If you are considering buying a home with someone else, it’s important to know the difference between the two types of ownership – joint tenants and tenants in common – before you sign any contract.
Property Rights
What type of ownership you have will impact the rights you have over the property. The legal agreement will determine what percentage of the property you own and what happens if you have a relationship breakdown or if one of you dies.
It will also cover things such as one party contributing more to the mortgage and if you’ll need a deed of trust. The Citizens Advice Bureau recommends getting legal advice to decide on the best sort of ownership for your circumstances.
Joint Tenancy
As joint tenants, each party has equal rights to the property. This is typical for married and cohabiting couples.
While no one wants to think about something terrible happening, such as a relationship breakdown, it’s important to understand what happens under a joint tenancy. If you decide to sell, if all parties agree, the proceeds would be shared equally.
If one of the owners dies, the whole property ownership passes to the survivor, regardless of the relationship between them.
Severance of Joint Tenancy
In some instances, if there’s been a change in the relationship for example, you may wish to change from a joint tenancy to a tenancy in common. You’ll need to apply for a severance of joint tenancy and can do this without the other party’s agreement.
A conveyancer, solicitor or another legal executive can act on your behalf. If you need more information about this, a legal firm such as https://www.parachutelaw.co.uk/severance-of-joint-tenancy can help.
Tenancy In Common
Friends who want to share the cost of buying a property are more likely to be tenants in common. This means that each party owns a specific percentage which is set out in a deed of trust. This legal document ensures that each party gets what they paid in, otherwise, it is assumed that the split will be 50-50.