Purchasing property can be both an exciting and daunting experience. Exciting because on the one hand you have found the property you have been searching for and you start dreaming of what you will do to transform the house into your home. In what can seem like the daunting side to your property purchase is the point at which you first lay eyes on the contract for sale of land. The contract requires you to make some important decisions. When you purchase property with your spouse or partner, you must decide how you will buy the property together. You can purchase either as joint tenants or as tenants in common. The distinction between the two is an important one because it can have an impact on future life events for example a relationship breakdown or death.
If you purchase property as joint tenants, this means that upon your death, your interest in the property automatically passes to your spouse/partner. This is despite any provision in your will to the contrary. This is because your interest in the property does not form part of your estate and it is not available for distribution to the beneficiaries of your will. Many married couples own property as joint tenants. Also a joint tenancy may exist where property is held in trust.
By contrast, if you purchase as tenants in common, then your individual share in the property can be gifted in your will. Furthermore the respective shares in the property may be held equally (e.g. 50/50) or in some other proportion (e.g. 60/40, 75/25 or 80/20 etc). Sometimes couples may choose to own property as tenants in common if for example there are children from a previous marriage for whom they wish to make provision upon their death. Also investors often buy property together as tenants in common.
If property is owned as joint tenants there is a process by which that property holding can be unilaterally severed by one party. The other party is given notice of this before it occurs. There are circumstances where this can be an appropriate course of action.
Being aware of your options can assist you in making a more informed choice when it comes to buying your next property. At Everingham Solomons we have the experience to assist you with all your property needs because Helping You is Our Business.
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