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Deed of Trust a Protected Trust Deed for Joint Owners of Property

10/12/2019
A Deed of Trust is an 'Express or Bare trust' (which includes within it a declaration of trust) that sets out the individual interests and intentions of joint owners of a property. The detail of the deed will depend greatly on the relationship between the co-owners of the property. Without such protected trust deed joint owners rely on trust law to seek enforcement of their beneficial rights to property in the future; either a resulting trust or a constructive trust

You can only use a deed of trust to separate individual shares in property if you hold the property as tenants in common, although if held as joint tenants you can sever the joint tenancy and draft a deed of trust as tenants in common. For most people a deed is used to protect money in a property to ensure they get out what they put in.

The deed can contain any number of clauses that govern the intentions of the co-owners of property including how they wish for the property to be used, maintenance obligations, the mechanics of selling or buying each other out and, most importantly, the beneficial interest split for the share of any income from the property. 

A deed is often drafted during the purchase process, but can also be drafted afterwards with the consent of all owners. You should be careful using online DIY deeds as they do not come with legal advice from a solicitor to confirm they meet with your intentions. It is also a criminal offence for deeds to be drafted by anyone other than a solicitor due to the implications of the deed.

This article focuses in on a basic deed of trust for home buyers looking for a fixed beneficial interest share declared and we include replies to a number of Frequently Asked Questions with links to our other types of deeds.

How to get a deed of trust?

We offer a variety of standard deeds to keep costs competitive or we can create a bespoke deed of trust specific to your own requirements.

  • Deed for buying a home for anyone looking to declare their individual beneficial interest and confirm their intentions such as how to sell the property or what happens if you break-up. It normally states a simple fixed share of the beneficial interest, for example Jane owns 40% and Mike owns 60%. This article examines this type of deed.
  • Deed for Tax Purposes for a landlord sharing property income in a tax efficient way with their partner (if married, to be filed alongside a Form 17 declaration to HMRC). If this is a property you already own as joint tenants then we can help sever the joint tenancy.
  • Silver Deed (also known as a Floating Deed of Trust) for joint owners looking for a floating beneficial interest that goes up and down during the life of the ownership and reflects what you put in including mortgage repayments, costs of purchase/sale and developments. (click here to find out more).
  • Deed of No Beneficial Interest (also known as a Declaration of no interest in property) used for clients buying with a joint mortgage sole proprietor mortgage product where they need to declare a zero beneficial interest to avoid second home stamp duty tax, divorces and even to protect joint shared but not jointly owned property

Our deed of trust solicitors specialise in this area and offer a low fixed cost. You can call and talk through your intentions with one of our specialists on 0333 344 3234 (local call charges apply) or click the link below to get a quote.

  • Speak to a specialist about what you want to do
  • Deeds drafted by a specialist solicitor
  • Deed emailed within 24-48 hours
  • Competitive Fixed prices

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What is a basic deed?

A basic deed is cost effective and states a fixed beneficial share in the property so that the joint owners know how much they will be paid on sale. The fixed beneficial interest can be either:

  • Percentages - for example Mike owns 60% and Michelle owns 40% of the beneficial interest.
  • Deposits - for example, Mike and Michelle will be repaid their deposit they used to buy the property and then any gain or loss will be split equally.

The a basic deed Deed suits longer term relationships where the purpose is to note the joint owners' separate shares of the property and what to do when the property sells. It doesn't include clauses to account for shorter term relationships where you would want to have pre-agreed terms in place in the event that the relationship breaks down. The deed is legally enforceable and overrides any future claim for an increase in beneficial interest.

Law of Property Act 1925 - Section 53, Instruments required to be in writing states "A declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will".

Recommended for:
Not recommended for:
  • Married couples or civil partners
  • Family members
  • Unmarried couples (already living together)
  • Buying a property with a  Gifted Deposit  from parent/s

  • Unmarried couples (not living together) - they may want to include more detailed intentions and look to include a floating beneficial ownership
  • Friends - as above
  • Joint Mortgage Sole Proprietor relationships - they will require a Declaration of no Beneficial ownership deed


What is and isn't included?


What clauses are included?

  • Your deposit contribution is shown clearly and separately from those of other joint owners
  • You agree the percentage of your beneficial interest of any gain or loss (this is fixed and doesn’t account for payments made during your joint ownership such as mortgage repayments or repairs/renovations)
  • Lists Registered Legal and Non-Legal Owners
  • Calculation for working out any gain or loss from rental income
  • Mechanism for buying out any other party’s share of property
  • Allows for unregistered Beneficial Owners (for example parents investing with children or for Joint Mortgage Sole Proprietor mortgage products)
  • Section for stating individual contributions towards outgoings
  • All terms explained in simple English

What clauses aren't included?

