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.
