You may have heard on the news this morning that the Supreme Court have ruled on a case where an unmarried couple owned a property jointly. Following the breakdown of the relationship, the couple could not agree how much each was entitled to receive.
After a relationship has broken down, many unmarried couples discover that they have very few rights in relation to property which they own together. The same may apply where one of them owns the property but the other has contributed to the purchase costs.
The routine conveyancing process deals with the legal formalities for registration of the property in the names of the couple at the Land Registry, but does nothing to reflect the shares in which they contributed to the purchase price, nor the shares in which the eventual sale proceeds should be paid. If the property is owned as joint tenants or tenants in common without any other clarification, the net sale proceeds would be split equally between the co-owners, regardless of who paid the deposit, who paid the mortgage or the other purchase costs.
Parents may have contributed to the deposit paid by their child, and would wish to ensure that the money is retained by that child in the event of a breakdown in the relationship.
A Declaration of Trust is a statement of interest in an asset, such as a house, which makes it clear how much is owned and by whom. Two or more people may be included – the document could relate, for example, to the purchase of a house by a couple, or by a group of friends. It should clearly set out the agreement between them, including how much of the purchase price was paid by each person and how any proceeds of sale should be split in the event of a breakdown in the relationship or the death of one of the parties. It would also cover matters such as who has responsibility for the mortgage payments, maintenance and utility costs and so on,
Declarations of Trust are very cost-effective and useful documents. They may be as simple or as complex as is required in the given situation. They are not only useful in connection with land, but can be made for any asset.
If you wish to discuss any issues raised in this blog please contact elaine.padbury@parissmith.co.uk