  • A formula to account for varying contributions towards mortgage repayments or repairs/renovations
  • Mechanisms to protect you if a joint owner stops paying their share of the mortgage repayments
  • Procedures to sell your share of the property
  • Procedures for property repair or renovation costs (including how to calculate any gain because of the development of the property)
  • Procedures to sub-let your share of the property
  • Procedures if the relationship breaks down
  • Procedures if you can't afford your mortgage repayments
  • Any cohabitation agreements including splitting bills, living arrangements and how to settle an argument 
  • Inventory listing of the personal possessions for joint owners

Our Silver Deed uses a formula that take into account the mortgage repayments and contributions to deposit and any development works when calculating the final distribution of any gain from sale.


Frequently Asked Questions

"Can I use a deed when buying as joint tenants?"

No. When buying as Joint Tenants you own the beneficial interest in the property equally with the other joint owners. If you want to own separate shares of the property then you have to buy as Tenants in Common. Read more about joint tenants here.

"Does a Deed take into account mortgage repayments?"

The Basic Deed states each Party's individual share of the outgoings, but doesn't include a way for these to be used to calculate an increase to their beneficial share in the property like the Floating Deed does.

All parties to the mortgage are joint and severally liable for its repayment. The challenge arises where one party stops paying their share of the mortgage repayments. With a basic deed  that has a fixed beneficial share, if one of the parties stops paying their share of the mortgage then no matter how much of the mortgage repayments are paid for by the other party, the beneficial interest remains the same. With a floating deed of trust it allows individuals to increase their beneficial interest in the property by paying more of the mortgage repayments.

  • a Resulting Trust as the share of the mortgage repayments were pre-agreed before the mortgage was taken out (see case Cowcher Vs Cowcher where client A paid 100% of the deposit, but client B paid 100% of the mortgage); or
  • a Constructive Trust by way of no agreement before the mortgage was taken out (see case Curly Vs Parkes where Ms Parkes' sole name was on the mortgage and paid 100% of the deposit, however Mr Curley paid off some of the mortgage with a lump sum).

Obtaining a judgement on resulting or constructive trusts can be a lengthy and costly legal battle. The Basic Deed does not have provisions to handle the mortgage repayments, however the Silver Deed does.

"What happens when you sell?"

When you sell you use your Basic Deed to confirm your individual joint owner's share of any gain or loss associated with the property.

The Basic Deed is used by the selling solicitor. It is important to note that property prices can go up as well as down so if you do make losses, then all joint owners are liable in direct proportion to their shares in the property.

The Basic Deed example on sale:
Jane and David buy a property together worth £250,000. Jane invests £40,000, David invests £10,000 and they get a mortgage for £200,000. With the trust deed, Jane owns a share of 80% of the property and 80% of any gain or loss on sale and David owns 20% and 20% of any gain or loss on sale. If they share the mortgage repayments 50:50, under their agreement, this doesn't increase or decrease either of their shares in the property. If you are concerned about any party ceasing to make the agreed mortgage repayments or that you are paying off different shares of the mortgage and want to reflect this with a greater ownership share on sale, then you should potentially get the Silver Deed.

"What happens if I want to sell and the other joint owner doesn't?"

Either joint owner can sell at any time. If one party wants to sell then they must give written notice to the other joint owner/s who have rights of first refusal to buy the share of the property. If the other joint owner/s cannot afford to buy the share then the property is placed on the open market through an estate agent seeking the best price available.

Beware Early Mortgage Redemption charges!
If you have a mortgage with a fixed initial mortgage term then mortgage lenders include an Early Mortgage Redemption charge if you change your mortgage or settle it in full during this time. The cost can be in the thousands so be careful when looking to sell before your initial mortgage term expires.

"Do I have to share the property 50:50?"

No. You can have any share you decide between yourselves. This is explained in this article: Can you have unequal shares in a property?

Remember that the split you agree between yourselves determines how any gains from the property including rental income are to be distributed, so if you own 10% of the property, then you are due 10% of any rental income.

Many couples who agree to pay 50:50 mortgage repayments, but have different deposit amounts choose to refund the deposits paid, and then split any gain in the property 50:50. If there is no gain and you make a loss, then your deposits are refunded less your 50:50 contribution to the loss.

"What happens if you pay different shares for repairs and/or renovation?"

