Deed of Trust Frequently Asked Questions

By Stephen Campion on January 30, 2024

What is a Deed of Trust?

Deed of Trust is a legal document whereby a Trust is set up. The basic elements are that the Trustees have legal ownership of a property and this legal ownership is subject to what is termed “beneficial” or “equitable” ownership. Those terms define true ownership. The majority of property purchases are made as joint tenants. This means that the buyers are joint legal owners. It also means that they are joint beneficial owners, e.g the actual ownership is in equal shares.

You have explained the ownership position over Joint Tenants. Can you explain ownership further in relation to Tenants in Common?

If you buy as a Tenant in Common then you can decide how the beneficial ownership should be divided. It can be in equal shares or can be divided in unequal proportions. A major motive for buying as Tenants in Common is to allow for unequal shares which cannot happen if they buy as Joint Tenants.

Can you give me a typical example of unequal shares in a Tenancy in Common?

The most common provision is where one party has provided the deposit or maybe a higher deposit than the other party. In those circumstances that person might want credit for the deposit if the parties separate. Therefore the Deed would state that the deposit would be returned to that person first. Then after that there would be an equal division of the rest of the proceeds of the sale of the property between the two owners.

Are there alternative ways of reflecting the contribution made by either party?

There are though less common. Another possibility is that one party obtains a greater part of the proceeds when the property sells. That is defined in percentage terms. That though is less common.

How do you record that a contribution is made?

There will be a statement on the Deed that a contribution has been made, if indeed that is the case. In addition we would ask that you retain a full record of the contribution that was my be you as evidence.

How far are Deeds of Trust binding if individuals are married?

In the case of marriage, the Deeds are less binding and may be totally ineffective between the parties if there was a breakdown in the relationship. When considering the division of assets, including property, a number of factors are considered and not just an agreement reached between the parties of this type. These are listed in the case of married couples under s25 of the Matrimonial Causes Act 1973. However, a Deed of this type cannot be totally dismissed. S25 (2)(f) of the Matrimonial Causes Act states that the court should take into account” the contributions which each of the parties has made….”

Is the law any different if the couple are in a Civil Partnership?

It appears they are. S65 of the Civil Partnership Act states that if a Civil Partner contributes to improvements to a property that is jointly owned or owned by one then that person might have an agreed share as may be agreed. In the alternative the courts might decide. The important thing is that an agreement is held to have force. This does refer to later improvement though so far advice has only been given on Deeds where parties have their initial contribution reflected in a Deed.

We understand that this type of simple Deed only deals with contributions made at the time of purchase of a property in joint names. What if we wished the Deed to refer to future financial contributions.

If you wish the Deed to refer to future financial contributions of any type then a Floating Deed of Trust would be appropriate. This type of Deed could list future contributions. However Floating Deeds are beyond the scope of this page.

How would a Deed of Trust be recorded at the Land Registry?

It would be recorded as a Form A Restriction.

Can you please clarify further what a Form A Restriction is?

A Restriction is an entry at the Land Registry that prevents or regulates the making of an entry in the registry of a disposition, for instance a sale. These Restrictions are in standard form and a Form A Restriction is one of them. The wording is “ 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.

Can you provide further guidance on what this means?

Put simply it means that the property has been bought as a Tenancy in Common. It does not state though the proportion of ownership. For this reason we advise that the parties to the Deed must keep a copy as a record.

If a property is bought as a Tenancy in Common is a Deed of Trust always required.

No it is not. You do not need one if you are buying in equal shares. If you are buying in unequal shares it is not obligatory. The ownership of the property can be recorded on the Transfer document or Lease if you are buying a new Leasehold property

Would you recommend a Deed of Trust if there are unequal shares?

Ultimately it is a matter for Campion’s clients. However, if it is recorded on the Transfer or Lease as the case maybe there will only be a brief statement. That leaves out a number of provisions in a Deed that Campions consider would be helpful in the event of a dispute.

Are there any more that you consider helpful

A Campions Property Solicitors consider that it is helpful that a statement be made that the parties have been given the option of having independent legal advice. This is almost never taken up.

Any more clauses?

If the division between the parties is based on contribution by one or both of them then Campions Property Lawyers will insert a clause to that effect. Evidence should be provided by the parties of the contribution. Campions emphasise this is past contribution. If any division is based on future contribution then a Floating Deed of Trust may be better.

Any other advantages of a Deed?

In general all matters are set out more thoroughly than if the future owners of the property being bought have a short statement attached to the Transfer document.

You have mentioned Deeds based on contribution. Is there any other reason to have a Deed of Trust?

