Home truths

PUBLISHED: 06:46 23 June 2014

Two Women On Sofa With Hot Drink In New Home

Two Women On Sofa With Hot Drink In New Home


Whenever people buy a property jointly with someone else, a trust of land is created and it is important to ensure that the property is held in such a way so that on any future sale, or in the event of the death of one of the owners, the sale proceeds are divided as the parties intend.

There are two ways of owning land jointly. The first is as beneficial joint tenants and the second is as tenants in common.

If you own as beneficial joint tenants then you are each entitled to half of any equity in the property on a sale (being the amount left over once any mortgage is repaid), and, if one of you dies, the property will automatically pass to the surviving joint tenant. However, it is possible to sever a joint tenancy and make it into an equal tenancy in common by serving a notice on your co-owner of your wish to do this at any time. Severance of a joint tenancy can also occur automatically, for instance if a joint owner is declared bankrupt.

If you own as tenants in common, you can choose to own the property either equally or in unequal shares, and on the death of one of you, the share of the deceased will pass according to the Will of the deceased or under the intestacy rules if there is no Will.

It is therefore very important that if you own as a tenant in common that Wills are made by both co-owners to deal with their respective shares, particularly if either one wanted to leave their share to someone else altogether but give their co -owner the right to continue to live in the property.

People should therefore think very carefully how they wish to own their property when buying jointly with another person, especially when one or other of them has received a gifted deposit from another family member such as parents or grandparents, as is very common these days, or if using more of their own savings to put towards the deposit than the other party. This is especially so if they wish to protect their larger deposit in the event of a relationship breakdown in the future.

Your solicitor should ask you about the source of your deposit and how you wish to own the property as part of the conveyancing process. If you wish to protect a greater share of the deposit than you have paid you should say you want to own as tenants in common in unequal shares. You could also ask your solicitor to prepare a separate Declaration of Trust document to record the amount of deposit you have each paid and to agree that you should receive this amount back on a future sale once the mortgage is repaid or that the equity should be divided in unequal proportions. The declaration could also record other agreed terms, such as what would happen if one party wished to sell and the other did not.

Spire Solicitors, 36-40 Prince of Wales Road, Norwich, NR1 1HZ; 01603 677077; www.spiresolicitors.co.uk

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