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What is the value of a floating deed of trust?

Also sometimes referred to as a Silver deed or a commensurate share deed, a deed of trust

ensures that each party with joint ownership of a property can accurately assess their interest in the property.

How does a floating deed differ from a declaration of trust?

Joint owners of a property typically adopt quite a narrow perspective and when they want to protect the money that they have used to purchase the property, a declaration of trust is generally used.

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A declaration of trust can have a fixed interest or the return of the original deposit and the equal division of the net proceeds. Providing the relationship between the joint owners of a property remains stable and both parties have consistently paid their fair share of the associated costs, this approach can be perfectly fine.

But what happens if one party ends up paying more? Will your beneficial interest increase if one of the property’s joint owners moves out? And who is responsible for payment of the mortgage if the property is only occupied by one of the joint owners?

It’s no secret that property law can be complex at the best of times but these complexities only increase when circumstances become difficult or contentious. Keep reading to find out more about a floating deed of trust and how it could help you to secure your investment long into the future.

What can increase a floating share?

As we have seen, a declaration of trust sets out a fixed interest. Floating deeds can incorporate a range of additional costs that increase the value of a fixed interest. Some of the most common extra costs include:

– The individual contribution paid as a deposit
– Contributions made towards property renovations
Contributions to legal and estate agent fees, as well as stamp duty

So, as you can see, there are numerous reasons why it could be worth investing the extra money into this type of deed.

Who can draft a floating deed?

As floating deeds are more complex and they are important legal documents, it is imperative to engage the services of an experienced and knowledgeable solicitor, such as Parachute Law.

What are the advantages of a floating deed?

Floating deeds better reflect the specific contributions made by each individual joint owner and offer additional flexibility that allows for and acknowledges when changes occur in the relationship.

So, let’s take a moment to imagine that Claire and Steven purchase a property together that is worth £300,000. They pay a 10% deposit, putting in £15,000 each. Although Claire and Steven are not married, they have been together for five years and opted to draft a fixed deed of trust.

Six months later, Claire and Steven split up and Steven moved out of the property. He tells Claire that he can’t contribute to the mortgage payments any longer, which means Claire needs to cover all the costs herself.

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Three years later, they decide to sell the property and although Steven hasn’t been contributing to the mortgage, the fixed deed states that he is entitled to 50% of the proceeds. With a floating deed, Claire would be entitled to a greater share which would reflect the additional funds she has put into the property.


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