Ownership of the House
If the property is in joint names, it can be owned in one of two ways, as “joint tenants” or “tenants in common”. The difference is that, if you own the property as joint tenants you will each own an undivided share of the property and should the property be sold, you will each have an equal entitlement to the sale proceeds subject to any claims that may exist as a result of divorce or children between you. If one of you dies, the whole property will pass to the survivor automatically, regardless of what is set out in any will and regardless of the amounts contributed by either party to the purchase price or payment of the mortgage.
If you own the property as tenants in common you will each have a defined interest in the sale proceeds subject to any claims that may exist as a result of children between you or upon divorce. Should either of you die the property will not automatically belong to the survivor and the deceased persons share will pass in accordance with a will or the rules of intestacy subject to any claim that may exist under the Inheritance (Provision for Family and Dependants) Act. Your interests could be specified as 50/50 or something else for example reflecting differing contributions.
Where a property is being purchased or transferred into joint names it is really important that all the intended owners understand the various options that are available and the implications and often this will mean that independent legal advice will be recommended. This is particularly important if you are making unequal contributions to the purchase price and wish to protect those contributions or the intended owners are not married to each other. The law in relation to the ownership of property is complicated but unless you are married to each other the starting point is always going to be what the parties intended at the time the property was purchased.
Our family solicitors are specialists in advising in relation to co-ownership issues and can advise people who are in the process of purchasing a property about the available options and advise as to the best way to protect their interests whether that is by way of Declaration of Trust, Nuptial Agreement and/or Cohabitation Agreement.
In the event that your relationship breaks down you should keep in mind the following;
– If you are not sure how your property is owned, we can find out by carrying out a search at the Land Registry.
– If you are married and your property is in your spouse’s sole name, you may need to register your Matrimonial Home Rights with the Land Registry to protect your right of occupation in the event of separation or divorce. If you think your property is in your spouse’s sole name, it is important that you discuss this with us even if you have not yet decided to separate.
– If you are joint tenants and are separating or divorcing, you may wish to consider changing the way in which you own the property. You can do this by serving a simple notice on the other owner. The effect of this is that you will then become tenants in common and will then be able to leave your share of the property to whomever you chose in your will. Please note, however, that if one party to a marriage dies without making provision in their will for the other, in some circumstances the surviving spouse may be able to make a claim to the Court under the Inheritance (Provision for Family and Dependants) Act 1975 for financial provision, challenging the other’s will.
The disadvantage in altering how a property is held is that, should anything subsequently happen to your spouse, you would not automatically inherit their share of the property. Advice before any action is taken is, therefore, always essential.
If the property is in joint names, it is very likely that the mortgage will be also. Both parties are liable to pay the mortgage on the property, even if one has moved out. If the bank or building society re-possessed the property, both would be responsible for any shortfall if the mortgage debt (including interest, penalties and legal costs) exceeded the money received on any sale. Some mortgage terms also oblige you to ensure that the premiums on any endowment or life insurance policies are kept up to date. If you do not do this, you could be in breach of your mortgage terms. If you are in difficulty paying the mortgage it is advisable to discuss this with your lender as well as with us.
- You should not sign any documents relating to the property or to financial matters without first taking legal advice.
- If you are separating or divorcing, it is important that you discuss with us the overall financial situation as well as ownership of your property. It is not generally advisable to make any changes or deal with assets on a piecemeal basis.
- If Decree Absolute has been granted and you are considering remarrying before any Order has been made in relation to financial matters, you must discuss this with us as soon as possible, and definitely before you arrange the marriage. The reason is that if no order has been made and no application issued with regard to the finances, you will be automatically be prevented from making an application once you have remarried and you could lose out financially.
- If you own the property as tenants in common, or sever the joint tenancy, it is essential that you make a will. You should always keep your will up to date; you do not need to wait until Decree Absolute is granted to deal with this. Please ask if you would like to make an appointment to discuss your will.
- If you are not married you must take legal advice before severing the joint tenancy as your position may be different from that of married couples.
Please speak to one of our specialist family solicitors for further advice on 01992 558411