If you’re planning on buying property with someone else, you’ll have to consider how you want to divide the ownership of the property. This is done through two forms of a declaration of trust: tenants in common or joint tenants.
Tenants in Common
When there are multiple parties contributing to a property’s purchase, it’s highly likely that the individuals will want to protect their assets. A tenancy in common agreement allows each person to have their share of the property recorded in a legally binding contract, meaning their shares are set in stone in the event of a sale and for passing down in their will.
This agreement is great for people seeking to leave shares to their children or other relatives in their will, or to have their investment properly reflected in ownership shares – by contributing more, you receive a higher share of the property on paper.
Joint Tenancy
Joint tenancy is far simpler, as all parties involved own the whole property in equal shares. If one of the owners dies, the property is passed directly to the other owner in its entirety.
This agreement continues until the last owner, by which point their will is consulted, but it can also overlook wills when remaining parties are alive – this is known as the ‘right of survivorship’ Note that the right of survivorship does not apply to tenants in common.
Which one should I choose?
Before binding yourself to legal contracts, it’s worth seeking professional advice on which type of declaration of trust is best for you.
The most important considerations for your property ownership arrangement should be: do you want your property passed down to someone other than your cohabitor in your will? Do you want your greater investment in the property to be reflected in the ownership of it? And can you benefit from the type of agreement in terms of taxes or estate planning?
Again, these questions and laws can be difficult to navigate alone, so seeking professional advice is in your best interests to help secure your assets.