A second major reason to have a Deed of Trust is to assign income between the owners for the purpose of tax planning on a Buy to Let property. Campions do not advise on any tax apart from SDLT. However, Campions Solicitors will give effect via a Deed to arrangements between the parties. So generally there might be an arrangement that the income be transferred from equal shares into an income division of 99% to 1%. To do that the beneficial or equitable interest in the property must be transferred in that proportion. The legal ownership can remain in the joint names of both parties. This is cheaper and since the legal interest remains unchanged you do not need to involve your Lender if you have one.

Do you recommend a Will is made if we have a Deed of Trust.

The advice Campions give on Wills in this context is this. If the property is owned as a Joint Tenancy then not only must it be owned in equal shares but the right of survivorship applies. This means that regardless of a Will the property passes on death to the surviving party. This is the same whether the parties are married, in a Civil Partnership or unmasked. However once there is a Tenancy in Common, whether or not in equal shares, then the right of survivorship does not apply and the share that the individual owns will not pass automatically to the other owner. Whether or not a Will is made Campions strongly advise that the matter must be considered.

Can you convert the ownership of a property once bought to a Tenancy in Common from a Joint Tenancy.

Here we deal with the situation where there is agreement between the parties. You apply to the Registry using Form RX1. A fee of £20 is payable. In the absence of agreement to the contrary the property would then be owned in equal shares. If a Deed of Trust was drawn up it would follow the ownership declared in the Deed of Trust.

Can you convert a Tenancy in Common to a Joint Tenancy after the property has been bought.

Yes. You may need to prepare a new Deed revoking the existing Deed. You then apply to the Registry to remove the Form A Restriction using Form RX3. There is no fee.

What are your fees for a Deed of Trust?

For a Deed of Trust of this type they are £120 including VAT. That is a fixed price and will not vary. If the Deed is prepared in connection with a property purchase then there are no disbursements. If we act not in connection with a property purchase then there will be additional disbursements. There will be a £20 Registration Fee. We may also need to obtain the Title from the Land Registry. There may be ID fees of £10.50 per person.

Is it possible to have a Deed of Trust even though the property owned is in one name only?

Anyone who owns the legal interest in a property eg is on the Title can create a Trust whereby another person or persons can own the beneficial interest. The legal owner could retain some beneficial interest or have none. So typically one partner in a relationship could own the legal interest. A simple trust could be created whereby the property is divided into equal beneficial shares.

Is there any case that illustrates the importance of having a Declaration of Trust that sets out your intentions should you wish to own the property in unequal shares.

There is one case in particular. That is Stack and Dowden, 2007 UKHL 17. This is a detailed and complex judgment. However one principle in this, not the only one, is where there is no declaration of beneficial interests, then equity follows the law.

Can you put that in another simpler way.

Yes. It means if the legal ownership is owned by two or more people then the beneficial ownership is owned in equal shares in the absence of evidence to the contrary.

Can you define beneficial ownership more exactly?

Beneficial or actual ownership is the true ownership of the property. In other words in what proportion would the net proceeds be divided if the property were sold.

So does that mean that if two people own the property legally then the assumption is that they own in equal shares.

Yes which means it is vital that you have a Deed if you would like unequal shares. If you have a presumption of equal shares then that presumption can only be overcome with great difficulty.

How many people can have legal ownership of a property?

Up to four individuals can hold the legal interest. There is no limit on how many individuals can hold beneficial or equitable ownership.

Is it necessary to legally own a property before you have a beneficial interest.

No. An individual can have a beneficial interest with no legal ownership.

What about a Company Purchase? Is a Deed of Trust necessary in these matters?

There are increasing numbers of Buy to Let Property Purchases bought through Limited Companies. The ownership of the property in these matters will be determined by the Company structure and in particular the shareholding. This is matter of Company Law.

Can I be clear on this. Does Stack and Dowden apply only to couples who are not married?

That is correct. If the parties are married and they part then the ownership of the beneficial interest is governed by the principles set out under the Matrimonial Causes Act 1973.

And if in a Civil Partnership?

Again Stack and Dowden does not apply. The property ownership would be dealt with under the Civil Partnership Act 2004.

I would like to ask about properties that have been bought by one person only in a relationship where the parties are not married. In the absence of any declaration of beneficial interest or ownership what is the presumption?

The presumption is the same as if there is a joint ownership. The beneficial interest follows the legal interest. Therefore in such cases it is assumed that the sole legal owner is also the sole owner of the beneficial interes

Again in such cases of sole ownership is there any difference if the parties are married or in a Civil Partnership?

