UK Property Conveyancing Guide for Joint Purchasers

Good afternoon everyone – hope you are all ready for the weekend. I decided that you needed some good edifying reading during your leisure time so set out below information relating to a poorly covered area of law by many firms of solicitors and property lawyers and that is in regard to property that is or will be jointly owned whether it be a House flat apartment or maisonette.

The legal term used for the way of jointly owning property includes the word “tenant” which simply means owner.

When two or more people (limited to a maximum of four) buy property together in England or Wales, they have to decide how they are going to “hold” the property. There are two ways in which property can be held where it is intended that the buyers alone are to have the benefit of the property and the right to share in the proceeds of sale when, it comes to be sold. If it is intended that some third party will also share in the property then a special document will need to be prepared in addition to any deed entered into between the buyers.

It is possible to change the way in which property is held, at some time in the future however; you will avoid the need for further expense if the choice, which you make at the outset, is the right one. It is appreciated that changes in circumstances might dictate the need to change this at some time in the future, in which case consult a specialist property lawyer.

The main difference between Joint Tenants and Tenants in Common is that Tenants in Common may leave their respective shares in the property by will to someone other than their co-owner(s) when they die; in the absence of a will the share will pass to a member of the deceased tenants family in accordance with the rules of intestacy, in this case it is particularly important that you make a will at the earliest opportunity following your purchase of the property


TENANTS IN COMMON: All parties will still have legal interests in the property and all parties will need to sign the sale documents before the property can be sold. However, instead of you all owning the whole of the property, the value of the property will be divided between you. You may agree to have the property in equal shares, even if one of you is paying more than the other(s) towards the running or purchase of the property. Alternatively, if you are not making equal contributions to the property, you can decide to own the property in unequal shares so that if it is sold the sale money will be divided in the shares you agree now. On the death of any of you and the property is sold, the proceeds will be shared in the agreed proportions between the remaining owner(s) and the estate of the deceased party.

If you choose to hold property as Tenants in Common you may do so either in equal or unequal shares. So for example, where one person has paid 75% of the purchase price and the other just 25%, they may agree that their respective shareholding in the property will reflect that imbalance. If you are considering holding the property in this way, be sure to take into account the value of the mortgage repayments and other outgoings in respect of the property; if it is intended that these will be paid equally, you might consider that it will be fairer for these to be taken into account when assessing the entitlement to the share in any profit which may be made, or loss incurred, when the property comes to be sold. You are advised that the Courts may have the power to override any arrangement where it appears to them that it does not fairly reflect the amount contributed by either party.

Tenants in Common is often seen as being the right choice for people who are embarking upon a new relationship together or where either party wants to ensure that children from a previous relationship should inherit their share in the property.

Subsequent changes in your circumstances which make it desirable to change Tenants in Common into Joint Tenants (where all Tenants agree) can be dealt with by a specialist property lawyer.

JOINT TENANTS: All parties will hold together the whole of the property as one legal person and are each entitled to an equal, undivided right in the property and its proceeds of sale and any liabilities arising out of its ownership. If the property is sold the transfer deed will have to be signed by all of you in order to be valid. The money arising from the sale of the property will be paid to all of you as one sum, or as you may request. If one of you dies, the remaining owner(s) automatically becomes the owner(s) of the property entitled to deal with it as they please and if sold, will receive all of the sale money.
This is the most common way in which property is held, particularly by married couples and those who are in a long-standing stable relationship and where both/all parties are to contribute, whether financially or otherwise, to the cost and expense either of buying the property or of maintaining and repairing it and/or paying a contribution towards the mortgage repayments.

Property held in this way can only be sold by consent of all the joint tenants. If there is a change in circumstances which results in one joint tenant wishing to sell and the other(s) refuse(s) to do so, it will be necessary, at that stage, to “sever” the joint tenancy in order to convert to a tenancy in common. Whereby the person wishing to sell can, ultimately compel his/her co-owner(s) to join in the sale. If these circumstances ever arise, it is important to contact a specialist property lawyer at the earliest opportunity.

GENERALLY: It is usual for Married couples to hold as Joint Tenants. They may wish to consider owning the property as Tenants in Common where they are wealthy and undertaking a series of tax planning measures. There are occasions when it is prudent for only one of a married couple to own a property either for tax planning or, where one spouse may face unlimited personal liability for example is a partner in a business or has given personal guarantees for the liabilities of a Limited Company. It may also be advisable to do this where one party buys a property out of assets owned prior to marriage or commencement of the current relationship.

Where the parties are not married they usually hold as Tenants in Common – either equally or in the shares that they agree (which normally relates to their contribution to the property price). If you hold as Tenants in Common it is important that you have a separate trust deed specifying the respective financial responsibilities and shares in the property. A specialist property lawyer can advise you regarding this deed. If any party were to die while a Tenant in Common their share in the property will form part of their estate – it will not pass automatically to their co-owner(s). Therefore, if you hold as Tenants in Common you must now consider making a will, or review your existing will where again a specialist lawyer can help you.

PLEASE NOTE: The decision you make need not be final in that you can change your mind after completion of a purchase if circumstances change. Changes in circumstances prior to completion of a purchase may interfere with the strict timescales laid down for the preparation of the purchase documents and may also affect your mortgage offer (if any). It may also result in your breaching the obligations to complete on the completion day. This will result in heavy penalties and therefore if you have any concerns you are advised discuss this with a specialist property lawyer before exchange of Contracts.

Where it is intended that four or more persons are to have a share in the property please consult a specialist property lawyer as soon as possible to enable the appropriate deed to be prepared to meet those particular circumstances.

I am sorry that this is such a long post however the subject is very important so if you have any concerns please contact me.

Hope you have a great weekend . See you next week


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