What is deed of trust and how does it work? 

Buying a home is regularly referred to as one of the most stressful life events.

However, it can be even more stressful if you’re purchasing with someone else, as you need to clarify who owns what proportions of your home. 

This is where a deed of trust can be handy. We’ll reveal what a deed of trust is, how it works, and why it’s worth considering. 

Summary 

• A deed of trust shows who owns a property and how ownership is divided. 

• It can help clarify what happens if someone wants to sell their share or if the owners want to sell their home. 

• A deed of trust is legally binding if it’s drawn up by a solicitor and witnessed. 

• If you’re buying a property and need help finding a mortgage, Unbiased can connect you to a qualified mortgage broker.  

What is a deed of trust? 

A deed of trust is a legal document that shows who owns the property and how ownership is divided by the purchasers. 

Tenants in common, which is when each buyer owns a specific share in the property, can find a deed of trust useful, especially if they contributed different amounts to the purchase price. 

With a deed of trust, you can outline how much of the property each owner has and what will happen if one of the owners wants to sell their share or if the home is sold.  

This can provide certainty regardless of what happens in the future and avoids disputes.  

How is a deed of trust different from a declaration of trust? 

A declaration of trust outlines who will benefit from the income or capital gain from a property.  

Unlike a deed of trust, it isn’t a legal document, but a declaration of trust can be included.  

Why do I need a deed of trust? 

If you jointly own your home and have a mortgage with the other owner, you’ll be joint tenants, so if one of you passes away, the other owner gets their share.  

However, if you’re tenants in common, you may not equally share your home, and you can choose who you want to inherit your proportion of the property when you die.  

So, it’s important to outline who owns the property and how much of the property each person owns. You should also state what happens if you pass away, decide to sell your share, or you both sell together.  

If you put down a larger deposit, pay more of the mortgage or for renovations, you may want this to be reflected in the deed of trust.  

What can a deed of trust be used for? 

While a deed of trust can be used to record the share of the property each buyer owns, it can be used for other purposes. 

For example, other things can be included in a deed of trust, such as: 

• The deposits paid for the property by both owners. 

• What happens if one or both owners want to sell the property or their share. 

• Other costs that could affect the property share, such as renovations, mortgage payments and household bills. 

• Anyone who has contributed money to the property who isn’t on the title deeds to ensure their money is protected. 

A significant benefit of using a deed of trust is that it can protect your money, whether it’s a deposit gifted by parents, an individual who paid a larger deposit, or someone who spent money on renovations. 

For example, if you initially contributed a small deposit and then spent a significant sum on renovations, this can increase your share in the property.  

If you are using a deed of trust to protect a third party not on the title deeds, you’ll need to notify your mortgage lender as it may impact their offer or require the third party to sign a waiver.  

How much does a deed of trust cost? 

A deed of trust can cost between £100 and £1,000, according to HomeOwners Alliance. 

The overall cost will be impacted by many factors, including how much your solicitor or conveyancer charges and how complex the deed of trust will be. 

If you’re getting a deed of trust while buying your new home, it’s worth asking how much this will cost and comparing costs with other solicitors and conveyancers.  

How do I apply for a deed of trust? 

You’ll need a solicitor or conveyancer to draw up a deed of trust to ensure that it is legally binding. 

Also, you’ll need your deed of trust to be witnessed when you sign, so it’s legally binding. The witness must be over the age of 18, have their full mental capacity, and must not be related to you.   

While you can register a deed of trust with the Land Registry to ensure your home cannot be sold without the agreement of those included in the document, it’s not mandatory. 

Can we get a deed of trust if we are joint tenants? 

If you’re a joint tenant, you can get a deed of trust to outline how much of the property each owner has and avoid disputes in the future.  

Can I write my own deed of trust? 

You can write your own deed (or use a template), but this is not advisable as it’ll not be legally binding even if it’s witnessed. 

Your deed of trust may also include mistakes and can be legally challenged, so it’s best to use a qualified solicitor or conveyancer to protect your property and investment.  

Can I apply for a deed of trust after I buy a property? 

If you decide on a deed of trust after buying a home, it’s possible to get one. You’ll need a current valuation of your property, which all owners must agree on. 

The deed of trust will become legally binding once it’s signed and witnessed. 

Where can I keep my deed of trust? 

Your solicitor should have a copy of the deed of trust, but it’s recommended that all parties also keep a copy in a safe place.  

Can I amend a deed of trust or cancel it? 

You can change a deed of trust by adding a deed of variation for minor changes. 

However, if you need to make bigger changes, it may be worth creating a new deed of trust, especially if the ownership shares change, different people own a share, or property value has changed.  

A solicitor should be able to advise you on the best course of action.  

You can also cancel a deed of trust if all parties agree. 

Can a deed of trust be challenged? 

It would be difficult to challenge a legally made and witnessed deed of trust, and it may require going to court.   

The only exception to this is if all parties agree to overturn a deed of trust.  

Need help with your property goals? 

Unbiased can quickly match you to a qualified mortgage broker who can help you find the right mortgage for your unique circumstances.