I am purchasing a property jointly, what do I need to consider?

By Louise Burgess on

Research indicates that 40% of people in Britain believe ‘mortgage is the new marriage’. Purchasing a property with your other half may seem like a simple idea in order to climb the property ladder. However you must consider how to adequately protect yourself in the unfortunate event that something happens to one of you. This applies not only to couples, but to those purchasing jointly with a friend or a relative.

If you take out a mortgage together and it is in both of your names, you will be jointly liable for that mortgage no matter who lives at the property. The actual legal ownership to the house can be owned in two ways; these are referred to in legal terms as joint tenants and tenants in common.

Joint tenants

One option available for the ownership of a property is by way of joint tenants. If you own a property jointly, there are no separate shares. If anything was to unfortunately happen to one of you, the property would automatically be transferred to the remaining owner. This is regardless of whether you have a will to state otherwise.

Tenants in common

The alternative option is to own the property as tenants in common. This would allow each of you to own your individual share in the property. Many people own the property in equal shares of 50% each, while some people choose to own it in unequal shares (particularly if one person has put more funds into the house than the other).

If you choose to buy the property as tenants in common, you may also wish to draw up a declaration of trust which will be registered with the Land Registry. This document will determine each person’s share and record the intention of the parties at the time of the purchase. For example, a declaration could state that one person is to receive x amount of pounds from the sale proceeds before they are split.

If you own a property with another person as tenants in common, you can deal with your share of the property as you wish. This means if something was to unfortunately happen to one of you, that persons share would be passed in accordance with their will, or if they do not have a will under the intestacy rules.

Splitting a jointly owned house

If a property is sold, the sale proceeds would only be divided up into shares if both were to hold the property as tenants in common. The tenants in common option does however have its pitfalls, if one person’s share were to pass under a will then that person would hold the property jointly with the other original owner. This may cause problems between the owners over decisions about the property such as who will live there and whether the property is to be sold.

The way which you own a property strongly dictates how the property is dealt with on your death. If you own a property already, or you are looking to purchase a property and are particularly concerned about joint ownership, it is recommended that you seek estate planning advice and or review your will.

If you would like to discuss your options further, we can assist. Call our residential conveyancing team today on 0800 988 7756.

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