A deed of trust is a legal document that sets out the financial arrangements applicable to a property purchase when the joint owners are not married.

Why do marital arrangements matter?

When a married couple buys property, they usually reside as joint tenants, and if they were to divorce, the property would be considered a marital asset and its value divided fairly between them.  No such protection exists for unmarried cohabitants and that is why a deed of trust is a sensible solution.

How does a deed of trust work?

A deed of trust specifies the percentage share of the property owned by each separate person based upon the amount that they contributed to the deposit and their monthly mortgage repayments. It also details how the sale proceeds of the property would be divided in the future should the cohabitation end.

It can also be used to account for situations when a third party contributes towards the deposit, but only intends this as a gift for one of the cohabitants. In this situation, a deed of trust can specify that the amount originally gifted is repaid before the sale proceeds are split between the cohabitants.

Why should you get a deed of trust?

If the relationship between cohabitants broke down and they no longer wished to live together, they would need to decide whether one party would buy out the other and become sole owner, or whether the property would need to be sold and the proceeds split.

Making major decisions such as this when already in a dispute is incredibly challenging, so writing a deed of trust during the conveyancing process when the relationship is stable can reduce the emotional stress that may otherwise be incurred in the future. Conveyancing lawyers such as https://www.parachutelaw.co.uk/deed-of-trust can prepare a deed of trust during the conveyancing process, so that the cohabitation begins on a sound footing.

In conclusion, a deed of trust is a legal document that aims to provide peace of mind by setting expectations before unmarried individuals enter into a property purchase together.