Everyone has slightly different circumstances and the commonly asked questions below will help you to understand how a Deed of Trust can be adapted to meet your specific requirements
We use a variety of appropriate clauses in the construction of each deed we prepare making every deed unique. The clauses used in the deed itself are in a legally proven format. This does not mean however that each clause cannot be modified to cater for your particular circumstances, indeed the majority of the time taken in preparing a deed is the customisation of each clause. The deed is set to commence from the date upon which all parties sign the agreement and then date and execute the deed.
Our deeds encompass definitions and operative terms, they can govern how and when the property is to be disposed of as well as in what proportion each party is to hold the property on trust.
The deed is applicable under the laws of England and Wales.
As mentioned above the deeds we prepare also contain numerous sections dealing with a variety of matters pertinent to your particular circumstances based on the information you provide in your application form and in other contact with us. Some provisions include the proportions in which the property is held, each parties contributions towards the ongoing upkeep of the property, responsibilities for outgoings and who is entitled to live at the property, as well as any specific requirements you may have.
If you have any specific requirements, for example, you need to specify further matters please indicate this in the remarks section of the application form.
Please note that if you require any amendments to the deed after it has been sent to you we will be happy to do this for you until you are entirely satisfied with the deed.
Click here to complete the Application Form.
The deed itself cannot be registered at the Land Registry, you should store it in a safe place and we will also keep a copy on file for a minimum of 6 years.
Although a deed cannot be registered at the Land Registry a restriction can be entered on the title to the property to protect the terms of a deed.
A deed is suitably protected when joint owners of property hold the property as tenants in common, this will ensure that a suitable Form A Restriction is placed on the title register of the property at the Land Registry. The Form A Restriction is also placed on the register if there is only one legal owner, this is to ensure that a single proprietor cannot dispose of the property without the appointment of a second trustee. A Form A Restriction must be placed on the register (if there is not already one present) whenever a trust of land comes into existence, this is why we always recommend completing the appropriate forms to do so. We assist in the completion of the application to the Land Registry at no cost to you!
This is the most common way that a deed of trust is protected on the title to a property other than using a Form B type restriction. If you wish to learn more about this type of restriction please contact us and we will be happy to provide further information. A Form B Restriction may be more appropriate in your circumstances and we will be able to advise you if this is the case on closer examination of your circumstances.
Only one deed is required, once this has been executed you can make certified copies of it for use by each party, this can be done by attending a local high street Soicitor who will stamp the copies for you for a nominal cost (usually around £10 – £15).
Yes. The deed is a fully legally binding document which can be produced in a court of law as long as it has been signed and executed correctly.
A cohabitation agreement is a form of legal agreement reached between a couple (usually) who have chosen to live together. In some ways, such a couple may be treated like a married couple, such as when applying for a mortgage or working out child support. However, in some other areas, such as property rights, pensions and inheritance, they are treated differently.
Our Deed of Trust can be used to incorporate a co-habitation agreement in order to regulate the use of the property and things like the day to day maintenance costs and outgoings (mortgage payments, bills etc…) associated with owning a property.
To execute the deed you simply need to ensure that you understand its contents and then sign and date the deed then have the signatures of all parties to the deed witnessed.
It is always advisable that all signatures on the deed are witnessed by independent witnesses (a friend, work colleague or neighbour, NOT a blood relative or someone you live with), this is to ensure that the document is correctly executed as a deed. Below is some guidance on execution:
The three elements of a validly executed deed: signature, attestation and delivery
To be validly executed as a deed by an individual, they must sign the document. Making one’s mark on a document is treated as signing it (s.1(4), LP(MP)A 1989). The signature should be on the document itself in the space provided and the words of execution should name the signatory or otherwise make clear who has signed the document. For obvious reasons, the signature ought to be in ink or some other indelible medium.
The individual must sign manually, not in facsimile.
Attestation by a witness
The individual must sign “in the presence of a witness who attests the signature” (s.1(3), LP(MP)A 1989). Where a witness has signed the deed, their signature should clearly record the witnessing of the signing of the deed by the individual concerned, and the name and address of the witness should appear in legible form on the deed (to allow the witness to be traced should any questions later arise concerning execution).
