Zoe Olender, Conveyancing Solicitor in the FDR Law Stockton Heath office discuses Joint Ownership
Q: I’m buying a house with a friend; do we need additional contracts or paperwork?
A: Yes, when a property is owned by two or more people a decision must be made as to how the ‘beneficial interest’ in the property is to be held.
There are two options; Joint Tenants or Tenants in Common.
As Joint Tenants neither owner has their own share in the property and they simply own the whole property jointly and the ‘Right of Survivorship’ applies so that on the death of the first owner, the property automatically passes to the survivor(s).
As Tenants in Common each owner has their own share in the property, either an equal share or as agreed. The Right of Survivorship does not apply to Tenants in Common and each owner can leave their share of the property to a third party in their Will.
Tenants in Common is a popular choice when parties have contributed unequally to the purchase price or have children from previous relationships that they wish to benefit. If you purchase a property as Joint Tenants but later wish to change to Tenants in Common, it is possible to ‘sever’ the Joint Tenancy and create a Tenancy in Common.
If a property is held as Tenants in Common, parties quite often also have a Declaration of Trust which records the terms upon which they hold the property and what is to happen in the event of a future sale. For example, one party may receive the first £20,000 of the net sale proceeds (being the deposit which they paid) with the remainder of the net sale proceeds being divided equally.
Your Conveyancing Solicitor will be able to advise you on the right route for your circumstances.