No – a Deed of Trust isn’t something you have to have to buy a home with another person.
But, having said that, you may want to consider it.
Buying a new home with your partner, if you are not married, can be an exciting but stressful time.
On top of finding somewhere you both love and applying for a mortgage, you have the added pressure of deciding how the property will be split – 50:50 or by a different percentage.
Nobody buys a home with their other half thinking that they’ll split up. But it’s still a good idea to plan for every possible outcome.
By agreeing from the start who’s entitled to what if you split up and sell your home, it can make an unpleasant situation a little more clear-cut. And a Deed of Trust helps you make things even clearer.
What is a Deed of Trust?
A Deed of Trust is a legal document that’s usually drawn up by a solicitor when two or more unmarried people buy a property. It sets out in writing the size of the stake each owner has in the property.
How this is done is totally up to the buyers, although it’s usual to take into account factors like how much each contributed to the deposit, and how much each will pay towards the mortgage.
Why would I need one?
A Deed of Trust isn’t essential when buying a property with a partner or third party, but it can be useful if a relationship breaks down or you choose to sell. If, when buying a home, one party puts in a larger deposit than the other, a Deed of Trust can reflect this and support that person receiving a larger cut of the profits if that property is sold.
For example, if a property is bought for £200,000, each party puts in £10,000 for the deposit and the mortgage is split equally, it makes sense for the property to be owned equally between both parties i.e. £100,000 each.
But what if one person puts down a larger deposit - for example, if a property is bought for £200,000 and one party puts in £30,000 and the other £10,000, creating a £40,000 deposit? In a Deed of Trust, the person who put in the larger deposit can stipulate that they get a larger percentage of the profits as long as the other owner agrees.
If the couple later splits up, a Deed of Trust provides support for the person’s case that they should receive a larger share of the profits following the sale of their former home.
Where can I get a Deed of Trust?
You can draw up your own Deed of Trust, but it may not provide much protection.
If you are interested in creating a Deed of Trust, contact a solicitor to draw up the document on your behalf to make it more official - you may need to pay a fee. It won’t be the only thing taken into consideration if you split up and need to decide who gets what, but it can make a messy situation cleaner.
Disclaimer: We make every effort to ensure that content is correct at the time of publication. Please note that information published on this website does not constitute financial advice, and we aren’t responsible for the content of any external sites.