The relevant legislation does not prevent a signatory’s spouse, civil partner or cohabitee from acting as a witness, but this is best avoided. It is also advisable that the witness be no younger than 18 or, at least, of sufficient maturity for their evidence to be relied on should it later prove necessary to verify the circumstances under which the execution took place.
The document must be “delivered as a deed” by each person executing it or a person authorised to deliver it on their behalf (s.1(3)(b), LP(MP)A 1989). Delivery requires that the person expressly or impliedly acknowledges, by words or conduct, an intention to be bound by its provisions.
In practice, there is an assumption that a document has been delivered as a deed unless there is some indication to the contrary.
You can enter into a deed of trust either when you are purchasing a property or at any point subsequent to this. You can also enter into a deed of trust when a new party makes a contribution to the property or when there is a change of ownership.
If you are entering into a deed of trust when purchasing a property, either in your sole name or jointly, you can let your solicitor/conveyancer know that the agreement exists, this way your solicitor/conveyancer can make sure a proprietorship restriction is entered on the title of the property. Please note that this is only necessary when creating the deed contemporaneously with a property purchase.
Please also see the FAQ with regard to informing mortgage companies.
When purchasing a property you can commission the creation of a deed of trust at any point of the transaction. However, there is always the possibility that a transaction could fall through if you have not yet exchanged contracts. The deed itself can only be completed and executed once your purchase has completed as details of your purchase form part of the recital of the deed, our customers usually spend the time prior to completion preparing the deed so it is ready to be dated upon completion.
We would usually recommend that a deed is commissioned once you have exchanged contracts or are close to, that way you can be certain that your money will not be wasted as the transaction is more or less guaranteed to complete.
The agreement is geared towards use by individual parties in a residential context and is able to accommodate any specific requirements.
Yes they can. However you will note that their charges for doing so will be considerably more than ours. This is partly due to the fact that we are an online company and consequently do not have the associated overheads that traditional firms of Solicitors and Licensed Conveyancers have.
This allows us to offer you a more cost effective package, not to mention the fact that we are experts in the preparation of Deeds of Trusts and we can use our expertise to prepare your Deed, however complex, for a fixed price!
Unlike the 4 person limit placed on property ownership by the Land Registry, any number of parties can enter into a deed of trust.
Legally there are two ways in which you can hold property jointly, as Joint Tenants or Tenants in Common.
When property is held as joint tenants the owners together own the whole property and do not have a particular share in it. If one of the owners dies the other automatically becomes the sole owner. This would be the case even if a will had been made leaving the deceased owner’s ‘share’ to someone other than the co-owner. Under this form of ownership if one of the owners dies, his share of the property will pass on to whoever he specifies in a will, or if a will is not made, in accordance with the rules of intestacy (someone dying without leaving a will). If you are planning on making a will (and it would be wise to do so) you should have it drawn up as soon as possible to take account of each party’s share by virtue of the deed of trust. This way you will save the time, money and inconvenience of having to change your will.
Property held as Tenants in Common is the opposite of joint tenancy in that the tenants in common each have a definitive share in the property. For example A and B could own the property in equal shares, or A could own one fifth with B owning four fifths. This would be the most appropriate agreement where people want to own a property in separate pre-determined shares.
You will be able to tell how you currently hold the property by looking at the title documents (the Land Registry would have sent you a copy of your Title Register when your purchase was completed and registered) you received when you purchased the property.
Under the proprietorship register, if you hold as tenants in common, you will see the following paragraph: “No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court.”
If this paragraph is absent then you hold the property as joint tenants and the tenancy will need to be severed as outlined in the FAQ below.
If you are purchasing a property jointly a Form A Restriction ensures that each party holds the property as tenants in common and not joint tenants. The Land Registry also state that whenever a trust of land is created (and that is what one or our deeds does!) they should be notified by way of a Form A restriction.
If a Form A restriction is required we will prepare the relevant paperwork for you to sign and send to the Land Registry, we do not charge for this service and as of September 2012 the Land Registry also do not charge a fee for the entry of a Form A restriction.
