Contributions:- (Original and Ongoing)
In every case you should consider what financial contribution each of you has made to the purchase at this stage and who will be making the payment of the property expenses once it is purchased e.g.. Mortgage, Improvement costs or insurance payments.
The options are as follows:-
1. You can buy as BENEFICIAL JOINT TENANTS
You are both regarded as owning the whole of the property. In the event that one of you dies, the survivor automatically takes the interest in the property of the person who has died. This is automatic and overrides any provisions you may make for the property in your Will. Therefore the survivor becomes the sole owner of the property and, for example, could sell it and keep the proceeds of sale without distributing them to anyone under a Will or under the intestacy rules. This is the usual arrangement for married couples.
To hold the property as joint tenants it is normally assumed that either:-
All parties contributions to the purchase and future expenses are approximately equal or
That the person making the greater contribution is happy to make a gift to the other i.e.. they are happy that the interest will be equal even though they have contributed more.
2. You can hold as BENEFICIAL TENANTS IN COMMON
You are regarded as having separate shares which can be equal (50/50) or unequal (e.g.. 70/30). In the event one of you dies his or her share does not automatically pass to the survivor. It may pass to who ever the deceased person wishes either under the terms of his or her Will or, if under the intestacy rules. It is advisable, particularly in these circumstances, to make a Will.
3. You may also hold the property under the terms of A TRUST DEED / DECLARATION OF TRUST
When you hold as tenants in common you might also consider making a deed which is sometimes referred to as a declaration of trust. A trust deed may be required where unequal shares are being considered, for example where the purchase money is being contributed unequally, but the future outgoings are to be contributed equally or vice-versa. A trust deed is useful to set out the shares on which you hold the property and how the proceeds of sale would be shared if the property was sold. A trust deed is helpful because the remedy for a dispute between tenants in common is normally resolved by the sale of the property- the trust deed can give the persons who wish to retain the property a right to buy from those who wish to sell their interest. These are just a couple of simple examples for why a trust deed is useful for those who hold the property as tenants in common, but almost any arrangement can be provided for in a trust deed.
Independent Legal Advice
In some circumstances the interest of each co-owner may be different in considering this aspect of the matter and in every case, we would recommend you consider seeking independent legal advice on this issue. Certainly if you are unhappy with the arrangement being proposed, we would normally insist that you do so.