As the cost-of-living crisis continues to dominate news headlines, it can be tempting to enter into a cohabitation agreement with a friend or romantic partner as a way to get onto the housing ladder while sharing the costs.
However, before you buy a property with someone to whom you aren’t married, you should consider the legal aspects. This is particularly necessary if either party is contributing a greater proportion of the deposit or you will own unequal shares in the property.
Deeds of trust can give protection
A deed (or declaration) of trust is a legal document designed for property co-owners. It details the amounts that each owner contributed towards the purchase price, their shares in the property and what happens if either party wants to modify or exit the agreement.
What is included in a declaration of trust?
A declaration of trust will be drafted by a solicitor based on your specific circumstances. However, it will typically include financial contributions and share apportionment, how the property will be valued and its equity split in the event that the property is later sold, how much each owner will contribute towards the cost of purchasing and maintaining the property, and what happens if an owner dies.
Additionally, it can include extra conditions. These can include the right to sublet, remedies if either party defaults on their payments, an inventory of furniture and furnishings provided by each owner, notice periods and dispute resolution strategies.
When should you get a declaration of trust?
You should consider getting a declaration of trust before you purchase a property with someone as tenants-in-common. This legal document will protect your interests and ensure that all potential outcomes of the co-ownership agreement are recorded and agreed upfront.