If you already own the property as Joint Tenants then to ensure that the deed is adequately protected the Joint Tenancy will need to be severed. The Land Registry have made this process much easier in recent years.
If severance of your joint tenancy is necessary we will complete Form SEV for you so all that is needed is for all the registered proprietors (owners) of the property to sign the form and send it to the Land Registry (we will also provide you with a precedent letter to send to the Land Registry. We do not charge for this service and as of September 2012 the Land Registry do not charge a fee for the submission of Form SEV.
Once the Land Registry receive and approve the Form SEV they will write to you informing you of the entry of a Form A Restriction on the title (which will indicate that you now hold the property as Tenants in Common).
If you currently hold your property as Joint Tenants of then a Form SEV will need to be completed and sent to the Land Registry to sever the joint tenancy.
If we deem that you have a joint tenancy that needs to be severed we will prepare the relevant paperwork for you to sign and send to the Land Registry, we do not charge for this service and as of September 2012 the Land Registry also do not charge a fee for the entry of a Form A restriction through an application made via Form SEV.
This form submission has the effect of severing the joint tenancy and makes all legal owners of the property Tenants in Common, thus enabling each of your respective shares in the property to be dealt with separately and in the event of death of one of the parties the right of survivorship will not apply.
The form is fairly straightforward for us as we prepare them on a daily basis, please be aware that many places offer this service at a grossly exagerrated price!
In some circumstances (see our Scenarios Section) it may be necessary for only one party to be the legal owner of property with a Deed of Trust reflecting that there is more than one beneficial owner.
In this situation Form RX1 would need to be completed by the sole legal owner to ensure a suitable Restriction (Form A Restriction) is placed on the title register. This Restriction has the same effect as severing a joint tenancy.
If we deem that a Form A restriction is required we will prepare the relevant paperwork for you to sign and send to the Land Registry, we do not charge for this service and as of September 2012 the Land Registry also do not charge a fee for the entry of a Form A restriction through an application made via Form RX1.
If you wish to have a look at the format of the form it is available from our Downloads Section.
The answer very much depends on the number of registered proprietors. If there are 2 or more proprietors then the presence of a Form A Restriction will indicate that the property is held as tenants in common rather than joint tenants. This will not usually affect the ability to remortgage if all the proprietors will be entering into the new mortgage.
The situation is somewhat different if there is only one registered proprietor. The presence of a Form A Restriction when there is a single proprietor is an indicator that there may be third party interests in the property, this may be due to the fact that a deed of trust has been entered into or that a joint owner of the property (who held the property as tenants in common) has died. It usually easy to work out which with reference to the date of the restriction. It may also be possible that owners of the property have severed their joint tenancy to become tenants in common. This is often the case when particular types of Will are being prepared (namely nil rate band). A mortgage company may require further information or confirmation of any third party interests (or evidence that there are none!) if they are to provide mortgage funding in these cases.
One of the problematic issues that often crops up is the apparent difficulty when on the one hand parties to a deed of trust require their beneficial interest in property to be protected and on the other hand the entry of a Form A or Form B restriction would certainly inhibit their ability to remortgage the property in the future.
One possible solution to this problem is the entry of a Form N restriction. This has the effect of requiring a particular party’s written consent before any disposition of the property can be registered. As it only requires the consent of the named party, theoretically (if the consent was forthcoming) there should be no problem in remortgaging or even selling the property. This may be an option client’s wish to consider if they envisage the possibility of a future remortgage.
Of course the entry of the restriction provides protection in other circumstances too, for example, the consent of the named party will be needed if the property was to be sold.
We cannot guarantee that the presence of a Form N restriction will not cause any issue when remortgaging but the strict reading of the restriction should mean it is possible.
A Stamp Duty Land Tax (SDLT) return has to be submitted when there has been a transfer of an interest in land and the total consideration exceeds £40,000. This does not include gifts. If a property is mortgaged then this will be taken into account by HMRC, for example, if half a share in a property is transferred subject to a mortgage then it is presumed that the person receiving the benefit of the property is also taking on half of the mortgage debt.