Partnership under the Civil Partnership Act 2004. Free advice can be given by Campions Divorce Solicitors, Derby and Nottingham if there are property disputes covered by those acts.

If there is a presumption that the if the sole legal owner has a sole beneficial ownership of the property is there any need for a Deed declaring ownership?

There may be two reasons why the owner of the legal title and the other owner might agree on a Deed. The first reason might be that the legal owner of the property owned might wish to give a beneficial ownership to the other party. So the owner could enter into a Deed with himself of herself as Trustee. Then the beneficial ownership could be given to another party as to part or in total. If in part then the legal owner of the Title to the property could grant a part beneficial interest to himself/ herself.

Is there any case that illustrates the importance of having a Declaration of Trust that sets out your intentions should you wish to own the property in unequal shares.

Can you put that in another simpler way.

Yes. It means if the legal ownership is owned by two or more people then the beneficial ownership is owned in equal shares in the absence of evidence to the contrary.

Can you define beneficial ownership more exactly?

Beneficial or actual ownership is the true ownership of the property. In other words in what proportion would the net proceeds be divided if the property were sold.

So does that mean that if two people own the property legally then the assumption is that they own in equal shares.

Yes which means it is vital that you have a Deed if you would like unequal shares. If you have a presumption of equal shares then that presumption can only be overcome with great difficulty.

How many people can have the legal ownership of a property?

Up to four individuals can hold the legal interest. There is no limit on how many individuals can hold a beneficial or equitable ownership.

Is it necessary to legally own a property before you have a beneficial interest.

No. An individual can have a beneficial interest with no legal ownership.

What about a Company Purchase? Is a Deed of Trust necessary in these matters?

Can I be clear on this. Does Stack and Dowden apply only to couples who are not married?

That is correct. If the parties are married and they part then the ownership of the beneficial interest is governed by the principles set out under the Matrimonial Causes Act 1973.

And if in a Civil Partnership?

Again Stack and Dowden does not apply. The property ownership would be dealt with under the Civil Partnership Act 2004.

I would like to ask about properties that have been bought by one person only in a relationship where the parties are not married. In the absence of any declaration of beneficial interest or ownership what is the presumption?

Again in such cases of sole ownership is there any difference if the parties are married or in a Civil Partnership?

Partnership under the Civil Partnership Act 2004. Free advice can be given by Campions Divorce Solicitors, Derby and Nottingham if there are property disputes covered by those acts.

If there is a presumption that the if the sole legal owner has a sole beneficial ownership of the property is there any need for a Deed declaring ownership?

Is there any case that illustrates the importance of having a Declaration of Trust that sets out your intentions should you wish to own the property in unequal shares.

Can you put that in another simpler way.

Yes. It means if the legal ownership is owned by two or more people then the beneficial ownership is owned in equal shares in the absence of evidence to the contrary.

Can you define beneficial ownership more exactly?

Beneficial or actual ownership is the true ownership of the property. In other words in what proportion would the net proceeds be divided if the property were sold.

So does that mean that if two people own the property legally then the assumption is that they own in equal shares.

Yes which means it is vital that you have a Deed if you would like unequal shares. If you have a presumption of equal shares then that presumption can only be overcome with great difficulty.

How many people can have the legal ownership of a property?

Up to four individuals can hold the legal interest. There is no limit on how many individuals can hold a beneficial or equitable ownership.

Is it necessary to legally own a property before you have a beneficial interest.

No. An individual can have a beneficial interest with no legal ownership.

What about a Company Purchase? Is a Deed of Trust necessary in these matters?

Can I be clear on this. Does Stack and Dowden apply only to couples who are not married?

That is correct. If the parties are married and they part then the ownership of the beneficial interest is governed by the principles set out under the Matrimonial Causes Act 1973.

I would like to ask about properties that have been bought by one person only in a relationship where the parties are not married. In the absence of any declaration of beneficial interest or ownership what is the presumption?

Again in such cases of sole ownership is there any difference if the parties are married or in a Civil Partnership?

The position is identical to the situation where the property that has been bought is in joint names and referred to above. That is that if married then the ownership is decided under the Matrimonial Causes Act 1973. Or if under a Civil Partnership under the Civil Partnership Act 2004. Free advice can be given by Campions Divorce Solicitors, Derby and Nottingham if there are property disputes covered by those acts.

If there is a presumption that the if the sole legal owner has a sole beneficial ownership of the property is there any need for a Deed declaring ownership?

I appreciate that under Stack and Dowden the presumption is that the legal interest determines the beneficial interest or true ownership unless there are documents to the contrary. However can this presumption be rebutted?

