Deed of trust in the UK: what it is, what it costs and how to get one

What a deed of trust is

When two or more people own a property, the Land Registry title shows who the legal owners are. It doesn’t show how much of the value each of them is entitled to. A deed of trust fills that gap. It’s a written agreement between the owners, signed as a deed, that sets out each person’s share and the rules for selling, buying each other out and dealing with payments.

“Deed of trust” and “declaration of trust” mean the same thing here. (In the US, a “deed of trust” is a type of mortgage, and in Scotland a “trust deed” is a debt solution. Neither is what this guide is about.)

When you need one

• Unequal deposits: one buyer puts in more than the other. See buying with unequal deposits.
• Unmarried couples, friends and relatives buying together, who don’t have the financial claims married couples have on divorce
• A family member investing in the purchase and expecting their money back, or a share, when the property is sold
• Buy-to-let partners who want shares to match what each put in
• Changes after you buy: one owner pays off a large part of the mortgage or funds an extension

Without one, joint owners are usually treated as owning equal shares, and anyone who says otherwise has to prove it in court.

Joint tenants or tenants in common?

Joint tenants own the whole property together, with no separate shares, and the survivor inherits automatically. Tenants in common each own a share, which can be unequal and passes under their will. A deed of trust with unequal shares only works if you’re tenants in common. HM Land Registry records this with a “Form A” restriction on the title.

What it usually covers

• each owner’s share, as a percentage or a formula, such as “deposits back first, then split equally”
• how mortgage payments and improvements are credited
• when either owner can ask for the property to be sold, and the notice needed
• how one owner can buy the other out, and how the property is valued
• what happens if someone stops paying their share of the mortgage

How much does a deed of trust cost?

There are two separate costs:

• Drafting the deed. Our solicitors can draft it for you, for a fixed fee confirmed on your free consultation. Elsewhere, conveyancers typically charge a few hundred pounds plus VAT for a straightforward deed between two owners. Deeds with formulas, several owners or a buy-to-let structure cost more.
• Independent legal advice. If the deed treats you differently from the other owner, for example because it protects their larger deposit, you should get your own advice before signing. Some lenders and conveyancers insist on it. With My Online Lawyer, independent legal advice starts from £140 + VAT per person.

There’s no fee to HM Land Registry for the deed itself, because it isn’t registered. If you need to become tenants in common, there’s a small fee for adding the restriction.

If the deed treats one of you less favourably, that person should be advised by a solicitor who isn’t acting for the other owner. We’ll tell you on your free consultation if that applies.

A deed that moves a share of the property from one owner to another can have tax consequences. Check the position before you sign.

How to get a deed of trust

1. Agree the terms between you: shares, contributions and what happens on a sale.
2. Have it drafted by our solicitors, your conveyancer or another solicitor. If you’re buying, do it before completion.
3. Take independent advice if the deed affects you differently from the other owner. Your solicitor explains the terms and confirms the advice in writing.
4. Sign it as a deed, in front of a witness, and keep the original safe with your property papers.
5. Check the title shows you as tenants in common, with a Form A restriction.

Your mortgage lender comes first

A deed of trust only governs things between the owners. On a sale, the mortgage is paid off before anyone receives their share, and all the borrowers stay liable for the whole mortgage. If a family member is being given a share, the lender must agree first, because most lenders want a gifted deposit letter saying the giver has no interest in the property.

Our solicitors can draft your deed of trust or advise you on one. See deed of trust.