The following examples illustrate situations when you need to consider SDLT implications:
- Property held in a sole name but the purchase price was contributed to by two people and the Deed of Trust declares it is held for the benefit of them jointly in the shares in which they contributed – either with or without mortgage
- No SDLT would be required – as there is no transfer of any interest in the property – the Deed of Trust is only recording what has been done. Any SDLT return would have been dealt with when the property was purchased.
- Property held in the sole name of Adam. There is no mortgage on the property. Adam gifts half of the property to Belinda and enters into a Deed of Trust to record that the property is now held for Adam and Belinda jointly.
- No SDLT would be required – the transfer is by way of gift.
- Property held in a sole name of Chris. There is no mortgage on the property. Chris transfers a share of the property to Denise in consideration of a payment by denise and they enter into a Deed of Trust to record that the property now held for Chris and Denise jointly.
- If the payment made by Denise is less than £40,000 then no SDLT return would be needed.However, if the payment by Denise exceeds £40,000 then an SDLT return would be required. In this example no tax would be payable unless the current threshold is exceeded (£125,000 for residential properties)
- Property held in the sole name of Elouise. There is a mortgage secured on the property. Elouise transfers a share of the property to Fred in consideration of a payment by Fred and they enter into Deed of Trust to record that the property is now held for Elouise and Fred jointly.
- If the payment made by Fred plus 50% of the mortgage debt is less than £40,000 then no SDLT return would be needed.If the payment from Fred plus 50% of the mortgage debt did exceed £40,000 then an SDLT return would be required. However in this scenario no tax would be payable unless the current threshold was exceeded (£125,000 for residential properties)
If it is necessary to complete an SDLT return then the main form is SDLT1 and sometimes a supplementary form SDLT4.
If you have any concerns about this you should refer to the HMRC web site at http://www.hmrc.gov.uk/sdlt/index.htm or telephone their help line on 0845 603 0135
The above is a very brief summary of SDLT requirements insofar as they may affect a Deed of Trust. If you have any concerns you should speak to your adviser or check directly with HM Revenue & Customs.
As mentioned elsewhere on the site, we are not regulated to provide specific financial or tax advice. However, if you are considering using a deed of trust to alleviate tax liability our deeds may be able to assist.
Please read the HMRC’s useful guide on jointly owned property here. This may help you in deciding whether we can be of service. Many of our clients have used one of our deeds for the very point made in the guide, particularly married couples who jointly own property and wish to record the fact that they each contributed varying amounts to the purchase of property (which may now be let and for which they are both receiving rental income) and they now wish to complete Form 17 and make a formal declaration to HMRC.
We are we are a legal services company who engage a variety of personnel in order to produce, what we feel are, the best and most comprehensively drafted deeds on the market. All of our advisers work in the legal property sector and most are solicitors or licensed conveyancers, all of our advisers have degrees in law (LLB) and have extensive experience (at least 10 years!) of producing complex deeds of trust.
As a company we do not offer any professional indemnity with regard to the deeds we create for our clients. We would not be able to offer such competitively priced deeds if we did!
We have taken the advice of Counsel over the issue and the decision was made that there is no need to have this in place due to the nature of what is being drafted, being in essence, the formalisation of an arrangement between contracting parties. The intention of the parties is paramount and will be given credence when being examined at court hence the only variable, in terms of risk assessment, is the correct execution of the deed, and in this regard we advise that clients execute deeds by following our thorough instructions. If clients so wish they can execute our deeds before a solicitor for that additional peace of mind although doing so before an independent witness (such as a work colleague or neighbour) is just as adequate and in fact the majority of our clients do just this.
As long as deeds are executed correctly and in accordance with our instructions together with any necessary restrictions placed on the title of the property the deeds will be fully legally binding and will be presentable at a court of law in England and Wales.
In order for our deeds to be effective there has to be agreement between all parties. Unfortunately we cannot act where there is a dispute between the parties. If your situation is not amicable then we would advise all parties to seek independent legal advice.
If all parties are in agreement we are happy to speak to you all in order to explain the workings of the deed, but as previously stated it is imperative that all parties co-operate when executing the deed.
