Co-Ownership of Property
Whether you are thinking of buying property with another person (even your spouse!) or whether you already own a property between two or more of you there are a few things you should know…
Whenever more than one person already owns or buys a property, co-ownership is an issue they should talk through with their Conveyancer.
Just a short time ago (less than a generation back!), it was easy to presume that engaged or married couples would own their house as ‘joint tenants’. This was the straightforward, easy option. But increasingly, mosshaselhurst solicitors are questioning if this is always the best option? Often co-owning as ‘tenants in common’ can be more advisable.
What’s the difference?
When you buy a property with another person, you will be asked how you wish to own it. Your choices are either as JOINT TENANTS or as TENANTS IN COMMON. These two old fashioned terms have become a modern concern for many property owners.
If you own as JOINT TENANTS should one of the co-owners die, ownership of the whole of the property automatically passes to the surviving owner. The property is not regarded as part of the deceased’s estate for probate purposes (although it is regarded as part for inheritance tax purposes). This does have some advantages as the surviving owner has immediate access to the entire property – particularly for cash – and there is no added complexity of having to include the house in the Will.
If you own as TENANTS IN COMMON each co-owner has a separate share in the property. These shares can be equal but this type of ownership is also used to record separate unequal shares (for example when one Buyer pays all or a greater share of the initial deposit). When the first co-owner dies, his or her share will pass to whomever they wish under their Will or according to the rules of intestacy if no Will exists.
So why and when should owning as TENANTS IN COMMON be considered? Here are just a few very good reasons why we want to help you make the right choice....
Elderly clients. For our more senior clients, owning as Tenants in Common can protect at least one half of the house from assessment for care home fees. This is a recent but very real concern. Until you get down to the last ?16,000 worth of capital, the rate at which you are assessed for care home fee contributions is 100% - meaning that there could be nothing left to leave in your Will. We can help you protect your most valuable asset.
Unequal Contributions. When the contributions to the purchase price of the property are not the same, it’s fair to make a legal record of each owner’s share and, if your circumstances change, this record can also be amended in the future too.
Children. When one (or both) co-owners have children from a previous relationship (and may want to leave some shares in the property to their children or to grandchildren). Separate shares allow each owner to make an independent decision as to who to leave their share of the property to.
Inheritance Tax. It may be more tax efficient to own the property as Tenants in Common to make the best use of the recent Inheritance Tax changes to nil-rate tax bands. Please ask one of our Wills specialists for more detailed advice.
Co-Owners who are not married. You do not have as many rights and benefits as married couples or couples in civil partnerships. To prevent any future disputes on death or separation, a Tenancy in Common with a valid Will is the most advisable position.
If you already own property and you are not sure how you own it we can look into this for you. Should you decide that you would like to change a Joint Tenancy to a Tenancy in Common, we can also do this for you.
Often in the face of separation, divorce, bankruptcy, needing home help or nursing care, or even on death, owners (and their families) can realise they have not done enough to protect a jointly owned property. Don’t leave it too late. Why not come and talk to mosshaselhurst now?
