When you purchase property with someone else there is a decision to be made about how you will own the property together.

By way of background on the legal side, the law splits the Title to the property into two elements, known as the legal title and the beneficial title.

The legal title cannot be split, but the beneficial title can, and it is designed this way so that only the true owner of a property receives the benefit of the property.  By way of example, imagine a child had inherited a property from their late parents.  In England and Wales, people under 18 years of age cannot hold a legal title in land, so the Trustees named in the parents Will would hold the legal title (and appear on the register at Land Registry) but the real owner, the person who the property belongs to and who has the benefit of it, is the child.  In this way, the child can say receive the sale proceeds or the rental income from the property can be invested for them to inherit when they are an adult.

When you buy a property with someone else, you will need to have a discussion and make a decision about how you want to own the beneficial Title. This will vary depending upon your own personal circumstances and the financial contributions that each of you are making towards the purchase price.  There are three options in this regard, I explore each of these below.

Joint Tenants

If you choose to hold the beneficial Title in this way, then each of you will own the property in equal shares. This means that should one of you pass away, their 50% share will automatically be inherited by the survivor of you.  This is the case, even if you have made a Will saying you leave your 50% to someone else.

Joint Tenants is usually appropriate if you are married, or each putting in the same financial contribution and do not have children from other relationships that you may want to provide for in the future.

It is important to remember when choosing this option that if you should separate from your partner, a Court will consider that you each own 50% in the event of a dispute.  Therefore, if you are each contributing a different amount to the purchase you may wish to consider one of the alternative other options below.

Tenants in Common in Equal Shares

If you choose to hold in this way, then you each own 50% of the Property but when one of you passes away, their 50% share will be inherited according to their Will, or the Intestacy Rules if you do not have a valid Will in place.

If you are unmarried or each contributing substantially different amounts to the purchase price or one of you is receiving a gift from a family member, then you may wish to consider the third option below.

Tenants in Common in unequal shares

If you choose to hold in this way, they you can set out how much each of you will own, which is usually attributable to how much each of you have contributed financially to the purchase price, in a legal document called a Declaration of Trust.  When one of you passes away, as with Tenants in Common in Equal Shares, the relevant share will pass according to any Will you have made or the Intestacy Rules if you have not made a valid Will.

This way of holding the Title is useful when you are each putting in different amounts of money to the purchase price, or for those who have children from previous relationships who wish to provide for those children in the event of their death.

If you feel this is the right option for you, it is also important to discuss your options in making a Will, as you may also want to provide for your partner for their lifetime and then leave to your children.

Which option you choose will depend on your own personal circumstances and we advise that you explore this with a Solicitor, who will be able to provide you with specific advice.  WBW can help you with making these choices as part of the conveyancing work that we carry out when you buy property or land.  We can also assist you with making a Will.

For further information on anything mentioned in this article, or any other property law query, contact Lisa Wilcock at WBW Solicitors in Exeter on 01392 260104 or email lisawilcock@wbw.co.uk.

WBW has offices in Torquay, Paignton, Newton Abbot, Exeter, Bovey Tracey,  Exmouth,  Honiton,  Sidmouth,  Launceston,  Axminster, Chard and Seaton.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.