Shared Ownership of Property
Owning a Property Jointly
When two or more people are purchasing a property the property will be registered in the joint names. However, a further very important distinction must be made as to which kind of ownership they have. The differences between how the property is held are crucial in relation to what happens if the owners separate or one of the owners dies.
There are two ways of owning property jointly - Joint Tenants or Tenants in Common
1. Joint Tenants
The owners are treated as having equal interests in the property. If Joint Tenants decide to separate and the property is sold the net sale proceeds will be split equally between the owners regardless of whether or not the owners all contributed equal amounts towards the purchase cost or have all made equal contributions towards any mortgage payments or general household running costs and maintenance.
The property is owned on the basis that if one owner dies their share will pass to the other owner or owners. Therefore a deceased owner can not leave their share under a Will.
If there are two or more owners the one surviving becomes the sole and absolute owner of the property.
This method is usually chosen by husband and wife joint owners.
2. Tenants in Common
The owners agree at the outset what their shares in the property will be whether the split be equally or otherwise.
When one of the owners dies their share will pass in accordance with the provisions of their Will, or if there is no Will, according to the Rules of Intestacy. Therefore the survivor will not automatically become the sole and absolute owner of the property (although they would if the deceased's Will leaves the deceased's share to the survivor or the survivor is the person entitled to the share according to the Rules of Intestacy)
We would normally recommend this method in cases of legal partnerships or where unmarried couples buy together.
If the shares in the property are not equal we would strongly recommend that the buyers declare the shares in a Trust Deed to ensure that there is no dispute in the future.
It is quite easy to convert Joint Tenants to Tenants in Common (and vice versa) at a later stage if the owners' situation has changed.
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