What is a deed of trust?

Key takeaways

• A deed of trust is a legally binding document that outlines how property ownership and equity are divided between multiple owners.
• It is primarily used for "tenants in common" mortgages where ownership is not a 50/50 split.
• It protects financial contributions from third parties, such as parents, even if they aren't named on the title deeds.
• While not mandatory, it can be registered with the Land Registry to become a matter of public record.
• Professional drafting by a solicitor typically costs between £100 and £1,000.

What is a deed of trust?

In the UK, a deed of trust is a mortgage deed document that states how the ownership of a property is divided amongst its owners. Sometimes called a Declaration of Trust, a deed of trust is used by those who have a tenants in common mortgage - meaning that the mortgage is divided in a way that is not a simple 50/50 split. If you have loved ones who are helping you purchase your first home, a deed of trust might also outline the financial help they are providing.

Learn more about how your parents can help you buy a home with a guarantor mortgage here.

Do I need a deed of trust?

If you are buying a property with others, such as a partner, friend, sibling or your parents, you might need a deed of trust to outline how much equity each person owns if there is no other legal agreement between you. It makes it clear who owns what, so it’s clear and agreed to by all parties.

If you want to help your son or daughter buy a house, but they are buying with someone else, a deed of trust can protect your contribution without you being named on the property title deeds.

Is a deed of trust legally binding?

Yes, a deed of trust is legally binding. It outlines how assets in trust are dealt with, and is agreed to by all prospective buyers before the house purchase. All owners will sign the deed of trust to confirm they agree to what it says.

Who signs a deed of trust?

All owners of the property sign the deed of trust, as well as anyone else who is a beneficiary (normally the lender who lends you the mortgage) or has a financial interest in the property.

Who is the beneficiary of a deed of trust?

A beneficiary in a deed of trust is normally the lender who provides your mortgage loan. The owners of the property are the trustees, who hold the property “in trust” on behalf of the lender.

Is a deed of trust proof of ownership?

A deed of trust outlines true ownership so that it can be used as evidence of ownership. It's a legal document that details who owns what share of the property. It also shows who receives what share of proceeds if you sell the property.

Is a deed of trust the same as a mortgage?

No, a deed of trust is not the same as a mortgage. A deed of trust is the document that legally outlines how much each owner is entitled to from the equity in the property. A mortgage is a loan provided to you by a lender, which you borrow to purchase the property, along with your house deposit.

If you are buying a home with others and have unequal shares, you may need to get a tenants in common mortgage to outline your different shares. The deed of trust will then outline how much each person owns.

You’ll need toget approved for a mortgage before getting a deed of trust. This is because you need to know you can purchase the property before documenting how much each person owns and is entitled to.

Where is a deed of trust recorded?

You can register a deed of trust at the Land Registry so that it is recorded on the public record. This can help if you ever need to enforce a change of ownership.

Are deeds of trust public record?

If you register your deed of trust with the Land Registry, then yes it will be recorded on the public record.

How long does a deed of trust last?

A deed of trust lasts as long as all parties hold equity in the property, and the mortgage loan is not yet paid off in full. In order to remove other parties from the deed of trust, all parties must agree for the document to be updated, or you need to remortgage and buy the other owners out. 

If you own the property with your partner and decide to get married, the deed of trust will be superseded by the Matrimonial Causes Act, which sets out how a court acts when settling a divorce.

The court will still consider the deed of trust during a divorce as an indicator of the couple’s intentions, but they aren't obliged to follow the terms set out in the deed. To make things clearer, if you decide to get married, you can replace your deed of trust with a pre-nuptial or post-nuptial agreement.

Can you sell a house with a deed of trust?

Yes, you can sell a house with a deed of trust, but all parties must agree to the property sale. The funds from the sale will be divided according to the ownership split set out in the deed, as well as paying back your lender if you still have an outstanding mortgage balance.

Does a will override a deed of trust?

With a tenants in common mortgage, each owner’s share is independent and does not automatically pass to the other owner on their death. Instead, their share will pass to their beneficiaries as outlined in their will, or their relatives if it’s not outlined in the will.

Another owner cannot dictate who the other owner’s share is passed to, even if they’ve put it in their will. This is because they are not entitled to the other owner’s share as a tenant in common. For more information on this, we’d advise you to speak to an independent solicitor or lawyer.

What does a deed of trust look like?

A deed of trust is a legal document drafted by a solicitor that typically includes:

• Names: All parties with a financial interest in the property.
• Property Details: Land Registry information and the purchase price.
• Financials: The deposit amount, mortgage loan size, and repayment terms.
• Equity Split: A specific breakdown of how ownership is divided.

How to get a deed of trust

To obtain a deed of trust, you'll need a solicitor to draft one up for you, which you and all other parties will then sign.

How much does a deed of trust cost?

The cost of a deed of trust varies depending on the complexity and the solicitor used. You can typically expect to pay £100 - £1,000.

Can a deed of trust be backdated?

No, you cannot backdate a deed of trust. However, it can be retrospective in particular circumstances. You can update your deed of trust at a later date, but this must be agreed to by all parties. It’s always best to set up a deed of trust before the purchase of the property so it’s clear from the beginning how the equity in the home is divided amongst owners.

Related reading:How to buy someone out of a property?