Whose house is it anyway?

You may own a property jointly with somebody or have contributed to the purchase price, but do you know what your ownership rights are?

If you are buying a house jointly with somebody, your solicitor will establish whether you want to hold it as “Joint Tenants” or “Tenants in Common” and advise you of the implications.

Joint Tenants

If parties own the house as Joint Tenants, it means that that both own the whole of the home. If the property is sold the parties are entitled to an equal share of the proceeds. And, if one party dies, the other automatically becomes the sole owner of the home, irrespective of what any will says, or their contribution towards the price.

Tenants in Common

With tenants in common each party owns a fixed share. This could be half each, or it could be a defined percentage, depending on each’s financial contribution towards the purchase price. When the property is sold each gets their shares. If one party dies, their share is dealt with in accordance with the terms of their will, or the rules of intestacy; the other owner does not automatically inherit.

Buying as tenants in common is therefore appropriate when friends or family are buying together to get on the property ladder, where unmarried couples are making unequal contributions to the purchase price, or where couples with children from previous relationships wish to leave their share to their children. In some cases a detailed Declaration of Trust Deed should be drawn up to deal with potential issues that may arise and minimise the risk of dispute if relationships break down.

Name “not on the deeds” at all?

Whether a Joint Tenant or Tenant in Common, either way your name will be on the title to the property, and you will be regarded as one of the legal owners.

But what happens if your name is not “on the deeds”, but you did contribute to either the purchase price, or made some other financial investment in the property.

As stated, ideally this will have already been dealt with by the parties entering into a Declaration of Trust or Trust Deed which is a binding document which records financial arrangements between property owner(s) and those with a financial interest in the property.

It is necessary where one party is contributing to the purchase price, but is not to be shown as legal owner. This could be, for example, where parents are helping out with a share of the purchase price or where one half of a couple moves into a property already owned by the other and pays a lump sum to help reduce the mortgage or carry out renovations.

If no formal agreement was reached at the time, and problems arise later, then the person who claims that they have an interest in the property does not have any automatic rights. If agreement cannot be reached, then they need to consider whether they have grounds to establishing that a Trust exists. They would need to make an application to the Court under the provisions of the Trusts of Land and Appointment of Trustees Act 1996. These are known as ToLATA claims and are complicated. Under the Act, the Court has the power to determine each party’s interest in the property and how it should be dealt with.

That said, it is much better to have formal agreement in writing before problems arise, so if this situation applies to you, take advice by contacting one of our helpful property lawyers.

Published 14 June 2018

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