No single party can unilaterally enter into a deed without the consent of all the other parties and as the deed needs to be correctly executed in order to be effective if a party refuses to sign the deed then the deed is of no use and you will simply have wasted your money, which is a situation we wish to avoid!
The simple answer to this question is no.
However there is nothing wrong with referencing past events within the deed. For example the majority of our clients are people who already own their property and now wish to regulate ownership. We therefore construct our deeds to reference when the property was purchased and quite often (if we feel it would aid the deed) we create a simple chronology of events so that any person reading the deed will understand the motivations behind it.
It is this type of customisation that can be very important if a deed is ever produced in a court of law, if the intentions of the parties can be made explicit there will be less room for any party to attempt to renege on the agreement.
Bear in mind that we DO NOT DATE the deed we produce for you, it is up to you to date the deed when all parties execute the deed.
If in the future a challenge is made to the deed and it is shown to have been mis-executed (for example by backdating the deed) it will have no validity so it is important to execute the deed correctly in order to make it effective.
This can be a tricky subject and usually crops up when a property is being purchased.
If you or another party to the deed of trust already own the property and you enter into a deed of trust to regulate an arrangement there is usually no reason to inform your mortgage lender. This is because their security is protected by virtue of a first legal charge over the property. In practice this means that if the property owner were to default in repaying the mortgage (or otherwise breach their mortgage conditions) the mortgage company could commence repossession proceedings and ultimately recover the property and sell it on the open market to recoup their loan.
The mortgage company will be the first in line when it comes to the proceeds of sale and the contents of the deed of trust will be irrelevant (all of our deeds are made subject to any currently secured mortgage) as they only concern any proceeds AFTER the mortgage and any associated sale costs have been paid. Therefore the mortgage company’s position is secure and they need not be concerned with a deed of trust.
The situation becomes confusing when a property is being purchased. Quite often your solicitor/ licensed conveyancer will be acting for your lender as well as you. If you express to your legal representative that you will be entering into a deed of trust they may feel they are duty bound to inform your lender (because they also act for them) as they will have notice that completion money may be coming from someone not party to the mortgage (this scenario is more relevant when money is being provided by parent for example). As a result the mortgage company may amend their mortgage offer or more commonly ask that the contributing party sign a waiver postponing any interests they have in the property behind those of the lender or to formally declare any contribution as a gift.
Agreeing to any of the last 2 actions should not affect your ability to enter into a deed of trust, this area is a little grey and confusing but from a practical point of view, as mentioned above, the lender’s interest is secure.
Please note that a similar situation arises where a property is being purchased in the name of one party but another will also be living there from the point of completion. It is standard practice for lenders in this situation to insist that the party who will be living at the property with the borrower to sign a waiver. This waiver again will be to postpone any interest that the residing party may have in the property behind the interests of the mortgage company.
In summary, if you have a mortgage then you may technically be required to inform your mortgage company of the existence of the rights of another party, if they are not also party to the mortgage, in accordance with the mortgage deed you entered into with your lender. However, as mentioned above the security of your lender is fairly secure and they should always have precedence over the rights of a third party (particularly if they have obtained a waiver from the third party).
There are two ways that we recommend changing an existing trust.
Where there are wholesale changes to the terms of the trust it would be prudent to enter into a new deed of trust. The new deed would make express reference to the existing trust and would make it clear that the provisions were being replaced by the contents of the new deed. Every party to the original deed would need to execute the new deed in order for it to be effective.
If there is only a minor change to an already existing deed (that we have previously produced for you) then a deed of variation may be more appropriate. We can prepare a deed of variation for you that will again reference the existing deed of trust and also note the clauses that are to be replaced with new ones. The deed of variation will need to be executed in the same way as a full deed and once done it should be annexed securely to the original deed of trust.
It is sometimes necessary or even prudent to execute a deed of trust in counterpart. It may be that each of the parties to the deed are located some distance apart or even in different countries making execution of the same physical deed difficult especially if there are time contraints.
If each party to a deed wishes to execute a separate deed then please let us know so we can advise you on the process and also to include a specific provision within the deed to make it clear that the deed is intended to be executed in counterpart.
