A Trust Deed is a legal document by which a Trust is established to hold and manage assets for the benefit of someone. Assets may be land, money, buildings, shares or even antiques. The one who sets up the trust is called a settlor, the one who manages the trust is a trustee and those who benefit from the trust are called beneficiaries.

A trust deed is often used in property transactions, particularly when property is purchased jointly by two or more individuals. If buying a property with your partner, relative or friend, and you are purchasing the property as tenants-in-common, it is advisable to have a trust deed prepared.  Trust Deed is also called  “deed of trust” and may also be  known as “declaration of trust and co-habitation”, or a “co-ownership agreement” depending on the nature of the agreement.

A deed of trust aims to protect the buyer’s interest and reduces the risk of buying with someone else.

Trust deed for property may contain various information, such as the contribution of each one towards the purchase price, their respective ownership of shares in the property, and what happens if someone dies or wants to move out, or there is a dispute about how to develop the property.

Typically a deed of trust will address some or all of the following s applicable:

• The amount paid by each one towards the purchase price;
• Each one’s contribution towards the mortgage repayments;
• How the equity is split if the property is sold or mortgage ends;
• Each owner’s contribution towards purchasing costs, insurance and ongoing maintenance.
• How the property will be valued if one owner wants to sell;
• A right of first refusal among the owners in the event one party wants to sell;
• What is to be done if only one owner wants to sell and not the other/s;
• What happens to the share of an owner in the event of his death;
• Arrangements regarding re-mortgaging, selling, and whether leasing the property or any part of it is permitted;
• If the property is tenanted how rental income is divided;
• Rent payable by a resident owner to a non-resident owner, if applicable;
• What happens if one party fails to make payments
• Notice periods (to vacate, etc if applicable);
• How disputes will be resolved;
• Inventory of shared items of furniture and furnishings.

 

In other cases, the Trust Deed stipulates how the Trust assets and funds are to be managed and disposed off, as desired by the Settlor.