When your property is repaired and/or renovated, and its value is thereby increased, any person who contributes towards the costs of such repairs or renovations will be entitled to an interest in the land by way of a resulting trust proportionate to the extent to which the increase was attributable to their contribution. Improvements made much later than the date of purchase may give rise to a Constructive Trust.

It is important to note that only improvements to the property that increase the purchase price are included (this would normally exclude painting, new kitchens/bathroom).

For example: Jane and David buy a property worth £100,000. David spends £50,000 developing the property and the property is now worth £200,000, £100,000 more than before. David alone would be entitled to the value of the increase due to the development.

To obtain judgement on resulting or constructive trusts can be a lengthy and costly legal battle. The Basic Deed of Trust does not have provisions to handle the matter of repairs or renovations, however the Silver Deed of Trust includes this.

In the case Drake v Whipp   Mrs Drake and Mr Whipp left their spouses with the intention of buying a home and living together. They purchased a barn at a cost of £62,500 with the intention of converting it into a dwelling and living in it; £25,000 (40%) was paid for by Mrs Drake and £37,500 (60%) by Mr Whipp. Mr Whipp was the sole legal owner of the barn and they did not formally set out their intentions in an express deed of trust.

The barn conversion cost £129,000 of which Mrs Drake contributed £13,000 (10%) and Mr Whipp £116,000 (90%). They both worked on the conversion, of which he provided 70% to her 30% of labour.

Mr Whipp broke up with Mrs Drake and formed a relationship with another woman. Mrs Drake bought an action for an order of sale and division of the proceeds in equal shares. The trial judge held that there was no common intention and therefore applied a resulting trust. However, he allowed the respective contributions to the conversion to be taken into account rather than just the contributions to the purchase price. Consequently, she was entitled to a 19.4% share of the property. She appealed contending that the judge was wrong to take into account the contributions to the conversion under a resulting trust.

The appeal was upheld: Mrs Drake was entitled to one third of the beneficial interest. The trial judge was wrong to conclude there was no common intention since both parties intended that she would take a share. She assumed it would be equal, however he was of the opinion it would be in proportion to her contribution. There was no requirement that they had to agree on the extent of the share. Once a common intention has been found the court can take into account a wider range of dealings and is not confined to financial contributions.

"Does paying the costs of purchase increase your interest in the property?"

Yes, it can do. In our Silver Deed we include a formula that accounts for the costs of purchase such as solicitor's fees, removal costs and stamp duty. The more you pay towards the costs of purchase, the greater your share of any gain or loss will be.

"Does paying house expenses increase your interest in the property?"

Not unless it is a substantial sum of money which could lead to the imposition of a constructive trust. The Basic Deed states your agreed intentions towards paying outgoings.

In the case Burns v Burns , Mr and Mrs Burns lived as husband and wife and in 1963 Mr Burns bought a house in his sole name and he solely paid towards the purchase price and the mortgage. In 1975 Mrs Burns used her earnings to pay the rates, telephone bills and various other chattels for the house. In 1980 they split and Mrs Burns claimed to have an equitable interest in the house due to her contributions.

The Court of Appeal held that she was not entitled to an interest by way of a resulting trust because she had 'made no direct contribution to the purchase price'. Contributions to household expenses do not give rise to a presumption of resulting trust, however they may, if substantial, constitute sufficient detriment to lead to the imposition of a constructive trust.

"What happens if we get married or have children?"

You should review the agreement and see if the trust deed is still fit for purpose. When you get married or have children you may change your intentions towards each other. You should speak to a solicitor if you wish to protect your interests before you get married or have children.

"Can I get the Basic Deed of Trust after I have purchased?"

Yes. You'll need the consent of all the joint owners as to what the current value of the property is and what your agreed share percentage is at the point of signing. You'll then also need to get a solicitor to register the restriction against the property.

"Do I need a will?"

Yes. As tenants in common your share of the property passes to your estate on death and doesn't get transferred to the surviving owner. Tenants in common should draft a will to confirm what they want done with their share of the property. The cost for our solicitor to draft your will is £180 INC VAT or a mirrored will is £299. Click here to read more about drafting wills

Do you need a Deed of Trust?

We have a specialist Solicitor, Claudine Boast, who is able to help draft a standard or bespoke deed. The basic deed is most commonly used when:

  • Buying a property jointly with a long-term or married partner
  • After changing a property from joint tenants to tenants in common to declare beneficial interest for tax purposes

The cost of the Deed of Trust is £240 Inc VAT.
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