If you are buying a house with another person, you may have come across the terms ‘joint tenants’ and ‘tenants in common’. Let’s take a look at the differences between these terms and the best option for various situations.
What are joint tenants?
When you and another person are joint tenants, it means you have equal ownership of a property. It does not reflect the amount of money each person puts in; for example, if one tenant puts down a larger deposit than the other, the ownership of the property is still equal. Another factor to consider with joint tenancy is that should one tenant die, their share of the property is automatically given to the other tenant.
Purchasing a property as joint tenants is often the best option for couples in long-term relationships or family members who are in agreement with the terms.
What are tenants in common?
With tenants in common, each person purchases a share of a property. This could be equal shares or a percentage of a property; for example, one person might own 30 percent of a property and another person own 70 percent.
When you are a tenant in common, your share of the property will not automatically pass to the other tenant, or tenants, should you pass away. This is something to consider when making your will.
Using a tenant in common agreement is often the best choice if you are investing in a property with someone whom you are not closely linked with, such as a business partner.
Declaration of trust for tenants in common
To save any legal hassles down the line, it is a good idea to hire a solicitor to create a declaration of trust. This is a document that sets out what would happen if a tenant wanted to sell their share of the property and the financial obligations involved. More information about declaration of trust cost can be obtained from companies such as https://www.samconveyancing.co.uk/news/conveyancing/declaration-of-trust-definition-294.
Whether you are buying a property as a couple, with family members or as a business investment, putting the right tenancy legalities in place is essential. When every party knows where they stand, it provides peace of mind and a hassle-free future should the property need to be sold. A good solicitor will be able to provide you with all the advice you need for happy homeownership, so always seek professional advice before deciding on the basis on which to purchase.