BUYING A NEW HOME - Guide to Joint Ownership

Who is purchasing the property?

It is important to clarify whether the property or land is being purchased by:

• a married couple
• civil partners
• co-habitees
• friends
• family members, or
• business partners.

It is also important that you let us know if it is intended that someone else should have an interest in the property and are contributing towards the purchase price but are not having their name on the mortgage and deeds.

Why is this important ?

Your decision is important because your choice in ownership will affect what share you will have in the property and what will happen to that share upon death or separation.

If you proceed with your purchase without clearly documenting your shares in the property you could lose any additional share which you feel you may have or incur additional expenses in legal fees to determine this. 

If, after considering this information, you are still unsure how to purchase the property we would recommend you delay making this decision until you have had the opportunity to attend your appointment or speak with us over the phone.

Types of joint ownership

A property may be held by two or more people in one of two ways - as joint tenants or as tenants in common.

Joint tenants:

You will automatically be treated as having equal interests in the property. This means that if you split up and sell the property, you will share the proceeds equally, even if one of you has paid much more towards the cost of your property or the mortgage  repayments or the property’s running costs and general outgoings.

When the first owner dies the survivor will automatically own all of the property. When the second owner dies the property will be passed on under the terms of the second owners will.

Tenants-in-common

The property will be owned in the shares that you decide and will be documented. These shares may be 50% each, but can be any other division that you agree. If you do not declare your shares, then this can lead to dispute in the future and may mean that a court must decide your shares.

When the first of the co-owners dies, the survivor will not automatically get the deceased’s share. This will only happen if the deceased leaves that share to the survivor in his or her will, or if the survivor is entitled to that share under the laws of intestacy.

The importance of making a will

It is therefore essential for every tenant-in-common to make a will. If there is no will, unmarried people who live together do not automatically inherit from each other, no matter how long they have been together and even if they have had children together. Currently, the law does not recognise a common law spouse and even the rights of widows and widowers to inherit may be limited if there is no will. If you wish to make a will our probate department would be able to help you with this.

Family considerations

Married couples or civil partners will usually choose to be joint tenants, as they will want the widow or widower to continue to own all of the property.

However, there are times when a married couple or civil partners should not choose to be joint tenants.  For example, if:

• you have a child from a previous relationship
• one party has contributed more to the purchase price
• one of you is in financial trouble
• for tax planning where specialist advice has been obtained

If you cannot agree how to own the property or are being bullied or pressured to purchase the property not in accordance with your respective contributions you should consider whether you should be purchasing the property jointly at all or consider taking advice separately from your partner, from another solicitor.

Implications in relationship breakdown

In the event of divorce the court has wide powers to divide the property of married couples and is usually not essential that they define their shares at the outset. The position of civil partners is the same.

If a trust deed is drawn up or it is agreed to own the property in different shares it is still possible to own the property as tenants in common and your wishes may be taken into account by the courts but they still have the power to vary the shares depending upon the circumstances in each individual case.

It is possible to change a method of ownership?

Changing from joint tenants to tenants-in-common

Where your property is held as joint tenants, either of the co-owners can end the joint tenancy and create a tenancy-in-common by giving a notice to the other joint tenant or, if there are more than two, to all of the other joint tenants.  Once the notice is given, all the automatic rights to take the share of a deceased co-owner end, but the size of your shares will remain equal. The property will then be inherited according to the will of the deceased or, if there is no will, the intestacy laws.

Changing from tenants-in-common to joint tenants

Where the property is held as tenants-in-common you can become joint tenants, but only if both, or all, of you sign a Trust Deed which creates the joint tenancy and swear a statutory declaration to remove an entry on your deeds which confirms a tenancy in common exists.

Changing contributions and shares

Where the property is held as joint tenants or as a tenancy in common in equal or unequal shares and the contributions change a supplemental trust deed can be created varying the terms and shares in the property.

What are the tax implications?

Detailed tax advice should be sought from either a specialist accountant or our probate department, in terms of:

• Capital gains tax
• Inheritance tax

Without careful planning, the need to pay this tax could mean that the property has to be sold and the survivor has to move out.

Next steps

When purchasing a property jointly, it is important to make the right decisions and if you are at all unsure, please contact us for further advice to ensure your wishes or changes are documented correctly.

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