Behind the Legal Jargon of Co-Ownership and Protecting your Investment
When two or more people purchase a house together lawyers will always ask how you want to hold the property. This is a vital decision from a legal point of view. It will establish the legal position on ownership of the property and how the shares in the property can be dealt with.
So what are my options?
The two options are to hold the property as joint tenants or as tenants in common.
Holding the property as joint tenants means that the property is owned by all co-owners equally despite any unequal deposit or mortgage contributions. Therefore should you hold the property as joint tenants and one of you dies the surviving owner takes the whole property and can deal with it without involvement from any other party or needing to obtain a grant of probate. This option is often chosen by couples on the basis that ‘what’s mine is yours’ and there is no need to define shares of ownership.
The second option is to hold the property as tenants in common. This denotes that co-owners hold the property in definitive shares, for example equally (50:50) or unequally (70:30). This appears on the property register through a restriction stating that that the property needs to be sold by two or more parties.
Should you decide to hold the property in specified shares the surviving owner does not automatically receive the deceased owner’s share. Instead it will pass in accordance with the Will or intestacy rules if there is no Will. In circumstances where the owners are unmarried couples, parents and children or simply a business purchase a tenancy in common is often the best way to make sure that your share is always identifiable.
There are also advantages to setting up a tenancy in common in order to protect your share in the property against the bankruptcy of a co-owner, possible divorce or other financial claims and also to ring fence your share against possible care fees and other liabilities.
If you decide to hold your property as tenants in common we advise that you draw up a deed of trust prior to completing the purchase. This often simple document can protect the investment you have made and set out the respective parties’ contribution to the purchase and how much they might receive from any sale, death or relationship breakdown. This serves to protect your investment and reduce the risks inherent to buying property with someone else.
Hine Solicitors offers both conveyancing and private client services so all these issues can be resolved under one roof.
Should you have any queries regarding the content of this article, please do not hesitate to contact the Conveyancing department or the private client on 01865 514348. Alternatively, should you already hold the property as tenants in common but have no Deed of Trust, it is not too late and please contact our private client team for further information.