Can a deed of trust be back dated?
A deed of trust cannot be backdated and only comes into effect once it has been executed and dated at the point of execution. The deed is also witnessed and the witness cannot benefit from the transaction so a friend, neighbour or colleague is always best.
Can a declaration of trust be revoked?
The joint owners can revoke a deed of trust with a view to:
- changing from tenants in common to joint tenants - this may be linked to the joint owners getting married and wanting to benefit from being joint tenants. We explain the process in this article - Change from tenants in common to joint tenants
- changing beneficial interest for tax purposes - often married couples will change their beneficial interest in a buy to let property so that they can share their income in a tax efficient way. If there is a deed of trust then the deed of trust must be revoked and then a new deed of trust/assignment is drafted to reflect the new beneficial share. If the joint owners are married then this needs to be reported to HMRC using Form 17.
How to get your money from the property?
The process of selling or transferring the property in order to get your money, your beneficial interest, from the property requires mutual consent that can be pre-agreed in a deed of trust. By doing so this frees up the joint owners to be able to exit the property using the pre-agreed process. The challenge arises where the co-owners don't have a deed of trust and are then find themselves stuck looking to force the sale. We examine in detail how to do that here - Can I force the sale of a jointly owned property?
Examples of how to protect money with a deed of trust
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1
Fixed Shares
Dave and Jane buy a property together. They both pay equal shares of the deposit and agree to share the mortgage repayments 50/50. They draft a Deed of Trust that states Dave owns 50% of the beneficial interest and Jane owns 50%. This means that on sale, after the mortgage has been repaid in full and the costs of sale deducted (such as conveyancing fees and estate agent costs) then the net sale proceeds are split equally.
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2
Return Deposit and Share Gain 50/50
Michelle and Lucy buy a property together. Michelle is paying all of the deposit however Lucy and Michelle are paying the mortgage repayments equally. They draft a Deed of Trust that confirms Michelle receives her deposit back first from any net sale proceeds and then the balance is shared equally between Michelle and Lucy.
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3
Floating beneficial share
Kevin and Julia buy a property together. They are both putting in deposits but in unequal amounts. They are also looking to share the mortgage repayments in unequal shares and may look to undertake development works. They draft a deed of trust that sets out these intentions and allows either party to increase their beneficial interest in the property by paying more of the deposit, mortgage repayments and renovations.