The answer is yes. It turns on intention. If it can be shown that the parties intended a different outcome then that would be upheld. A variety of factors can be taken into account. One of the most important may be the capital contribution. In the Stack and Dowden case Ms Dowden was awarded 65% and not 50% that she would have received if the matter was a joint beneficial ownership.

Can you tell me any more about Stack and Dowden?

The House of Lords Judgement is complex and detailed. For any other advice you should contact Campions Family Lawyers, Derby and Nottingham.

Was there any particular case that summed up the absurdity of the previous law based as it still was on fault.

Yes there was. It was the case of Owens and Owens. This was decided by the Supreme Court. The reference is 2018 UKSC 41.

I understand that Campions Solicitors, Derby, Leicester, Nottingham state in various places that they draw up Deeds of Trust for a fixed fee. Can Campions Solicitors provide more details?

Yes. Deeds of Trust or of Ownership are used in two circumstances. The first is if the parties owning a property wish to own it as Tenants in Common. The second circumstance is when one party owns the property and wishes to have a Deed whereby the other party living in the property has no ownership at all.

Can you please define “Tenants in Common”?

Yes. Tenants in Common own a property in two separate parts. The alternative method of owning a property is as Joint Tenants where the owners own the property as an indivisible whole. The distinction between the two ownerships is two fold. On death of one party who is a Tenant in Common then his or her share goes into his or her Estate. This means that it is important that a Will is made by a Tenant in Common. If that is not done this will mean that the Estate of the Tenant in Common will go according to Intestacy Rules which may not be desirable. Of course if married or in a Civil Partnership this may mean the other party would inherit under the Intestacy Rules. However if the parties were not married this will not be the case.

What is the position on death of a Joint Tenant?

On the death of a Joint Tenant the property will pass automatically to the other party. This is known as “ the right of Survivorship. “ This is so regardless of whether or not Will has been made

So with that background what are the two main reasons why owners of properties opt for a Deed of Trust?

The first reason is that if the parties are unmarried then they may wish to own the property between themselves in unequal shares.

The second reason for opting for a Deed of Trust is that owners may wish to alter ownership because they may wish to vary the receipt of rent on a Buy to Let Property between themselves. That will be for tax reasons and they cannot vary the income from rent between themselves without altering the ownership.

That could be whether the owners are married (or in a Civil Partnership) or unmarried.

Why do Campions Solicitors (Derby, Leicester, Nottingham) distinguish between married and unmarried?

If couples are not married or in a Civil Partnership then their respective property rights are governed by strict property rights and agreements between them. Therefore if couples are setting out these rights in houses or flats they own a Deed of Trust becomes highly relevant. However if they are married or in a Civil Partnership the property rights (together with all other property assets- pensions and others) can be divided by the Financial Remedies Court under the Matrimonial Causes Act 1973 or Civil Partnership Act 2004. So any Consent Order might reflect that and any settlement reached via Family Mediation (Derby,Leicester, Nottingham) is also likely to do so.

A Deed of Trust made between a married couple or those in a Civil Partnership might be taken into account as a factor by the Financial Remedies Court but it is not bound to do so.

What should go into a straightforward Deed of Trust?

There should be a recital of the facts of the property purchase. A Deed of Trust can be done in conjunction with a property purchase or it might be done later after the property has been bought. That information should be recited.

What should come after that on the Trust Deed?

The ownership between the parties should be set out. The ownership should be declared of the net proceeds of sale of the property. So that should be after the repayment of any Mortgages on the property. It should also be after all selling expenses of the property. That means Estate Agents (Derby, Leicester, Nottingham) Fees on sale and Solicitors Fees on dealing with the Sale Conveyancing.

What suggestions do Campions Solicitors (Derby, Leicester, Nottingham) make about property division?

It is not for Campions Property/Wills and Probate/Family Solicitors to say! It is a matter for the owners of the property to decide between themselves. However Campions can report what clients will normally decide. If an unmarried couple buy a property then they will often want one party to have credit for the deposit if one owner has provided it.

What if a parent or parents of one owner of the property have provided a deposit. How would that work?

Lenders will not allow parents to have a property interest if they give money for a deposit. They could not therefore be part of the Deed of Trust. Of course the situation might be different if there is no Mortgage on the property when the parents could have a property interest recorded in a document if they so wish. They could have an Equitable Interest under a Deed or a Charge Registered at the Land Registry under Form CH1.

So how could the parents interest be protected if the property is bought with a Mortgage?

It cannot be as such for the reasons given above. However their son/ daughter could have the gifted deposit reflected in the Deed of Trust.

