Buying a property jointly, what should you consider?

If you are in the lucky position to be buying a home with another person, your solicitor will ask you how the property will be owned. There are two different sorts of joint ownership, joint tenancy and tenancy in common, so how do they differ and which type will suit your situation the best?

1. Joint Tenancy

Where there is a joint tenancy, neither one of the co-owners will be entitled to a distinct or separate proportion of the property, each one effectively owns all of it. Of particular importance is the fact that where one of two joint tenants dies, his or her share will automatically pass to the survivor, irrespective of any wishes expressed in the deceased’s Will. Most married couples will tend to own property as joint tenants.

2. Tenancy in Common

With this arrangement, each co-owner of the property holds a specified proportion of the interest in the property. On the death of a tenant in common, his or her share in the property will not pass automatically to the co-owner but will pass according to the wishes expressed in the deceased’s Will. If no Will exists, the interest will pass under the rules of intestacy, which means that it passes to the deceased’s next of kin.

To avoid any possible disputes, it is always preferable that the shares of each co-owner be expressed and recorded in a separate document, known as a Declaration of Trust, which should normally be kept with the title documents of the property. Tenancies in common are typically used where two or more persons buy a property and make unequal contributions towards the purchase price, perhaps because a parent has provided a significant cash advance for a deposit, or where one co-owner would not wish that person’s interest to pass automatically to the survivor on his or her death.

This may happen for example if the person has a child/children from a previous relationship, whom they would like to benefit in the event of their death. It is important to take legal advice and to make and keep an up to date Will which reflects these wishes.

Making sure there is a record of the beneficial interest you have in the property from the outset of the purchase and a record of what you should receive from the sale, along with making sure you have an up-to-date Will on the completion of the property transaction, should help ensure there are no squabbles about ownership in the future.

Natalie Skinner can be contacted at n.skinner@gullands.com