If you buy a home jointly, whether with a husband or wife, fiancé, friend or colleague, it is important that you fully understand the legal implications of co-ownership. You must decide what is to happen if one party dies and in particular, what happens to that party’s interest in the property.

You will also need to consider having a separate agreement setting out what happens on a sale of the property if there is a dispute, particularly if the parties have contributed unequal sums.

Methods of ownership
A property may either be held as “joint tenants” or as “tenants in common”. It is very important that you understand the difference between the two:

  • Joint tenants – under this arrangement, each party has an equal interest in the property. On the death of one party, their share will automatically pass to the survivor, irrespective of the terms of any Will.
  • Tenants in common – under this arrangement, the parties have specified interests in the property which may or may not be equal. On the death of one party, their share will not automatically pass to the survivor but will pass in accordance with the deceased’s Will, or if there is no Will, in accordance with the Rules of Intestacy.

Sale proceeds
If a property is held as joint tenants, the proceeds will normally be divided equally, regardless of the contributions made to the purchase price or the outgoings of the property. With tenants in common, a separate legal document will be required specifying the contributions which each party has made, the circumstances in which the property should be sold and how the sale proceeds are to be divided.

What happens if there is a dispute?
In the event of a dispute, the Court will apply strict legal principles rather than make an order based on fairness. A Court will analyse the facts of each case including details of the parties’ contributions, their intentions in relation to ownership and any promises made or relied upon. This area of litigation can be protracted and legal advice early on is vital.

We can deal with all aspects of property ownership, including giving advice at the outset and preparing agreements between two or more co-owners. Please contact your local BLB office.

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