Buying a property with another person? Then this article is a must read!
To speak to a legal expert about buying property with friends, call 01271 343457 today.
When buying a property with another person you will be asked if you wish to purchase the property as "joint tenants" or "tenants in common".
What is the difference?
Where property is held as "joint tenants", and one co-owner dies, then the property automatically passes to the survivor of them and that person will become the sole owner, irrespective of what is stated in the deceased's Will.
Where the property is held as "tenants in common", each party has their own distinct share in the property. This may be in equal shares or unequal shares. When a co-owner of a property held as tenants in common dies, his/her share will pass in accordance with the terms of their Will.
There are many reasons why you may wish to own a property as tenants in common. For example, you may be putting in a larger sum of money towards the purchase of the property (or assisting someone else to purchase a property, such as your children) and want to protect your interest in it in the event the property is sold. Or you may not want your share of the property to pass to the co-owner on your death, but to someone else such as your children or your children from a previous marriage.
Where the property is held as tenants in common the shares as to what each party owns are recorded in a legal document known as a "Declaration of Trust".
What happens if I don't have Declaration of Trust?
Disputes can arise where for example a relationship breaks down and there is then an argument as to division of the proceeds of sale. This can lead to lengthy and costly legal proceedings.
If you are about to purchase a property and would like to draw up a Declaration of Trust, or if you hold your property as joint tenants but would now like to hold the property as tenants in common, then contact one of our private client team who would be happy to assist you.