Ownership of the Property

When two or more individuals (co-owners) purchase a property, there are two ways in which they can own it. The first is as Joint Tenants and the second is as Tenants in Common. These are technical legal terms and each has important implications.

Joint Tenants

If buyers decide to own a property as Joint Tenants and one dies, the deceased's share in the property automatically passes to the survivor. It makes no difference whether a Will has been made and a joint tenant cannot leave his or her share in the property to anyone other than the co-owner. Where property is purchased as Joint Tenants, each individual is deemed to own an equal share of the property, whether or not they have made a contribution towards the purchase price, the mortgage or other household payments.

Tenants in Common

In this case each individual owns a separate and distinct portion of the value of the property. If one of the co-owners dies, his or her share does not pass automatically to the survivor, but to whoever is nominated in the deceased's Will, or in the absence of a Will, under the intestacy rules.

A Will is essential in these circumstances to ensure that the deceased's share passes in accordance with the deceased's wishes. Even if Tenants in Common are husband and wife, and the intention is for each to inherit the other share on death, if one dies without a Will, it is by no means certain that the surviving spouse will inherit the deceased's share of the property under the intestacy rules.

In order to avoid subsequent disputes, it is advisable to record in writing, in a Declaration of Trust, the proportionate shares of each Tenant in Common. This is particularly important when the parties have paid for the property in unequal shares.

If at a later date the proportions change, for example one party repays the mortgage, then a further Declaration of Trust must be made to redefine the proportions. If the property is sold subsequently, the Declaration will govern the position in relation to the division of the proceeds of the sale, except in the case of divorcing joint owners where the courts will take the Declaration of Trust into account but are not necessarily bound by it.

Note:

This is only a brief outline and for general guidance only. We will be happy to provide specific advice relevant to your individual circumstances.