Introduction

When purchasing a property jointly with another person you should, at an early stage, consider how you wish to own the property. There are two different forms of joint ownership and it is important to choose the right one from the start in accordance with your particular circumstances. The forms of ownership are joint tenants and tenants in common.

Joint Tenants

When you own the property as joint tenants then in the event of a death of one of you the remaining owner or owners receive the deceased's share automatically. For instance, if a husband and wife own a property as beneficial joint tenants and one of them dies then the survivor automatically becomes the sole owner of the property. Therefore in a joint tenancy no one owns a specific and identifiable proportion of the property, each has an interest in the whole.

Joint Tenants operate independently of a will and therefore the automatic transfer on death takes place independent of any Will made by the deceased owner (or by the Laws of Intestacy if a Will had not been made). It is not possible for a joint owner to leave his or her share in the property to anyone other than the joint owner.

Tenants in Common

The situation is the reverse of the above in that if one of the owners dies, that owner can leave his or her share in the property to whomever they wish. Their share in the property will form part of their estate and will be distributed in accordance with their wishes as specified in their Will or under the Laws of Intestacy if no Will has been made.

This method is commonly used where the deposit for the purchase of the property is provided in unequal share as the parties may wish to agree that each party owns distinct identifiable shares in the property. It can also be used where the owners or one of them has been married previously and has children from that marriage or relationship and wishes to leave their share to those children on death. If held as joint tenants then those children would not inherit their share of the property as it would automatically pass to the remaining owner.

Shares can be in any proportion and it is possible to specify that the owners have different shares in the property. For instance if there are two owners and one owner is providing the deposit solely then it can be held 75% for one owner and 25% for the other. Or if four owners each put in an equal share they will then each hold a 25% stake in the property.

There is no automatic transfer on death so if one of the joint owners dies then his or her share does not automatically transfer to the other owner or owners but will be left in accordance with their instructions contained within their will or under the laws of intestacy. Therefore that share can go to a third party.

Tenants in common may be used by a co-habiting couple, more than two owners even by a man and wife.

How to Make the Decision and When to Make the Decision

Making a Will

Where you hold the property as tenants in common it is important to have a valid Will. If you already have a valid Will then this should be reconsidered now and revised if necessary. If you have not made a Will then you must consider making a Will now or before completion of your purchase.

You may decide to hold the property as tenants in common but you may still wish for the joint owner to inherit your share or even to continue to reside in the property following your death. If this is the case then you must stipulate this in your Will. If you have not made a Will then your share will be distributed in accordance with the Law of Intestacy and the joint owner may not inherit and the property may have to be sold.

For further details in connection with the making of a Will or for further advice on how to hold the property then please contact our Wills, Probate and Trusts department by clicking on the Wills & Probate link at the top of the page.

Co-habitation agreement

If you are an unmarried couple then you may wish to enter into a co-habitation agreement which will provide you with peace of mind and security should anything go wrong between you in the future. A co-habitation agreement is a formal document usually drawn up by a solicitor in which you can define your financial relationship with each other.

Therefore it is important in particular when you are buying a home to set out precisely who should own what, who should pay for what and who should get what when you decide to separate and particularly if the property is to be sold in the future.

Although entering into a co-habitation agreement when you are purchasing your first home with your partner may appear daunting and unromantic, we believe that it is best from the outset to have peace of mind instead of quarrelling about financial matters if you do decide to separate in the future.

If you do require further advice in respect of co-habitation agreements then please contact our family department by going onto our family law website by clicking on family law on the menu at the top of the page or contacting us on 01642 252828