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Home co-ownership

Buying a property with someone else is often a good idea. But what does it entail? Property lawyer Claire Simmons looks at co-ownership.

If you are buying a property jointly with someone else, you will each be a co-owner. As co-owners, you will need to consider whether you wish to hold the property as joint tenants or as tenants in common.

“Joint tenants” and “tenants in common” are ways of describing how you own the property: the terms have a different legal meaning to the type of tenant who rents a property from a Landlord.

If you hold the property as joint tenants, both of you will own the whole of the property. You will not each have a quantified share in the property and will not be able to leave a share of the property in your will.

If you sell the property, or if you separate, it will be presumed that you both own the property equally, regardless of your respective contributions to the purchase price.

On the death of one co-owner, their interest in the property would automatically pass to the remaining co-owner without any further action.

The surviving co-owner would then own all of the property and on their death it would form part of their estate. This is known as the “right of survivorship”.

Married couples or those in a civil partnership commonly use this method of co-ownership because the right of survivorship makes it straightforward to inherit each other’s shares in the property.

In the future, if you wish to split your interests, the joint tenancy can be “severed” and turned into a tenancy in common at any time.

However, there may be reasons not to become joint tenants. For example, if one of you has made a large contribution to the purchase price of the property and you would want this to be recognised if the property is sold or if you separate.

A joint tenancy is also not suitable if you have a family from an earlier marriage and wish to leave your interest in the property to them, instead of passing it to the other co-owner.

If you hold the property as tenants in common, each of you will own a specified share in the property. Your shares may be equal, but they do not have to be.

Your share of the property can be passed on to another person, either during your lifetime or under your will. If you do not have a will at the time of your death then your share will pass in accordance with the rules of intestacy.

If you wish to hold the property as tenants in common, then you should sign a Declaration of Trust. A Declaration of Trust is a document that formally records that you hold the property as tenants in common and sets out your respective shares in the property.

If you sell the property, or if you separate, the Declaration of Trust will be referred to in order to work out your entitlement to the sale proceeds from the property.

Holding the property as tenants in common may be appropriate if you have children from previous relationships and would prefer them to inherit your interest on your death rather than your co-owner.

Holding the property as tenants in common in unequal shares may be desirable if you have made unequal contributions to the purchase price of the property.

How you wish to hold the property must be your own decision and is something that you should keep under review following the purchase of your property and you should always discuss this matter with your solicitor.

For more information on the issues raised by this article please get in touch.

Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

This page may contain links that direct you to third party websites. We have no control over and are not responsible for the content, use by you or availability of those third party websites, for any products or services you buy through those sites or for the treatment of any personal information you provide to the third party.

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