operations. One partner contributes 70% of the purchasing costs, while the other contributes 30%. With a Declaration of Trust, they can specify their ownership percentages and how they'll share expenses like any mortgage repayments and other costs, and how their respective proportions in the property will be dealt with on sale.

Is a Declaration of Trust legally binding?

A Declaration of Trust is legally binding, provided it meets the necessary legal requirements. It should be in writing and signed by all parties involved to be valid. Furthermore, it should explicitly state the property's legal owners, the proportions of their beneficial interests, and the property's specific details, including its full address and, ideally, its Land Registry Title Number.

We recommend speaking to one of our expert property lawyers to ensure your Declaration of Trust complies with all legal formalities and accurately reflects your intentions.

Does a Declaration of Trust need to be witnessed?

There is no legal requirement for a Declaration of Trust to be witnessed. However, signing the document as a Deed with a witness for each signature can add an extra layer of validity and credibility to the document, especially if any disputes arise in the future. Witnesses can attest that the parties signed the document willingly in their presence. 

When is a Declaration of Trust not valid?

A Declaration of Trust may be deemed invalid if it fails to meet the necessary legal requirements. Some common reasons include:

  • No written document  – a Declaration of Trust must be in writing to be enforceable
  • Missing signatures all parties involved must sign the document for it to be valid
  • Unclear provisions the document should clearly outline the property's details, ownership shares, and any other relevant terms
  • Duress or undue influence if one party is coerced into signing the document, its validity may be challenged

In such cases, the property may be treated as if no Declaration of Trust exists, and the legal ownership will be determined according to law and the relevant title deeds.

Can a Declaration of Trust be changed?

A Declaration of Trust can be changed or amended through a Deed of Variation. This legal document allows parties to alter the terms of their original agreement. For instance, if the co-owners decide to change their ownership percentages or introduce new clauses, they can do so with a Deed of Variation. It's important to have any changes properly documented and signed by all parties to avoid confusion or disputes in the future.

Can I write my own Declaration of Trust?

While you can draft your own Declaration of Trust, we strongly advise speaking to one of our property lawyers to ensure it’s accurately written and legally binding. A poorly drafted document may lead to disputes and potentially costly legal battles. Working with an experienced solicitor ensures that the Declaration of Trust covers all relevant aspects and reflects your specific requirements.

Can an undated Declaration of Trust be effective?

No, an undated Declaration of Trust is unlikely to be effective. The date is important as it establishes the timeline of ownership and helps determine the beneficial interests of the parties involved. Without a date, it can be challenging to ascertain the order of contributions and when the Declaration of Trust came into effect. Thus, it's crucial to include the date when the document is executed.

Get legal assistance from LawBite

Navigating the intricacies of property ownership can be daunting, especially for small businesses and entrepreneurs. A well-drafted Declaration of Trust can be the key to smooth and successful property ownership, ensuring clarity, transparency and long-term security for all co-owners. 

At LawBite, we’re committed to doing law differently, providing a seamless and innovative experience for our customers and offering practical legal solutions to meet your specific requirements.

When dealing with property matters, having a trusted legal partner by your side is essential. Our team of experienced property solicitors are well-versed in UK property law and can guide you through the entire process. 

Our expertise extends beyond drafting Declarations of Trust. We can assist you with various property-related matters, such as drafting Deeds of Trust and Deeds of Variation, advising on stamp duty implications and handling Land Registry submissions. We'll ensure that your interests are protected at every step of the way.

To find out more, book a free 15 minute consultation with one of our expert property lawyers or call us on 020 3808 8314. Your property ambitions are within reach, and we're here to help you achieve them.


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In closing

Nothing in this article constitutes legal advice on which you should rely. The article is provided for general information purposes only. Professional legal advice should always be sought before taking any action relating to or relying on the content of this article. Our Platform Terms of Use apply to this article.

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