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A Simple Guide to Property Ownership Options When Buying With Your Partner or a Friend
What are Joint Tenants?
Holding the property as joint tenants means that each person has an equal interest in the property. If one of you died, the survivor would automatically own the whole (100%) of the property.
What are Tenants in Common (equal shares)?
Holding the property as tenants in common, in equal shares, mean that you each own 50% of the property. If one of you died, your 50% share of the property would be left to whomever you choose under your Will. You may wish to consider this option if you are both contributing equally to purchasing your property but wish to decide who your 50% share is left to.
What are Tenants in Common (unequal shares)?
Holding the property as tenants in common, in unequal shares, means that you hold the property in anything other than 50/50 shares. It could be 60/40, 80/20 or even 99/1. You may wish to consider this option if you are contributing different amounts to purchase your property. Should you decide to hold your property as tenants in common with unequal shares, you should consider making a Declaration of Trust providing for more detail as to options on disposing of your share and contributions to property expenses.
Does This Affect Our Mortgage?
No, it does not matter how you hold your property when it comes to your mortgage. You are both jointly and individually responsible, meaning that you are not just liable for ‘your half’ of the mortgage.
Can We Change Our Minds Once the Property is Registered?
Joint Tenants to Tenants in Common: this is done by way of severance of joint tenancy. You can do this by yourself, or by appointing a Solicitor.
Tenants in Common to Joint Tenants: to do this, you both need to agree to the change. The documentation is more complicated. You should appoint a Solicitor to assist with this.
What is a Declaration of Trust?
In simple terms, it is a legally binding document that sets out the underlying ownership between the property owners. It can be drafted to suit your required needs, but it will mainly outline how much of the property you each own, the amount each person has contributed to the purchase, and the procedures for selling or transferring ownership. The existence of the Trust will need to be registered with HMRC and the Land Registry. To find out more, please contact our Private Wealth & Tax team who can assist.
If you have any queries about the contents of this article, please contact our Residential Real Estate team via the form below.
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Does EU Law Still Apply To My Estate?
The EU Succession Regulation more commonly known as the Brussels IV (the Regulation) came into force in 2015. The main objective of the Regulation is to simplify cross-border estates and succession planning which is particularly important with more geographic mobility in the world today than ever before.
Position prior to the Regulation
Prior to the introduction of the Regulation, if an individual had connections to the UK and more than one EU member state, each state had its own rules to determine which court had jurisdiction. This in turn lead to uncertainty and complications in the estate administration.
Position after the Regulation
The key provision of the Regulation is that the court in which the deceased died habitually resident have jurisdiction in succession matters. The Regulation also does not distinguish between property that is movable or immovable.
The default position under the Regulation may, however, be overridden in two circumstances:
- Habitual residence can be displaced by an election made in an individual’s Will for the law of their nationality to apply; or
- The individual is manifestly more closely connected with another jurisdiction at the date of their death.
For example, if an individual is habitually resident in a jurisdiction subject to the Regulation, but their Will contains an election for English law to apply to their estate as this is their nationality, this could effectively apply English law to their estate across not just the UK but also other member states in which they hold assets.
How does an EU regulation effect the UK?
Despite the UK not being part of the EU, the Regulation is important for individuals who have assets and connections to the UK and an EU Member State.
In 2015, the UK was one of the few Member States to opt out of the Regulation and considered a “third state”. Practically, this means that whilst the UK is not bound by the Regulation or subject to its application, it does affect the way in which conflict of law rules in the UK interact with the EU Member States where the Regulation does apply.
It is important to add that there has been no change in how the Regulation affects the UK since Brexit.
The importance of making an election and a practical example
Rose is a UK national, who has lived in Spain for the last 15 years. She still has a property in the UK that her husband lives in, but they are separated, and she has two estranged children she has not seen for 20 years. Spain has forced heirship rules and Rose does not wish for her children or husband to benefit from her estate and instead wishes for her estate to pass to her nephews.
Rose could therefore put in place a worldwide Will that includes an election for the law of her nationality to apply to the succession of her estate therefore disapplying forced heirship. She would therefore have testamentary freedom under English law to leave her estate to her nephews regardless of the fact she is habitually resident in Spain.
A nationality election also gives greater certainty than relying on habitual residence as a default. This is particularly relevant for internationally mobile individuals who move around regularly therefore meaning that their habitual residence is changing constantly. By electing for the law of their nationality to apply to their estate, this gives them certainty of the succession of their estate in relation to their assets within the EU. Rose in this circumstance would therefore also have certainty that this will remain the position even if she moves in the future.
If you have any queries relating to cross-border estate planning, please contact Ben Rosen or Eleanor Catling at Quastels LLP.
