When two or more people buy a property together, they usually own it in one of two ways: joint tenancy or tenancy in common. Understanding the difference is essential, particularly if you want to ensure your share of the property passes to the right person in the future.
Joint Tenancy
With joint tenancy, all owners hold the property together as a single legal unit, with no distinct shares.
If one owner dies, their interest automatically passes to the surviving owner(s). This is known as the right of survivorship.
Joint tenancy is commonly chosen by:
- Married couples,
- Civil partners,
- Long-term partners who want their share to pass automatically to each other.
It offers simplicity, but it does not allow you to leave your share to someone else in your will.
Tenancy in Common
With tenancy in common, each owner holds a defined share of the property. These shares can be:
- Equal (e.g. 50/50),
- Unequal (e.g. 70/30), reflecting different financial contributions.
If one owner dies, their share does not automatically pass to the other owner. Instead, it passes according to their will or under the rules of intestacy if no will exists.
This arrangement is often chosen by:
- Friends buying together,
- Family members investing together,
- Couples contributing different amounts,
- Business partners.
Tenancy in common offers greater flexibility but it also makes clear documentation essential.
Why a Declaration of Trust important
If you own property as tenants in common, particularly in unequal shares, a Declaration of Trust is highly advisable.
A Declaration of Trust is a legally binding document that sets out:
- The exact percentage each person owns,
- How mortgage payments and other financial contributions are dealt with,
- How outgoings (such as mortgage payments, buildings insurance, maintenance, and household bills) are to be apportioned between the owners,
- What happens if one person wants to sell,
- How sale proceeds will be divided,
- What happens if circumstances change.
Without this document, there is a greater risk of disputes arising in the future, particularly if relationships break down, one party wishes to sell, or there is disagreement over contributions.
While some co-owners manage without formal arrangements, relying on informal or verbal agreements can lead to uncertainty and difficulty if disagreements occur.
Putting arrangements in writing provides clarity and helps protect everyone involved.
How GT Stewart can help
We provide can prepare a Declaration of Trust to ensure your property ownership is clear, accurate, and tailored to your circumstances.
Whether you are buying with a partner, friend, family member, or business associate, we make the process straightforward and easy to understand without unnecessary legal jargon.
If you are purchasing property as tenants in common, please get in touch with our dedicated Residential Conveyancing team. A properly drafted Declaration of Trust provides certainty and peace of mind.
