We’re paying an equal amount towards the purchase of the property. What is the best way of owning it?
Provided that you are both happy that you should own the property equally and that you are going to continue to contribute towards the cost of the house such as the mortgage or improvements and maintenance in equal shares then your decision probably needs to be based upon what you would want to happen to the property upon your death.
There are two ways of owning the property:-
Joint tenants – this means that you both own the whole property and if one of you dies the whole property will automatically pass to the other owner. It will not pass under your Will or under the intestacy laws if there is no Will. You may be happy with this option if you want your partner to inherit the whole of the property upon your death and you don’t have anyone else that you wish to leave your share to such as children from a previous relationship.
Tenants in common in equal shares – this means that you own specific, and in this case, equal shares in the property. If one of you dies their share will pass under their Will or under the intestacy laws if there is no Will. It will not automatically pass to the other party. You may prefer this option if you do not wish to leave your share of the property to your partner but wish to leave it to somebody else such as children from a previous relationship. You can also make a Will which gives a life interest to your partner so that they can at least continue living in the property for the rest of their life, but your share would then pass to your beneficiary.
If you separate in the future then the equity in the property would be divided equally between you whether you own it as joint tenants or tenants in common in equal shares.
I am paying more towards the property than my partner. What should I do?
In this situation, unless you are happy for your partner to own 50% of the equity in the property even though they have not made an equal contribution and are happy for them to receive that amount if you separate, the best way of owning the property is as tenants in common in unequal shares. It is wise to have an agreement drafted to confirm the shares that you each own. This is known as a Declaration of Trust. If you die your share will pass under your Will or under the intestacy laws if there is no Will. If you separate the Declaration of Trust will confirm how you have agreed to split the equity in the property.
Although you may be concerned about the cost of getting legal advice when you are already paying out for the cost of buying the property, getting the right legal advice can save you a lot of money if you do separate in the future. It can provide you with security knowing what share of the property you are entitled to in the future and ensure that you share is left to who you wish to benefit upon your death.
