If you own a property jointly with someone else, it is important to make sure you understand what might happen in the future, should one of you die.
There are two different ways of holding property with another owner. Which type of ownership you have will affect what will happen to the property in the event of a death. In some cases, the property might not pass to the survivor and that can cause difficulties. The survivor may even end up having to leave so that the property can be sold.
The two types of joint ownership
The two types of joint ownership are:
- Joint tenants
- Tenants in common
Owning a property as joint tenants
If you own your home as joint tenants, then neither of you holds a distinct share, you both own the whole property together. Should one of you die, the other automatically owns the whole property.
Property owned in this way will not pass under the terms of the deceased’s Will.
After a death, you can send an official copy of the death certificate or the Grant of Probate or Grant of Letters of Administration to the Land Registry together with form DJP and they will amend the Land Register to show just one name, although this is not essential.
Owning a property as tenants in common
If you own a property with someone as tenants in common, then each of you will own a specified share. The shares you own do not have to be equal. For example, one of you could own 25% and the other 75%.
If one of you were to die, that person’s share would pass under the terms of their Will. If they do not have a Will, then their share would pass under the Rules of Intestacy. The rules set out who inherits in order of priority, starting with the deceased’s spouse and children.
Relying on the Rules of Intestacy to pass on a property is not a good idea. A spouse will inherit the first £322,000 of the estate together with the deceased’s personal possessions. If the deceased had children, the remainder of the estate would be split in half. The spouse will receive one half and the children will share equally in the other half. If the deceased did not have children, the spouse will inherit everything.
There is no provision in the Rules of Intestacy for cohabiting partners. This means that even if you have lived with someone for many years, you will not receive anything from their estate. If you owned a property with them as tenants in common, the share not owned by you will be inherited by someone else. They are likely to want to sell the property to realise their share. This could cause difficulties for you if you are not able to buy them out.
The importance of making a Will
If you jointly own a property as a tenant in common, it is crucial that both owners have a Will in place. This means that you can be sure that your share will pass to the beneficiaries you want to inherit.
If you own a property as tenants in common with a cohabiting partner, you can leave them a life interest in your share if you wish. This means that they will be able to stay in the home for as long as they want. After their death, your share will pass to your choice of beneficiary.
Changing the method of ownership
You may want to change the type of joint ownership you have. This can be done quite easily by a property solicitor. For example, if you have put more money towards the property than the other owner, you could sever the joint tenancy so that you each own a specified share and enter into a declaration of trust setting out how much each of you owns.
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