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Your Home, Your Risk: Why Legal Contracts Matter on Renovations
What value do you place on your home?
Your home is one of the largest investments you will make. In almost all cases, it is your most important asset not just because of its capital value, but because it’s your home and hopefully a sanctuary. Yet so many of us neglect its importance when arranging for works to be undertaken to it.
It is exciting to be improving or extending your home. However, without proper planning and legal safeguards, home improvement projects very often spiral into dispute, financial loss, and even damage to your most valuable asset.
How can you protect yourself?
- Contractor selection – Select your contractors and professionals very carefully.
- Defined works – Be very clear about what is and what is not included.
- Insurance – Make sure the contractor is adequately insured.
- Contract – Have the contractors and advisers enter into a formal contract.
Selecting a Contractor
Just a few of the many considerations include:
- Where possible, obtaining a personal recommendation, and attending previous jobs and speak to the contractor’s client;
- Checking the contractor’s financial solvency; and
- Ensuring the contractor is adequately insured.
Defining the Works
Make sure that all the works you are instructing to be carried out are clearly defined, and that you specify to what standard these must be completed.
Insuring the Works
Even on small jobs, things can do drastically wrong – a nail through the wrong wall could mean a pipe bursting and flooding your home and any adjoining properties, or faulty wiring could result in fire damage to your property and contents. Standard home insurance will not cover any ongoing works, and you should ensure that your contractor (a) is adequately insured to cover these risks and (b) takes responsibility for such damage by means of a formal contract.
A Formal Contract
The best step you can take to protect yourself is put a proper building contract in place at the outset. A well-drafted contract does more than just describe the works to be carried out – it manages your risk, defines responsibilities, and provides legal recourse if something goes wrong.
Many homeowners assume that standard or unamended forms of agreement offer sufficient protection. In reality, these agreements are inherently contractor-friendly and leave homeowners exposed.
Why do you need a contract?
Without appropriate contractual protection, you may be exposed to serious risks which can affect your ability to live in, sell, or borrow against your home. For example:
1. Defective works
Statutory construction obligations are unlikely to protect you from the full extent of any damage and financial losses you might suffer as a result of poor workmanship. And even where they do, contractors routinely seek to limit your ability to recover losses by inserting onerous limitation clauses into construction forms. Even where you believe you are “covered,” you may find you cannot recoup your losses in practice.
2. Legal and Regulatory Consequences
If works are completed without the necessary approvals or certificates (e.g. building control sign-off or listed building consent), you may be in breach of legal obligations or planning conditions. Standard forms of contract tend to place the burden of complying with these on you, rather than on the contractor. This can cause problems years down the line. Solicitors acting for prospective buyers will raise enquiries about the works, and any gaps in paperwork will come to light.
3. Impact on Property Value and Mortgageability
Failure to complete your project in compliance with your mortgage terms could reduce a valuation of your home – or worse, lose you your mortgage. Mortgage lenders can refuse to lend against properties with unresolved building issues or works which have not been signed off. If you need to refinance or a buyer needs a mortgage, the transaction could fall through.
4. Inadequate Insurance and Uninsured Works
Standard, unamended building contracts often contain minimal insurance provisions, offering little or no protection against professional negligence, leaving you exposed if things go wrong. The risks of professional negligence are real and potentially devastating, as seen in tragic cases like Grenfell Tower.
Your home insurance should be carefully considered to establish if it covers the works, but worse, could also be in jeopardy. Many homeowners are also unaware that their standard buildings insurance policy will almost certainly not cover construction works, and that these need to be insured separately. Failure to notify your insurers or ensure the works are completed in accordance with their requirements could also invalidate your cover.
Your contract, if well drafted, can provide critical protection, allowing you to recover losses arising from negligent or defective works for up to 12 years after completion.
5. Breaching your Leasehold Terms
Leaseholders face heightened risk, as they must comply not only with general legal obligations but also with general legal obligations but also with the specific terms of their lease. Unauthorised works can amount to a breach, exposing the leaseholder to enforcement action or even forfeiture.
Even when works are authorised, problems can arise if the building contract doesn’t require the contractor to comply with the terms of the lease or any licence for alterations. Breach of those terms, however inadvertent, remains the leaseholder’s responsibility. Crucially, you are unlikely to recover losses from the contractor, who is not bound by your lease or licence as they are not a party to that agreement.
Get in touch with our Construction Team
Our specialist Construction Team is experienced in identifying and addressing risks before problems arise. We offer cost-effective, tailored contracts that help safeguard your home and your finances, giving you peace of mind.
Making this small investment now could save you significant time, stress, and expense later – potentially avoiding costly litigation. Get in touch to find out how we can help.
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