Signing a deed in counterpart basically means that the various parties to a deed may not all sign the same copy of the deed but may sign different copies. Together, the identical copies signed by the various parties will form a single binding deed of trust, even though there is no one copy of the deed signed by all of them.
As mentioned above it is prudent to include a specific clause within the deed when executing it in counterpart, this can help prevent any party from later basing any defence on an argument that the deed is not binding because it did not intend to be bound unless all parties executed a particular copy of the deed.
Counterpart deeds of trust involve the exchange of deeds each of which has been duly (that is, completely) executed by each party. It is therefore important than when each party executes their copy of the deed they send it to the other party. This exchange will also provide comfort to each party knowing that the deed they hold is executed by the opposite party.
A deed of surrender may be appropriate when people are, or intend on, cohabiting at a property owned by one of them AND the owner wishes to ensure that the cohabiting party (‘the Cohabitant’) does not acquire any interest in the property.
A trust of land can usually be inferred by virtue of contributions made by the Cohabitant towards mortgage repayments, improvements to the property or payment of outgoings related to the property. In these circumstances a Cohabitant may establish ownership of a beneficial share. In order to do so the Cohabitant must show that the parties had a common intention that both should have a beneficial interest in the property acquired, and that the Cohabitant has acted to his or her detriment on the basis of that common intention, there is relevant case law covering this situation, see Grant v Edwards .
A deed of surrender expresses the agreement between the parties that the beneficial interest is owned exclusively by one party. The deed will also effectively prevent the inference of any common intention that the beneficial ownership should be shared. This may be appropriate where a person is moving into their partner’s property and will be making a contribution towards outgoings but both parties agree that this shall not entitle them to a beneficial share of the property.
If you have any queries about whether a deed of surrender is relevant to your circumstances please contact us and we will be happy to assist. You can find the application form here.
A deed of trust cannot, on its own, be effectively used to protect a party’s interest where one party is made bankrupt. If a legal owner of the property in question is bankrupt or there is a possibility that they may be made bankrupt then we advise you to seek the help of a firm of solicitors who will be able to advise you of your options, including possible court orders to protect a party’s beneficial interests in a property.
The situation is similar if the bankruptcy of a party to an existing deed of trust becomes likely. You should seek the advice of a suitably competent legal practitioner who will be able to advise you on possible ways to protect your beneficial interest.
If you are considering commissioning a deed of trust in the knowledge that a bankruptcy is likely, or being processed, we would urge you to take appropriate legal advice before doing so as there is no guarantee that it will be effective. We are not legal advisors and any information we provide is given on an ‘as is’ basis with no warranty. It is therefore imperative that you seek appropriate advice prior to commissioning a deed.
Similar to the scenario regarding Bankruptcy, a deed of trust may not provide the protection required against the registration of a charging order against a property. You should seek the advice of a competent legal practitioner if there is a threat of a charging order.
This is because a deed of trust, in essence, a voluntary contractual agreement between parties as to how beneficial interests in property are held. This alone will not prevent a creditor from applying for and successfully registering a charging order against the beneficial interests of a legal owner of a property.
Very simply, when looking at the ranking of charges secured on a property, a first legal charge will of course have primary ranking, and the beneficiary of a first legal charge will be entitled to any sums owed to them after payment of any associated sale costs. If a charging order is obtained it has the effect of making a previously unsecured debt become secured on the property. This is so even if the property is held on trust by the legal owner for beneficiary not registered as a legal owner. The charging orders will secure the ranking of the debt behind that of the first legal charge (or subsequent second or third legal charges). The deed of trust will only be effective to deal with any remainder of the equity in a property after the satisfaction of the debts in favour of registered legal charges and charging orders.
If you suspect that a charging order is likely then you should consult the services of a firm of solicitors as soon as possible in order that they can advise you on how to fully protect your interests.
When a property is held in the joint names of a married couple (or civil partners) and larger share is gifted to one spouse then SDLT would usually not be payable.
This is reiterated on the Government website which you can find here. You can see from the section titled: “If the larger share is given outright as a gift” that when a larger share is gifted then no SDLT would be payable even if there is a mortgage on the property.
This is usually very relevant when clients wish to use a Form 17 declaration to mitigate their tax spend.