Today’s housing market means many more people are deciding to jointly buy property and share mortgage repayments. This allows people to pool their financial resources, but can also lead to problems if the relationship ends for any reason.
•Essentially you are entering into a business relationship and so should have a contract drawn up which protects both of your interests. There are two common types of joint ownership that you should consider – ‘beneficial joint tenants’ and ‘tenants in common’.
•Beneficial joint tenants -
Have no pre-defined shares in the property and in the event of the death of one of the partners the house will pass automatically to the co-owner irrespective of their will.
•Tenants in common -
Each own a pre-defined share of the property and when it is sold the net proceeds are split accordingly. Your share of the property can also be bequeathed in your will according to your wishes. The obligation of each partner is detailed in a ‘deed of trust’ which records details such as ownership, contributions and financial obligations. A deed of trust can also include whether a participant can enforce an ‘order of sale’, forcing the property to be sold against the wishes of other partners.
•Ultimately, both of you are liable to the bank for the debt and if one person leaves or cannot pay their share, the other must bear full responsibility. Clearly defining your financial obligation and commitments from the beginning will cut down on stress and uncertainty and allow you and your partner the peace of mind to enjoy your new home.