Top advice for buying a jointly owned property
Getting your foot on the property ladder is a difficult accomplishment for many, so more and more people are choosing to jointly purchase a property with family or friends.
Considering homeownership is likely to be the biggest investment you will ever make, there are a number of things joint buyers should be aware of to avoid the problems that may arise if the relationship/partnership was to become less amicable further down the line.
Be clear on who owns what
One vital thing to be clear on from the get go is how the property will be owned between yourself and your co-owner. A straight 50:50 split is the usual assumption, but any split is possible provided this is agreed by both buyers. For example, if one party is paying a bigger portion of the deposit, then they are likely to want a larger share of the property.
If no written agreement is in place between the co-owners, then litigation is likely to occur. In this instance, the party who can provide evidence of contributions to expenses will put themselves in the best position to improve their stake in the property. For this reason, keeping a record of all payments that are made is very important as they can prove influential if legal action is ever involved.
Understand the purpose of the purchase
It's important to fully understand the reason you're both making this property investment together. Do you and/or your co-owner plan on living in the property, or do you both view it as an investment that can provide rental income?
If things go wrong, a court will be looking to consider what the purpose of the purchase was for when deciding the appropriate remedy.
Legally reflect the agreement
Once the division of ownership is decided, you then need to ensure that the property is legally held in a way that reflects the agreement.
All owners should be registered on the property as legal owners. If this isn't possible, then you should at the very least have a legal document (known as a Declaration of Trust) to protect yourself in the event of a future dispute.
A property can be co-owned in two ways - either as a joint tenant or a tenant in common.
Joint tenancy is the usual route that's taken if you want to own the property in equal shares. In this instance, 'survivorship' applies, which means that your share will automatically transfer to the surviving co-owner(s).
If you are tenants in common, your share will pass to whomever you have bequeathed it to in your will (if you have one set up).
From a legal standpoint, the law will always assume that shares are equal if there is more than one person on the title, unless it is otherwise stated.
A change of ownership
Sometimes circumstances may result in us wanting to change from type of ownership to another.
Legal ownership can be altered from joint tenants to tenants in common by 'severing' the joint tenancy.
All you have to do is serve a Notice of Severance on the co-owner and complete and file a form SEV (and possibly an RX1) with the land registry.
Changing from tenants in common to joint tenants can be just a little more complicated and you will need the agreement of all co-owners. The government website has a useful guide that provides the steps you must take to change from tenants in common to joint ownership.
Seek advice
Ultimately, it all comes down to getting accurate advice from the right professionals at the very start. You should seek independent mortgage and legal advice separate from your respective co-owners, and make sure that you take the appropriate steps to safeguard your interest.
Here at CPS Homes, we're proud to be Cardiff's largest sales and letting agents. Whether you're looking to buy or sell a property in Cardiff, seeking tenants for a buy-to-let, or would like to learn more about the management services that we offer, don't hesitate to get in touch with our expert team today. Call us on 02920 668585, e-mail enquiries@cpshomes.co.uk or pop in to one of our three Cardiff branches.
