Joint Tenants or Tenants in Common
Although we naturally hope that people will never ‘split up’ disputes can arise at a later stage as to who is entitled to what from the proceeds of sale of the property. This can result in costly legal proceedings. Therefore, before you have committed yourself to a purchase of a property it is important that you know the various options available as how you can own a property.
This means that if one of the joint owners dies, his/her share of the property (which will be an equal division between the property owners) automatically goes to the surviving owner(s), even if they have made a will which states that the property will pass to someone else. However, it is important to note that the joint tenancy may be converted to a tenancy in common at any time by any one or both parties, in which case, the probability would be that you would then own the property in equal shares.
Tenants in Common:
If you purchase a property as Tenants in Common you will both still be legal owners of the property but in separate shares. The shares you own in the property can relate to the proportions you contribute towards the purchase or as you decide between you. The shares can be equal, e.g., 50% or unequal, e.g., 60/40 or any other percentage/figure. If one of the joint owners dies, his/her share will not automatically pass to the surviving owner(s). Instead, the share will go to whoever they have nominated in their will. If they have not made a will, then the rules of intestacy will determine who inherits the property, which could have an unforeseen impact on the deceased person’s partner, family, and/or dependents. The joint owners should agree the extent of each person’s share of the property, which can be divided in either equal or unequal shares. It is recommended that a separate Declaration of Trust be drafted to reflect your wishes should you choose this option which we can arrange for you, albeit at an additional cost.