Jointly owned property and “the 4 Ds”

When you are buying your new home with your partner the future looks rosy and it can be tempting to believe that nothing will ever come between you. However, you are making a serious financial and legal commitment.  It is a time for clear heads and rational decision making.

You should carefully consider the risks of sharing ownership, commonly called the four Ds.  What will happen to the property if the other owner gets into debt, divorces, dies or you have a disagreement with them.  In all of these instances your use and enjoyment of the property could be threatened. For instance, any creditors of the joint owner could seek a court order charging the property with the debt owed by the owner and eventually seeking possession of the property or forcing a sale.

When two or more people own a property jointly, there are two alternative methods of legal ownership that can be used.  The differences can be summarised as follows:-

1. Joint Tenants  All owners jointly own the whole of the property and if one of the owners dies, the property will be owned in full by the surviving joint owner/s.

2.  Tenants in Common   Each party owns a distinct and separate share of the property (defined by fractions or percentages) and if one of the owners dies, the other owners do not automatically receive the deceased’s share.  The deceased’s share will pass to their estate to be distributed with their Will or through the rules of intestacy to their next of kin (if the deceased did not have a will).

You should carefully consider which type of ownership suits you and your co-owners best and instruct your solicitor accordingly.

Couples or joint investors purchasing a property should consider what they would want to happen to the property should they wish to go their separate ways.  Sometimes it is useful to draw up a “joint purchasers agreement” recording who has contributed what to the purchase price of the property and how the net proceeds of any future sale of the property should be split. However such an agreement is only useful as a record of your agreement AT THAT TIME and you should bear in mind that any such agreement is unlikely to be enforceable in the future, particularly if much time has passed and your circumstances have changed.

If you require specific advice on these matters we would be delighted to advise you further.