20 October 2023

What are the ways in which my partner and I can own our home?

What are the ways in which my partner and I can own our home?

There are two main ways a property can be held when there is more than one purchaser: joint tenants, or tenants in common (in equal or unequal shares). Our residential property solicitors in Surrey explore both of these in detail.

Joint Tenants

Joint Tenants are the most common form of ownership, particularly for married couples, as the sale proceeds would be divided equally between the two parties.  In addition, should one party pass away, the property would automatically transfer to the surviving owner regardless of whether any Will has been written to the contrary.

Tenants in Common

Tenants in Common is the second way of owning a property. When a property is owned as Tenants in Common, each party has a separate share in the property and therefore also the sale proceeds. This method is used commonly, particularly when the parties have contributed unequally to the purchase of the property, and therefore they can hold the property as Tenants in Common in unequal shares (shares to be determined at the time of the purchase i.e. 70/30 or 80/20).

The other common use for Tenants in Common would be if each party wants to leave their share of the property to someone else in their Will, for instance, if the purchasers are unrelated or they have children from a previous relationship that they would like to benefit from their passing. If this is the case, then it is strongly recommended that a Will is drafted or updated at the time of purchasing the property, to ensure the owner’s wishes are carried out when the time comes.  If you do not have a Will, then your share would pass under the Intestacy rules which may not be who you want to pass to.

Importance of a Declaration of Trust

If the purchase of the property is made using unequal contributions towards the purchase price, for instance, if one party pays the deposit or all of the balance of the required purchase price and fees, then we would strongly recommend a Declaration of Trust is drawn up.  This is a document that sets out in more detail how each party contributed to the purchase of the property and more importantly, when the property is subsequently sold, how the sale proceeds are to be divided.  A Declaration of Trust can also be used when a person has contributed financially towards the purchase of a property and they are not registered as a legal owner, such as if a Parent has contributed towards the purchase for instance.

A Declaration of Trust protects everyone’s interests when buying a property to ensure everyone gets what they are entitled to when the property eventually sells.  Especially when the property is owned by a couple who are not married, as they would have no legal protection in the event of separation.   The details in a declaration of trust will depend on your unique circumstances.

However, it should include the following core information:

  • How much each party has contributed towards the deposit?
  • How the mortgage will be paid off and how each party will contribute towards repayments and other costs?
  • What percentage of the property will be owned by each party?
  • How the proceeds of a property sale should be split?
  • How the property would be valued before being put on sale?

We will work with you to ensure your deed of trust accounts for your situation.

Careful consideration should be given when deciding how to own a property, as depending on how you own the property could have an impact when the property is sold, or if one party were to pass away, it could affect their Estate and the Inheritance Tax due.

For more information, contact our Howell Jones solicitors today.

our lawyers deliver an excellent quality service, independently recognised by The Law Society and our many returning clients.

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