I met with some clients recently; a young couple buying their first property and excited at the prospect of sharing a home together rather than living with parents. Let’s face it, these days it is really quite an achievement for a young couple to buy their own home – some are lucky enough to benefit from the “bank of mum and dad” with a gifted deposit, but for many, their first house purchase can only come after many years of saving.
As we discussed their transaction, the conversation turned to joint ownership. I explained that, as an unmarried couple, it was particularly important that they give careful consideration to how they would hold the property. Whilst we shared a laugh at how unromantic it was to consider what would happen if their relationship broke down, they agreed that now was the time to look at their financial contributions to the purchase and to set out in clear terms their respective ‘shares’ in their home.
There are two forms of joint ownership – joint tenants and tenants in common. Holding a property as joint tenants means that co-owners are automatically treated as having an equal interest in the property. It is a little like saying “what’s mine is yours and yours is mine”.
Another important aspect to a joint tenancy is that in the event of the death of one of the co-owners, the property automatically passes to the other owner. Married couples often choose to register their ownership of property as joint tenants. There are circumstances where this is not appropriate but one can see the benefits of this type of ownership for couples who have embarked on a shared life together with pooled financial assets.
The lack of legislation governing the division of finances for unmarried couples is one of the reasons why I had to stress to my clients the particular importance of their joint ownership decision. Without a clear understanding of their shares in the property this can result in a division of assets that one or both of them might consider unfair in the event of a break-up.
In this couple’s case, one of them was putting in considerably more to the purchase price and both of them wanted this to be recognised. The other had a child from a previous relationship and wanted to provide for that child in their Will. Clearly a joint tenancy was not the option for them and they decided to register their purchase as tenants in common.
Tenants in common means that you hold your property in agreed shares that are set out on the land registry transfer deed. As a tenancy in common means that each owner’s share passes with their estate in the event of death, it is essential that those holding property in this way have Wills providing for their share to pass to their chosen beneficiaries and also that they give consideration to the position of their co-owner in those circumstances.
I have made reference to couples but, of course, co-owners can be business partners, relatives or friends. Every property purchase will have its own unique set of circumstances and so it is important that purchasers are provided with the necessary advice they need to make this decision. The property solicitors and conveyancers at Stone Rowe Brewer recognise this is a key element to a joint purchase.
We provide detailed advice and support to assist co-owners in making the decision that is right for them. Wills are dealt with by the Private Client Department at our Twickenham office who have a number of experienced solicitors who specialise in that area and who can ensure that each purchaser has a Will in place which supports their choice of ownership.
For more information, please contact Lisa by calling 020 8977 8621 or e-mail her at email@example.com