The joint ownership decision

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“Looking after number one” doesn’t sound a very friendly approach when you are buying a house or flat together particularly when you are starting out making a commitment to each other.

It’s fine if you are jointly buying a property as a married couple as there is detailed matrimonial law which enables the court to order who gets what in the event of a divorce if you cannot agree between you on the timing and division of the proceeds of sale.

But what if you are buying together but not married? Short answer:  you’re on your own. Not quite true because the court will make an order for sale and how the proceeds of sale are divided, but each case is unique on its own facts which always raises uncertainty as to the eventual outcome. Who wants the stress and cost of a court case?

So here are a few pointers on the two forms of joint ownership under English law:

(a   “A joint tenancy” is where owners purchase a property in undivided shares. In the event of the death of one the survivor automatically inherits the property whatever is in the deceased owner’s Will.

(b   “A  tenancy in common” is where each owner has agreed with the other what share in the property they will own whether it be on a 50:50 basis or 99:1 or anything in between.

This form of ownership is common between say business partners who buy a commercial property between them. A tenancy in common is very likely to be the best way unmarried owners purchase property together to avoid a legal dispute if separation takes place or one subsequently dies. It is important therefore to make a will in order to dispose of your joint ownership share.

Whilst therefore a discussion between domestic partners on the merits of whatever form of joint ownership is right for you may not sound romantic, it’s certainly the best way of avoiding arguments which at worse could lead to a court case.

Take some examples. What if a couple married or otherwise but each with grown up children buy a property together as joint tenants? If one of them dies the survivor will inherit the deceased owner’s share leaving the deceased owner’s children without anything from the property. Another possible example of the outcome of a joint tenancy is where a married couple own a property and on say the wife’s death the property passes to the husband in its entirety. The husband would then own the whole of the property which could be subject to a claim for future care home fees. If, however, the property had been held as tenants in common the wife’s share of the home would be protected.

A solicitor will tell you the importance of making a declaration of trust defining how you will own your property when you purchase it. In simple cases this could be in the Land Registry transfer where legal ownership passes to you as buyers. However in more complex cases, e.g. unequal deposits or different contributions to the mortgage payments or repairs, it is worth incurring the relatively small expense of having a detailed declaration of trust drawn up to avoid the possibility of an acrimonious and expensive argument at a later date.

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