Joint Tenancy & Tenants in Common
If you are buying a property with someone else, you will need to decide how you will share the ownership. There are basically two ways you may own property, either under a Joint Tenancy (as Joint Tenants) or as Tenants in Common.
Choosing the right way to hold the property is vital, as it can affect not only what happens when you sell the property, but also what happens if one of you passes away.
Below is an explanation of both ways to own property.
If you own the property under a joint tenancy, in the eyes of the law the joint owners are deemed to hold the property in equal shares, and on the death of one of them, his or her share passes automatically to the other by operation of law.
Similarly if there are more than two owners, ownership passes automatically to the remaining owners until ultimately there is only one. This automatic right to survivor-ship is irrespective of the provisions of any Will which a joint tenant may make during his or her life time. The survivor becomes the legal owner of the whole of the property without need for further documentation and any further sale or dealings with the title can be made by him or her without obtaining Probate to the deceased owner’s estate, and the survivor is solely entitled to the proceeds of sale.
On a sale of the property during the joint lives of the joint tenants the net proceeds of sale will be divided equally between them even if they have contributed the original purchase money and expenses such as stamp duty (which can often be significant) in disproportionate shares. This frequently causes distress between couples who are not married and who then separate on bad terms. The Partner who has contributed the larger share often complains it is unfair and seeks a larger proportion of the sale money in line with his or her original investment. The law does not assist such a claim and therefore couples who are buying jointly but not paying equally need to be particularly mindful of this and should give serious consideration to buying as Tenants in Common or having a separate Deed of Trust setting out what should happen in such an event.
The other situation where Joint Tenancy may be inappropriate is where divorcees or previously married people with existing families come together to purchase a property jointly. Automatic succession may not be appropriate as the claims of their respective children and existing families have to be considered.
Tenants in common
On the death of a tenant in common, his or her share does not pass automatically to the survivor but becomes part of his or her estate. It is then dealt with in accordance with the terms of the deceased’s Will, or, if the deceased did not make one, under the rules of intestacy.
Tenants in common can hold the property in equal or unequal shares. For example the shares can be 50-50 or in whatever specific percentages they declare, e.g. 70 – 30 , 60 – 40 etc.
Moreover the shares can be in accordance with each party’s contribution towards the purchase money. If the transaction is to be on this basis it is advisable and necessary for a separate document, (a Declaration of Trust), to be prepared specifying the division of the ownership. This deed can cover a wide-reaching number of points, for example the contributions made towards the purchase price, the payment of mortgage payments and up-keep and future maintenance of the property and the eventual division of future sale proceeds. A Trust Deed can provide that on a sale, each party will be re-paid their original contribution and thereafter the proceeds divided equally or in such proportions as they declare.
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Frequently Asked Questions
This is by far one of the most frequently asked questions. In most cases the conveyancing process for the purchase of a home can take between eight and twelve weeks. These time frames can and will alter depending on the circumstances that surround the purchase.
There can be many unknowns associated with conveyancing and this makes it particularly hard for a Solicitor to pinpoint an exact time and date for the house purchase to complete.
The team at L P Law will endeavour to ensure there are no unnecessary delays to the process and if there is, they guarantee to keep you informed of any such development with their transaction.
As soon as you have had an offer accepted on your property you are ready to appoint a Solicitor.
Usually not. There are certain rules in place that prevent the buyer and seller appointing the same Solicitor. This is because of what is known as a ‘conflict of interest’.
There are exceptions but if you are marketing the property you will require an EPC.
Your Solicitor will be able to advise you on the implications but there are 2 ways in which a property can be held. You can hold as tenants in common which is where you hold a share of the property, say 50%, and upon the death of that person he or she can pass it to another person. The other method by which one can hold a property is beneficial joint tenants. This is where a property is held jointly. Upon the death of one of them the other automatically becomes the owner.
Alternatively a Deed of Trust can be drawn up setting out the terms on which you hold the property. We are able to advise you on this and prepare the Deed for your approval.
This is another one of the most frequently asked questions that we get asked. In most cases, the process is no different than using a local solicitor. Everything can now be dealt with by post, e mail and telephone. The process has changed over the last 15 or so years enabling you to appoint a Solicitor with whom you have no face to face contact.
A disbursement is a payment in relation to the process and is payable to a third party. For example, if you are buying a land registry fee will need to be paid to the land registry. This is their fee for registering the property.
More information can be found on our conveyancing expenses page.
It is advisable to obtain a survey. If you are taking out a mortgage your lender may wish to procure one. It is worth checking what type of survey they will be completing as this may not be a full structural survey.
If you are taking out a mortgage your lender will require various searches to be purchased. These are usually a local search and a water & drainage search however, if you are buying in a coal or tin mining area an additional search would be required. There are other searches which may be relevant depending on the area in which you are buying. If you are not taking a mortgage to buy the property they are optional and it is therefore your choice as to whether you have them. We of course do strongly advise that they are purchased as they may reveal matters that will impact on your ownership of the property.
More information on searches can be found on our conveyancing expenses page.
If you are purchasing a property for over £125,000 then yes. How much you will have to pay will depend on how much you are paying for the property. Stamp Duty is worked out as a percentage of the property purchase price.
The rates of Stamp Duty payable on the property as as follows:
Property or lease premium or transfer value – SDLT Rate
Up to £125,000 – Zero
The next £125,000 (the portion from £125,001 to £250,000) – 2%
The next £675,000 (the portion from £250,001 to £925,000) – 5%
The next £575,000 (the portion from £925,001 to £1.5 million) – 10%
The remaining amount (the portion above £1.5 million) – 12%
If the property you are buying will not be the only property you own after completion, such as Buy to Let properties, then an additional 3% is payable on all purchases over £40,000.
For more information on Stamp Duty Land Tax, please see our conveyancing expenses page or visit the Governments guidance pages on Stamp Duty: https://www.gov.uk/stamp-duty-land-tax/residential-property-rates
Exchange of contracts is when the date for completion is fixed. The process of exchanging contracts is usually a telephone call between both sets of Solicitors.
Completion is the date when the money transfers occur and the keys are given to the buyer. As with exchange of contracts you do not need to attend the Solicitor’s office.