How to avoid the pitfalls of joint property ownership

On behalf of Attwaters Jameson Hill posted on Monday, January 30th, 2017

With property prices remaining high, buying a home with friends or family members can often be a practical way of getting onto the property ladder.

There are plenty of advantages. The deposit will be lower, as will the on-going costs of ownership such as mortgage repayments, council tax and utility bills.

With property prices remaining high, buying a home with friends or family members can often be a practical way of getting onto the property ladder.

There are plenty of advantages. The deposit will be lower, as will the on-going costs of ownership such as mortgage repayments, council tax and utility bills.

However, it’s important to make sure that you have the appropriate legal agreements in place from the outset to avoid problems later on. This means having a discussion with us about what you all want to get out of the venture, how long you plan to live together and what happens if one of you wants to sell their share in the future.

You will also need to get advice on how you hold your share of the property. Legally, there are two types of joint ownership – Joint Tenancy or Tenancy in Common.

Joint Tenants

Married couples or those in civil partnerships tend to hold property as joint tenants, as the property automatically passes to the other on the first death. In a joint tenancy, each person owns the whole property. If one of you dies, the property automatically passes to the other joint tenant(s). No more than four people can own a property as joint tenants at any one time.

Tenants in Common

Unmarried couples, friends, or those who contribute unequal amounts often choose to hold property as tenants in common and own a predetermined share which could be 50/50 but could equally be any other percentage split, depending on how many people are involved and what is agreed between the parties at the outset. If one of you dies, the deceased’s share will not automatically go to the survivor(s). Instead the deceased’s will determines who takes their share; if no will exists, then the laws of intestacy will apply.

Where the contributions are unequal, it’s often considered wise to draw up a Declaration of Trust. This is a document which is legally binding and records how much people have contributed and what their share would be if the property were to be sold. That way, each of you will know from the outset how much of the proceeds you will receive which can avoid future conflict.

Owning a property jointly can be highly beneficial for all involved; talking to us before you embark on the venture will help ensure all parties are happy with the arrangement and that the necessary agreements are in place.

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