Campions Solicitors, Derby, Leicester, Nottingham mentioned another purpose of the Deed of Trust which covers all couples. That is the division of the ownership so that property income from a Buy to Let property is assigned to one party for tax reasons. How does this work?

The Deed of Trust is drawn up in the same way. The net proceeds to be divided are defined as before. That is the Gross Proceeds of Sale of the Property and then less Estate Agents( Derby, Leicester, Nottingham) costs on sale. Also Conveyancing Solicitors selling expenses. The net proceeds are then divided 99%/1% in favor of the Owner of the Buy to Let who will receive the rental income from the Tenant.

What ever the reason should there be evidence of the parties intentions and the reason for drawing the Deed up in the way it is drawn up?

Very much so. This is particularly the case where property ownership is based on financial contribution.

How normally will Campions/ Conveyancing/ Wills and Probate/Family/ Divorce obtain such evidence.

There should be an email instruction on the clients file where the evidence is kept

What else should the Deed of Trust contain?

It will contain a statement that if the parties marry later or enter into a Civil Partnership then the Deed can be overreached in the event of Divorce, Dissolution or Divorce. It should contain a statement that each party might wish to obtain independent legal advice. It is extremely rare for either party in a Deed of Trust to obtain independent legal advice but that should be offered. The Deed should contain a statement that both parties are aware of the values of what is involved. That is the value of the property, the net equity and any contribution by either party.

Is there any provision for disputes?

In all cases there should be a clause that in the event of dispute the matter should be referred to Arbitration. That may not always be binding. Campions, (Derby, Leicester, Nottingham) do though believe that to be a helpful clause.

What advice to Campions Solicitors of Derby- Pride Park, Leicester-Grove Park, Nottingham- Mansfield Road give to clients who have a Deed of Trust?

The advice given is totally neutral as to the allocation of ownership between the owners of the property. It has to be. Either owner of the property can obtain independent legal advice on his/ her position.

Is there anything else in the Deed?

Both parties must confirm that neither has exercised undue influence on the other. All parties must confirm that they have considered the possibility of a Floating Deed of Trust and rejected the idea or in the alternative would like Campions Solicitors to prepare one.

I accept this is different issue but can Campions( Property/Wills and Probate/ Divorce/ Financial Remedies) Solicitors tell me what a Floating Deed of Trust is?

A Floating Deed of Trust is a Deed where any future payments made by either party are accountable and taken into account in dividing the ownership of property. A typical example might be that future Mortgage payments are taken into account. Then there has to be a calculation of what might have been paid if, at some future time, the parties have to divide ownership.

I accept this section is not about Floating Deeds of Trust. However how much use will that type of Deed be if the parties are married or in a Civil Partnership?

It is impossible to predict division of ownership of any asset in divorce, dissolution or separation proceedings. However though a Floating Deed can certainly be taken into account other factors listed under Statute will be of great importance. This is so however Financial Remedies are decided, whether by Order of the Financial Remedies Court, by Consent or otherwise or by Agreement without an Order. (Not recommended).

I am entering into Family Mediation(Derby/Leicester/Nottingham following the breakdown of my relationship. I am not married. How far will the Deed of Trust be relevant?

Campions Solicitors (Derby, Leicester, Nottingham) cannot of course advise on any Family Mediation.How a Family Mediation on Finances develops is a matter for the individual parties attending and the Family Mediator. However in the course of Family Mediation( Derby, Leicester, Nottingham) independent legal advice can be obtained. You should rely on the advice given at the time. However general advice given now is that you might expect a Deed of Trust( Floating or otherwise) to be binding on both parties.

I have a Deed of Trust. This was not done by Campions,( Derby, Leicester, Nottingham) Solicitors. Can Campions Solicitors advise me on the Deed? I am not married nor in a Civil Partnership.

Yes. Campions Solicitors give a free consultation on all property and financial issues arising from relationship breakdown.

I and my partner bought a property some years ago. We are not married. We bought as Joint Tenants. I understand that this means automatic equal shares and that if one dies it goes to the other regardless of a Will if one had been made. Can I now convert to a Tenancy in Common and have a Deed of Trust?

Yes. Of course any variation in property arrangements would have to be by consent of both owners. However a Deed of Trust varying property arrangements can be agreed at any time. There might be two reasons for this. The first reason mentioned above in this section is if the property originally purchased is a buy to let. Then the ownership might be altered in favour of one party for tax reasons. The second reason might be because there is a change of circumstance and the parties wish to reflect that in a new Agreement.

Can you indicate to me how a Deed of Trust should be recorded at the Land Registry.

It should be recorded by a Restriction entered on the Title of the Property at the Land Registry.

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