When you buy a property with someone else, you buy it on trust for the benefit of both of you. Should one or both of you later wish to sell the property, then it must be sold and the proceeds divided depending on how you held the property.
There are two basic ways of holding a property on trust as joint buyers:
If a couple buy a property as joint tenants, then they each jointly own the whole of the property with no divisible share. Upon the death of one, the whole of the property automatically vests in the other. This happens whether the person who died had a Will or not and the content of a Will can have no bearing on it happening. Neither co-owner can leave a share in the property by Will to somebody else. Nevertheless, anyone buying a property to hold it as joint tenants should make a Will in order to determine what would happen to the property in the event that both owners die.
Tenants in Common
If a couple buy a property as tenants in common, then they each take a distinct and separate share in the property. That can be in any proportion from equal half shares (where each owns 50%) to some other division such as 25% for one co-owner and 75% for the other. Upon the death of one co-owner, their share in the property passes to whomever they have nominated in their Will (or to whomever the intestacy rules determine if there is no Will). The surviving co-owner simply retains his or her own share in the property. Only if he or she has been left the deceased co-owner’s share in their Will would they become the sole owner of the whole of the property.
All couples will naturally, and rightly, view their relationship as long-lasting and not give thought to future discord or ‘break-up’. We would however recommend as essential that anyone buying a property to hold as tenants in common enter into a Declaration of Trust.
A Declaration of Trust is a legal document which records how the property was bought, your agreed shares and who is to get what from any future sale or disposition. A Declaration of Trust assists in avoiding future disputes (potentially resulting in costly legal battles), should any unhappy circumstances in the relationship arise at a later stage.
Anyone buying a property to hold it as tenants in common should consider it essential to have a Will as well as a Declaration of Trust in order to ensure that chosen shares in the property pass in accordance with their wishes.
Leigh Duncan Solicitors can assist you in preparing and registering a Declaration of Trust for a fixed fee. Contact us for details.