With the current financial crisis hitting the UK, it is now more common than ever for family members to provide financial help to younger and first-time buyers so that they can access the property ladder.
A survey has found that 64% of parents who have homeowning adult children contributed towards their house deposit. On average, this deposit was £32,440. Another 10% surveyed stated that although they did not contribute to a deposit, other family members did.
It is recommended that any parent contributing to a property deposit seeks out independent legal advice and considers having a Deed of Trust drawn up, thereby protecting any financial contribution that they have made.
What is a Deed of Trust?
A Deed of Trust – or a Declaration of Trust – is a legally binding document that outlines who has contributed to the house deposit, what amounts were agreed upon and what shares are owned. It also details how a property will be sold, what happens with the equity when it is and who is responsible for the outgoings and expenses related to the property.
Having a Deed of Trust in place eliminates any ambiguity in the event of a dispute since the document is legally binding.
For parents and family members who have helped and financially contributed, it will outline their share of the beneficial interest in the property.
A Deed of Trust therefore guarantees any contribution a parent or family member has made to a property. It records the financial arrangements agreed upon and ensures that each party gets their fair proportion upon its sale.
A Deed of Trust will show both the legal and the beneficial owners of a property.
Conveyancing
A Deed of Trust can be drafted when the property is being purchased as part of the conveyancing process or after the event, should all the parties agree. Many conveyancing specialists can draft the document up in relatively quick timescales, under a fixed fee agreement, so as not to add unnecessary delays or expense to the house-buying process. They can also provide parents with legal advice on stamp duty implications. Upon completion, a solicitor can then register the restriction against the property.
For details of a conveyancing specialist who can give advice online, or in person, as well as provide a Deed of Trust under a fixed fee agreement, visit https://www.samconveyancing.co.uk/news/conveyancing/deed-of-trust-4378.
By investing a small amount to ensure that your finances are protected in the event of death, dispute or separation, you are saving the potential stress of court cases and loss of protection further down the line.