Purchasing property is one of the most high-value purchases that you are likely to make. While it's an exciting venture, there are many legal issues to navigate, and you'll want to protect your finances and interests.
For many people, purchasing a property alone presents a real financial challenge. Co-owning a property allows friends, couples, or family members to purchase homes together, combining their income and increasing their mortgage options.
If you're considering purchasing a property with friends or a partner, you're probably wondering what your options are. In this article, we'll explore the key aspects and considerations of joint property ownership.
What does joint ownership of a property mean?
Joint ownership allows between two and four individuals to purchase a property together, owning equal or different shares depending on the circumstances. It's a viable option for couples, groups of friends, or parents who like to help their children get on the property ladder.
What are the different types of joint property ownership
When you opt for joint ownership of a property, there are two different types of joint property ownership:
Joint tenants
Joint tenants mean that all tenants have equal rights over the entire property. If one of the tenants passes away, the property is automatically transferred to the other tenant(s). Due to this, it is not possible for one tenant to leave their share of the property to another person as part of their Will. This is known as the right of survivorship.
Both tenants own the property together. Regardless of financial contribution, it is not possible to own unequal shares of the property.
Tenants in common
When two or more individuals are tenants in common the tenants can purchase different shares of the property. For instance, one tenant might own a larger share than another.
Under this type of ownership, the property is not automatically transferred to the other tenants if one tenant passes away. Tenants are permitted to include their share of a property as part of their Will. A tenant might decide that their share will be transferred to their children when they pass away. No rights of survivorship applies with tenants in common.
If you own a property as tenants in common, each owner has a specific share of the property. This is generally a 50% share each. However, it is possible to own unequal shares.
What are the benefits of joint property ownership?
One of the key benefits of joint property ownership is that the individuals can combine their salaries to improve their loan eligibility. Banks are more likely to approve a larger loan when the combined income is higher.
Co-owners have opportunities to claim tax deductions, whereas individuals cannot access multiple tax benefits on one loan. Overall, joint ownership provides an easier way to get on the property ladder compared to sole ownership of a home.
What are my rights if I own half a property?
If you co-own a property as a joint tenant, you do not have the right to leave your share of the property in your Will. According to the terms of the agreement, your share is automatically transferred to the other tenant. If you co-own a property as tenants in common, you have the right to leave your share of the property as part of your Will.
If your co-owner wishes to sell the property, and you do not agree to the sale, you may buy their share and access full ownership. Where this option is not financially viable, the other tenant will not be able to sell without your permission.
Under these circumstances, the other tenant may apply for a Court order to force the sale. If this happens, you have the right to access legal support to appeal the sale of the property.
If you're a joint tenant, you have the right to sever your tenancy, meaning to change it to tenants in common. You do not need the permission of the other tenant to do so.
What is a Deed of Trust?
A Deed of Trust refers to a legally binding document which outlines the division of property ownership. Where tenants in common have purchased different shares of the property, these amounts are established in the Deed of Trust or the Declaration of Trust.
It's vital that this type of information is outlined in the Deed of Trust, to avoid disputes later down the line. In some scenarios, it's not possible to put every person's name on the Land Registry deeds, and so a Deed of Trust can also be useful to verify someone's ownership.
If you're considering joint ownership of a house, it's advisable to establish a Deed of Trust, whether you are tenants in common or joint tenants. When buying a property with your partner, a Deed of Trust can help you to protect your legal interests.
How do you sell a joint ownership property?
In theory, to sell a jointly owned property, all tenants must be in agreement about the sale. Where this is the case, the sale process should be relatively straightforward, and your conveyancing solicitor can support you.
If you own joint property and you wish to sell you must first gain the permission of the other tenants. This is the case for both joint tenants and tenants in common.
Whereby one of the tenants does not agree to the sale the tenant who does wish to sell will need to obtain a Court order to sell.
Can a joint owner of a property force a sale?
Yes, if one party wishes to sell but the other does not, you can force the sale of the property. To do so, you'll first need to contact a solicitor. A property lawyer will be able to offer the legal advice you need and support you in completing an N208 form to begin the process.
The tenants who do not agree to the sale may choose to oppose the order. In this situation, both parties should receive independent legal assistance.
Can I sell my half of a jointly owned house?
Joint ownership of a house includes different legal rights depending on the circumstances. If you are a joint tenant, this means that each person owns the entire property. Neither is allocated a specific share, and so the tenants cannot sell their part of the property.
Both joint tenants and tenants in common can agree to sell their property together; however, neither can sell their share independently. Where the parties do not agree the only option is for one tenant to attempt to force the sale.
Is it best to be joint tenants or tenants in common?
The decision on whether to be joint tenants or tenants in common depends on your circumstances. Purchasing a property as joint tenants is a great option for couples who would like to transfer the property to their partner when they pass away.
A tenancy in common agreement is perfect for those who'd like to purchase a property with friends or a partner, yet they'd like to leave their share of the property to another person when they pass away. For many people, purchasing a property as tenants in common offers a more flexible option.
If you are joint tenants, you can sever the tenancy, changing it to tenants in common, without the permission of the other tenant.
Why would you change from joint tenants to tenants in common?
There are a few different reasons that you might change from joint tenants to tenants in common, including:
- You'd like the option to leave your property to someone other than your partner when you pass way
- You'd like the option to own specific shares of the property (including unequal shares)
- Changing to tenants in common can offer tax advantages
How do you resolve joint property ownership disputes?
Joint ownership of a property may result in a number of different disputes. If you're having a dispute with a co-owner, you'll need to seek legal advice. A solicitor will be able to guide you to resolve your dispute using amicable processes, for example, mediation.
Mediation may not be appropriate in all circumstances, particularly if there is tension or conflict between separating couples. In this situation, a residential property disputes lawyer will be able to provide you with alternative options.
What are the risks of joint property ownership?
When purchasing property as a co-owner there is always the risk that the relationship between the tenants could break down. This is a particular concern if the tenants are a couple or married.
If the relationship ends, it can be difficult to determine what should happen to the property and how to divide it. In this situation, it's important that both involved parties receive independent legal advice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.