In whose name should you put the house?
These days, it’s scary enough even trying to get your foot on the property ladder, let alone dealing with the necessary legal paperwork that results if you’re successful.
But, if you’re buying your house with your partner, it pays to give some careful thought to whose name should be registered as owner.
Property held in joint names can be held in one of two ways, with significant differences for each. These are as follows:-
Beneficial Joint Tenants
- This is where the joint owners (which may mean more than two) are all equally entitled to the property.
- When one of the owners dies, that person’s interest in the property passes automatically to the surviving owner( s ). If, therefore, there are two joint owners and one of them dies, the other becomes solely entitled to the property.
- A Joint Tenant cannot use their Will to choose to whom they want their “share” of the property to pass – it must pass to the surviving owners.
- Do not be confused by the term “tenant” – this has nothing to do with tenants in the ordinary meaning of the word.
Beneficial Tenants in Common
- Under this arrangement the property is held by the joint owners in specific proportions, which may or may not be equal. There might for example, be two owners each owning a half interest in the property, or three owners having a 20%, 40% and 40 % share respectively.
- If one of the joint owners dies, that person’s interest does NOT pass automatically to the surviving joint owners, but would form part of his/her estate and will pass according to that person’s Will or under the rules of intestacy.
- A joint owner could, therefore, make a Will leaving his/her share to the other owner(s) or leaving it to someone else altogether.
- When the property is held in this way, it is essential to have a declaration of Trust, either in the deeds or separately, which states the proportions owned by each of the joint owners.
What happens if we choose to own as joint tenants and then change our minds
at a later date?
When buying a property in joint names, you’ll need to decide whether the property should be held as Joint Tenants or as Tenants in Common. However, this decision need not be permanent as it is possible to change from one form of ownership to the other.
What if we disagree about making a change?
To change a joint tenancy to the status of tenants in common does not require the consent of the other joint owner(s). One person can instigate it and the other(s) do not have to agree for it to be effective.
So when should we choose a joint tenancy?
You should not own a property as joint tenants unless you are agreed that you all want equal shares in its value AND are happy for your share on your death to pass automatically to the other joint owners.
And what do we need to consider if we want to be Tenants in Common?
If you want to hold the property as Tenants in Common (usually because you own unequal interests in the property or there are tax reasons) but you still want the surviving owner(s) to inherit your interest in the property on your death, you need to make provision for this in the terms of your Will.
Does it make any difference if we are married?
If you are married and registered as joint owners, it’s important to note that should you get divorced, the court can make a Property Adjustment Order. In these circumstances, your legal ownership of the property is not the deciding factor when the Court looks at who should have what.
The Court also has the power on the application of a parent to transfer the property or settle the property for the benefit of the child of that parent. This applies whether or not the parents are married. In such cases, as on divorce, legal ownership of’ the property is not necessarily the deciding factor.
Sounds pretty complicated…
There could be significant personal and/or tax implications behind your choice of ownership so you should always consult with a specialist conveyancing solicitor at the time of your purchase.
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