If you are purchasing a property with another person it is important that you consider how you want to hold the property, or in reality what you want to happen with the property upon sale or when anything happens to you in the future.
There are a few options and you need to consider what is better for you. There is no set rule on what you should choose.
Joint tenants
In this scenario all owners own all of the property wholly. If anything was to happen to one of the owners the surviving owners would continue to own all of the property wholly. In reality the deceased’s share of the property passes to the other.
With this choice you cannot leave the property to someone in a will.
If the property needs to be sold, all owners must agree.
This is typically used for husband and wife scenario’s but can be suitable for others.
Tenants In Common in equal shares
Each owner in this scenario owns a share of the property, i.e. if there are 2 owners they will own 50% each, if there are 4 they will own 25% each. If one dies, their share is dealt with in their estate, or under a Will if there is one written.
This type of tenancy is usually used for unmarried couples, friends, business partners etc.
Tenants In Common in unequal shares
In this scenario co-owners can have different shares i.e. 70% and 30%, or any other percentages. If 1 dies, the other will not automatically inherit their share. This means shares in the property can be left to other people under a Will.
This type of tenancy is usually used where one person pays are larger deposit or has a significantly larger income and therefore will make the majority of the mortgage payments etc. It can also be used in a re-mortgage where one party has moved into another’s house, but the owner had already paid the mortgage for a good number of years on their own.
If you want to hold the property in unequal shares we would recommend a Declaration of Trust is drawn up to accurately record your intentions at the time of purchase. It is often more difficult to prove or agree when parties may be in dispute at the point of sale etc.
Exclusive Law can help with a Declaration of Trust for a fee of £250.00 plus VAT.
If you have decided how you wish to hold the property you should complete the Joint Ownership form that your Solicitor sends to you to indicate your choice to them in writing.
Ending a joint tenancy – notice of severance
If you did not enter into a Declaration of Trust when buying your property, you can still change the nature of your ownership from joint tenants to tenants in common at a later date.
One way to do this is to enter into a Declaration of Trust post-purchase. However, this requires the consent and cooperation of all the owners regarding the shares each person holds.
You can also become tenants in common in equal shares by severing the joint tenancy. You can do this without the other owners’ agreement. This process involves completing what is called a “Form A restriction” which should be sent to HM Land Registry (this notifies the Land Registry that the property is subject to a trust). You must also serve a “notice of severance” upon any owners who do not agree to the change.
Once the joint tenancy is severed, you and the other owners will own the property as tenants in common in equal shares. You will obtain all the benefits of the tenancy in common, including the right to leave your share to whomever you like in your Will.
If you do not have a will you should give serious consideration to making one to ensure that your wishes are protected.
If you would like a free consultation or to discuss how Exclusive Legal can assist you in your conveyancing needs, please contact us via the website or call us directly.
