Joint Ownership of Property
When you purchase a property in joint names it is important to understand the different types of joint ownership that are available to you. Of course when purchasing a property together everyone hopes that the parties will never split up but unfortunately this is not always the case. Therefore it is important when making such a large investment together that you consider carefully what you would do if you were to separate.
On any sale of a property all mortgages and charges have to be paid first and this will include estate agents and solicitors costs. Only what is left, the net proceeds of sale, will be available to you.
Therefore unless you are contributing exactly the same amount of money to the purchase price and all other costs associated with the purchase, and are paying any mortgage payments equally between you, the person paying more may wish to protect that additional contribution.
There are two ways of owning the property jointly between you – Joint Tenants and Tenants in Common.
Joint Tenants – If you hold the property as Joint Tenants and one owner dies before the other, the survivor automatically owns the whole of the property without reference to any Will left by the deceased or, if there is no will, the law of intestacy. If during their lifetime the joint owners wish to divide the ownership of the property or sell it and split the proceeds it would be extremely difficult to argue successfully that the shares should be anything other than equal regardless of the financial contribution made by each owner to the property or any mortgage.
Tenants in Common – If you hold the property as Tenants in Common the property is held in shares so that on the death of any of the owners their share passes under their Will or intestacy and not automatically to any surviving owner. It is therefore essential that your will is up to date following your purchase and our colleagues in our Wills and Probate Department will be happy to advise you.
On a sale of the property the proceeds will be divided in accordance with each owner's share in the property. If a property is held as tenants in common it is preferable that the size of each owner’s share should be specified at the time of purchase to avoid potential disputes at a later stage, and we would strongly advise that you enter into a declaration of trust to set out your respective shares in the property at the time of the purchase. We will be happy to advise you on the terms of a declaration of trust to be drawn up between you.