More and more people are choosing to own property jointly, not just with partners, but also with siblings, parents or even friends.  It can seem like the perfect solution – pool your resources, making it much easier to raise an acceptable deposit.

But buying a house with someone else is not always straightforward, even if that person is the one with whom you have chosen to spend the rest of your life, as well as your cash.

Legally, there are two ways in which joint owners can hold a property: as Joint Tenants, or as Tenants in Common.

Joint Tenants

Joint Tenants will always hold an equal share in the property.  In the event that one of them dies, the property will automatically vest in the surviving owner(s), and if more than one, in equal shares.  This is the form of joint ownership most commonly seen with married couples.

Tenants in Common

Tenants in Common can hold a property in whatever shares they like.  Each share is held separately, and in the event that one of the owners holding as tenants in common dies, that person’s share then passes according to their will (or under the rules of intestacy, if they have not made a will).

It is therefore crucial that each party owning a property as tenants in common has a valid will in place dealing with their share in the property in the event of their death, regardless of the size of each person’s share.

Tenancy in Common is often used by unmarried joint owners, even if they are each holding an equal share.  For example, siblings, or parent and child owners.  It can also be used if one party specifically wishes to leave their share to someone else, e.g. a child, rather than the joint owner.  This is especially pertinent for those couples who may have children from a previous relationship that they wish to protect and provide for.

In the absence of any evidence to the contrary, the assumption is that each joint owner holds an equal share in the property, whether Joint Tenants or Tenants in Common.  However, if one of you is putting down a greater share of the deposit, or if only one of you will actually be paying the monthly mortgage payments, then an even split of the proceeds when the house is eventually sold may not be appropriate.

These issues can be dealt with by a simple Declaration of Trust.  This can be prepared quickly and easily, and can help to avoid potential problems in years to come.  A Declaration of Trust is designed to reflect the shares that each party owns in the property, based upon the contributions each made to the deposit.  It can also reflect who will be responsible for the mortgage payments, and other outgoings relating to the property.

Any Declaration of Trust should be reviewed regularly, to ensure that it still accurately reflects the intentions and wishes of all parties, as shares can change if, e.g., one party subsequently spends more cash on improvements to a property.

If you would like advice in relation to joint ownership or any other property law matters please contact Steven McMaster.