The Eric Whitehead Partnership

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Buying a property together – how can you protect your investment?

Buying a property is the largest transaction most of us will make, so it is natural to that we want to make sure that investment is protected.

When more than one person purchases a property, you will each be a co-owner. As co-owners, you can either hold the property as Joint Tenants or Tenants in Common.

What are Joint Tenants?

If you hold the property as joint tenants, both of you will own the whole of the property. You will not each have a specific share in the property and will not be able to leave a share of the property in your Will.

If you sell the property, it will be presumed that you both own the property equally, regardless of each of your contributions to the purchase price.

If one of the co-owners dies, their interest would automatically pass to the other co-owner. The surviving co-owner would then own all the property and on their death, it would form part of their estate. This is known as the rules of survivorship. Married couples or those in a civil partnership commonly purchase property as joint tenants because the right of survivorship makes it straightforward to inherit each other’s share in the property.

What are Tenants in Common?

If you hold the property as tenants in common, each of you will own a specified share in the property. Your shares may be equal, but they do not have to be. Your share of the property can be passed on to another person on your death, either under your Will or in accordance with the rules of intestacy (if you do not have a Will) If co-owners want to hold the property as tenants in common, this can either be noted as a simple declaration in the Transfer Deed, or you can sign a Declaration of Trust. A Declaration of Trust is a document that formally records that you hold the property at tenants in common and sets out your respective shares in the property. If you sell the property, or if you separate, the Declaration of Trust will be referred to, to work out your entitlement to the sale proceeds.

If you decide to hold the property as joint tenants but then decide to split your interests, you can “sever” the joint tenancy and turn it into a tenancy in common at any time. The joint tenancy may also be severed automatically in certain circumstances, including when one co-owner becomes bankrupt.

Protecting assets in contemplation of marriage.

Once you are married, a Declaration of Trust can be disregarded, and we recommend that you enter into a Pre-Nuptial Agreement before the marriage. Pre-nuptial agreements are not enforceable automatically; however, they will be considered by the court when considering a financial claim.

Also, after marriage, any existing Will is automatically revoked (cancelled) and becomes no longer valid (unless Wills have been made in contemplation of the marriage). For this reason, it is important for anyone who is getting married to have a new Will drafted.

Our team are here to assist you with all of the above. To find out how we can help, please email ellenbrian@ericwhitehead.co.uk or call us on 01538 755761

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