Love is in the air but how should you hold your property with your partner?

Have you asked your partner to move in with you this Valentine’s Day? Maybe you have both decided to take the next step and purchase a property together. It’s easy to get swept up in the excitement of purchasing a property together and not always to consider the legal elements such as how you will hold the title of your property. If you find yourself not quite ready to take the next step of buying together BUT your partner will be moving in with you have you considered how this will affect your transactions. The below will provide a brief insight into the options available to joint purchasers along with a snapshot of what is involved in purchasing with an occupier.

How to hold a property

When purchasing as co-owners you will be requested to fill in panel 11 of a transfer deed. The transfer deed is the legal document that transfers the title from the sellers to the purchasers. This outlines three options on how you can hold your property, but what do they mean, and which is the best option for you?

 To hold the Property on Trust for themselves as Joint Tenants.

This is where the property is held equally between parties and on the death of one of the owners the property will automatically pass to the surviving owner. If there are disputes between the joint owners as to co-ownership, for example on a separation, it should be noted the joint tenancy will always be deemed to be in equal shares.

A joint tenancy can be ‘severed’ at any time by either party giving ‘notice’ to the other and would result in the property being held as tenants in common. At that point consideration should be given as to the percentage share that will be owned by each party.

They are to hold the property on trust for themselves as tenants in common in equal shares

When the property is held as tenants in common in equal shares, the shares are held as 50/50. On the death of one of the owners, the deceased’s share will not automatically pass to the co-owner. It will pass under the terms of their will or if no will is available under the rules of intestacy.

A restriction will automatically be added on your title documents by the Land Registry to reflect that the property is held this way.

They are to hold the property on trust: for themselves as tenants in common in unequal shares

This option is similar to the above, however, the property is not held equally by the parties. Under this option it can be stipulated how the shares in the property will be held, within the transfer. For example Mr X will hold 40% Miss Z will hold the property 60%. This is often established by the parties’ contributions to the purchase price. This type of ownership is often used by unmarried couples or friends buying together.

As above, a restriction will automatically be added on your title documents. It must be noted that it will not state the split of the shares.

Where the property is held unequally it is highly recommended that a ‘Declaration of Trust’ is considered.

Where different contributions to the purchase price are given, or more complex instructions are given on how the property will be held, it is advised that a ‘Declaration of Trust’ is drawn up to reflect this. This is a legal document which sets out the terms of how the ownership will be split. A deed of trust allows for extra security should any disputes arise when selling a property and splitting funds.If you would like any further information or advice regarding a ‘Declaration of Trust’ our Private Wealth and Inheritance department will be happy to help.

Occupiers

Not all couples are in a position where they can purchase together. Therefore, some will purchase as a sole owner and their partners will be considered ‘occupiers’. Below we have highlighted briefly some elements to consider.

In general

Having occupiers can open you up to a potential claim of them having a beneficial interest in the property, especially if they have financially contributed towards the property e.g. towards mortgage payments and household bills. It must be noted that proving a beneficial interest is difficult and requires specialist legal advice.

Buying with a mortgage

If you are buying with a mortgage and have an occupier, it will most likely be a requirement of your lender that the occupier signs an ‘Occupier’s Waiver’. This document confirms that they postpone any right or interest they may have in the property.

Some lenders do agree to having two borrowers and one legal owner registered as the registered proprietor. If this is of interest to you and your occupier, then it would be a discussion to have with your broker.

Selling

When selling your property, it is a requirement to declare if there are any occupiers. It’s important to note that the occupier will be required to sign the contract. This is to confirm they will vacate the property on completion.

If you would like further information on holding property with your partner, please contact us to speak to a member of our team.