In England and Wales, when you buy a property with someone else, you either buy as joint tenants or as tenants in common. There are significant differences between the two, and the right option for you will depend on your personal circumstances.
Buying a house as joint tenants
When you buy as joint tenants, you each have a 100% stake in the property’s value. Your ownership is completely equal. This means you must effectively act as a single unit. You must have a joint mortgage, and if you want to sell, both parties must agree.
Joint owners also enjoy something called the ‘right of survivorship’. This is a law that stipulates that when one joint owner dies, the property automatically passes to the remaining joint owner.
Because of the right of survivorship, you cannot leave your share of the property to another beneficiary – even if you make a Will. If you do, the gift will be considered invalid. Instead, your interest in the property is inherited by the other joint owner.
To summarise, buying as joint tenants means that:
· You both own the entire property
· Your ownership is equal
· Your share of the property passes automatically to the surviving owner on your death, and vice versa
Buying a house as tenants in common
When you buy as tenants in common, you each own a specific share of the property. There can be up to four named legal owners. If there are more, you will need to use a trust, whereby trustees hold the property for named beneficiaries.
Shares can be divided in any way you like. For example, if there are four owners, you might each have a 25% share. If there are two owners, one person might have a 60% share and the other a 40% share. Or, it could be an equal 50/50 split.
The right of survivorship does not apply. This means you can leave your share of the property to whomever you wish. You can do this by making a Will. If you do not make a Will, the rules of intestacy will decide who inherits your share.
To summarise, buying as tenants in common means that:
· You each own a specific share of the property
· Your shares can be equal or unequal
· You can leave your share of the property to a beneficiary of your choosing
What should I do?
If you are buying a property with someone else, should you buy as joint tenants or as tenants in common? The answer to this question depends entirely on your personal circumstances.
As a general rule of thumb, those who are buying a property with their spouse or partner tend to buy as joint tenants. On the other hand, those who are buying a property with a friend or relative tend to buy as tenants in common.
However, it is not always so straightforward. While you may be in a loving relationship, you may feel strongly that you want your share of the property to be inherited by someone other than your partner on your death – such as a child from a previous relationship.
Or, you might be concerned that if you die first, your share of the property will form part of your partner’s estate. Your partner can then bequeath it to beneficiaries of their choosing, meaning your loved ones may be accidentally disinherited.
Speak to a solicitor
Therefore, the way in which you buy a property with someone else requires careful deliberation. The issues can be quite complex, especially for those with children from a previous relationship.
If you would like to speak to a legal expert about the matter, please call our Sunderland solicitors on 0191 567 7244. We can explain the implications of buying as joint tenants as opposed to buying as tenants in common, discussing the most suitable option for you.
If you would rather contact us online, email us on info@cooklaw.co.uk and one of our team will be in touch with you shortly.