Agree on the type of ownership
Before you buy, you’ll need to decide if you will be Joint Tenants or Tenants in Common. If you buy as Joint Tenants it means that if one of you should die, the other would automatically inherit their half of the property, even if their will made different instructions. However, if you buy as Tenants in Common, you’ll each own a separate share of the property which you can leave to whoever you want to in your will. In our experience, friends tend to buy as Tenants in Common and married couples or people in long term relationships tend to follow the Joint Tenants route. Your solicitor will be able to advise you on your situation.
Write it down
Ask your solicitor to draw up a Declaration of Trust to confirm the shares of the property you both own. This should also outline what will happen if one of you decides to sell – usually allowing the other owner the option of buying them out within a reasonable amount of time. To give everyone a bit of reassurance from the start, you can also choose to include a clause which states that neither of you will sell for at least two years.
Get separate advice
Separate legal advice means both your best interests are looked after. Remember, you might be good friends now, but this could change in the future, so get sound legal advice to protect you for all future scenarios. This is particularly important if one of you has contributed a higher amount to the deposit. We can help you draft documents to cover everything from who pays for any property repairs to whether you can have friends around.
Prepare for the worst
What will happen if one of you becomes redundant or too ill to work? You will both be liable for the mortgage repayments, so if one of you can’t pay, your lender could insist that 100% of the mortgage is paid by the other person. You might want to consider taking out insurance to protect yourselves. Similarly, think about what would happen if you fell into negative equity, your mortgage company could pursue both of you for the full amount.