Co-owning a Property

How do you jointly own your property?  This is an issue which is commonly overlooked but can be of critical importance when a relationship breaks down or when a joint owner dies.

As co-owners, you can hold property in one of two ways, being “joint tenants” or “tenants in common”.  These terms have a different meaning to the type of tenant who rents a property from a landlord.

Joint Tenants

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 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.

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

A joint tenancy is not suitable if one of you has made a larger 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.  You should also not hold as joint tenants if you have a family from an earlier marriage and wish to leave your interest in the property to them.

Tenants in Common

As tenants in common, you can either own the property in equal or unequal shares depending on your financial contribution towards the purchase price.

The property is not automatically inherited by the other co-owner if you die and you can pass on your share of the property in 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 in unequal shares, then you should sign a declaration of trust.  This document formally records that you hold the property as tenants in common and sets out your respective shares.  This document is important when you come to sell the property or if you separate in working out the split of the net sale proceeds.

You should be aware that either co-owner can end the joint tenancy at any time without the other’s agreement.  It can also become severed automatically in certain circumstances for example, if one party becomes bankrupt.

When buying a property with someone else, it is important that you set out, at an early stage, how you wish to co-own the property. This will avoid any uncertainty or potential dispute in the future.

Please contact us for help or any questions you may have with co-owning a property.