Ashfords Solicitors - Are you living together and buying a property?

Please think before you buy, as living and sharing together can sometimes give rise to problems in the future. However, this can be avoided.

Consider the following:-

Example

Jack and Jill are very much in love, and have found their ideal property at the top of a hill, which they want to buy and live in together. The price is £200,000. They can afford a mortgage of £130,000. Jack's Dad agrees to give his son £15,000 towards the purchase, and Jill puts in £55,000 inherited from her Granny. They buy as Joint Tenants. Five years later, Jill is fed up with carrying the shopping up the hill, is finding Jack a pain, and wants to sell the house, take her money and start again. She is devastated to find that she cannot have back the whole of her Granny's inheritance.

Before Jack and Jill can sell the house, Jack falls down the hill one morning and dies. Jack's Dad is horrified to find that every penny in the house will now go to Jill.

Solution

If Jack and Jill had bought their property as Tenants in Common and made a Declaration of Trust, Jack would have had a 40% share in the property and Jill a 60% share. Everyone's interests would have been protected.

1) Owning your property

Under English Law you can own a property in one name alone (sole ownership) or in 2 or more names (joint ownership).

Under joint ownership you must decide how you would like the property to be held by the owners. There are 2 alternatives:

Joint Tenants

Here if one of the owners dies, their share passes automatically to the other owner(s).

Tenants in Common

Here each owner has a fixed share in the property. If one owner dies, that share is part of their estate, and does not pass automatically to the other owner(s).

If 2 or more of you are buying a property, you will have to decide how you want to own the property. If one of you is putting in additional money, you should consider buying as Tenants in Common, and the percentage share that each owner will have.

2) Declaration of Trust

If you are going to own as Tenants in Common, you should think about making a Declaration of Trust. This is a simple document which can set out in legal terms the percentage shares in the property, and can also make it clear who is responsible for paying the mortgage, insurance, improvements, bills etc, and what should happen if one of the owners wants to sell their share in the property.

3) Agreements for Couples

If you are going to be living together, and either or both of you already have some money or investments etc. you should think about how you are going to deal with them, or what should happen to them. You can make a simple, signed, agreement between you both setting out what you agree, and this can give you peace of mind and should avoid any disputes later.

If you would like further advice and/or feel a Declaration of Trust or Agreement is the correct course of action for you please inform the legal representative who is dealing with your conveyance in the first instance.

What Cost

For a fixed fee of £200 plus VAT our specialists can prepare a straightforward Declaration of Trust which will protect any money you put into the property. If you require further information please contact Michael Alden on 01392 33 4041.

Alternatively, we can prepare an Agreement to deal with all your savings and money etc. for a fixed fee of £200 plus VAT. If you require further information please contact Rachel Edwards on 01823 23 2303.