In a situation where multiple people have an interest in a property, there can be complications when trying to sell or someone dies. This is when a deed of trust can become invaluable. This deed is a legal document that firmly establishes who is entitled to what share of the property, protecting everyone involved.
What is a deed of trust?
A deed of trust is a legally binding document. It is drawn up when a property is purchased and clearly states how it should be divided if it should be sold in future or if one party dies. Every person who has invested in the property has their share clearly delineated and will receive the full amount to which they are entitled without arguments or prolonged legal fights.
There may be variations in the content of your deed of trust, as every purchase is different, but it will generally include information on how much each person contributed to the initial deposit and how much they will continue to provide towards mortgage payments and any other costs. It will also set out each individual’s share of the property as a percentage and how much they should receive from a future sale. Details on how to evaluate the property before sale should also be included.
Why sign a deed of trust?
Deeds of trust are important in situations where the ownership of the property may be in dispute. This includes romantic partners who are not married and therefore have less legal protection, people who contribute to the property but for whatever reason – such as their credit history – cannot have their name on the mortgage, or simply friends who want to minimise the risk of damaging their relationship through property-related disagreements.
Drawing up a deed of trust is a way to protect your interest in a shared property whilst reducing the risk of friction with your co-owners. It can provide legal clarity for everyone involved should you decide to sell the property and need to distribute the proceeds.