How much do you ‘Trust’ your co-owner?

Thu 23rd Apr 2015

Buying a property can seem like as much of a commitment as getting married and, as with marriage, even though you do not foresee any breakdown in your relationship, there is always a risk which could result in a dispute over your home. The good news is there are methods to protect yourself from both when initially purchasing a property or also if you already own your property.

If you are buying a property in equal shares you may not be overly concerned, however, there is an increasing trend in co-owners contributing different amounts to not only the initial contributions to purchase the property but also mortgage payments, improvements and repairs. Likewise, you may be the sole owner of a property but wish to transfer some of your equity to a new partner. One of your main concerns may be to protect your deposit and equity in the home and to ensure that credit will be given for any financial contributions you make during your ownership.

At Coodes we are able to offer specialist advice on the formal documentation which is known as a ‘Declaration of Trust’

When a property is to be owned jointly a decision has to be made as to whether the property is to be held as Beneficial Joint Tenants or Tenants in Common. With the former the ownership is entirely joint and if one of you were to die then the property will pass to the survivor irrespective of whatever your Will may say. With the latter, you have defined shares which may or may not be equal and your share passes upon your death either in accordance with your Will or under the intestacy rules if you have not made one. Your personal circumstances may well have an impact on your choice, particularly if you have children from a previous relationship.

If you have already purchased your property and own as joint tenants then it is possible to ‘sever’ your joint tenancy to create a tenancy in common.

We are able to advise upon and draft the Declaration of Trust to suit your needs. We can set out the initial contributions you are to make (or have made) and we can include aspects such as what happens to your shares in the event that you pay certain ‘expenditure’, including mortgage payments, improvements or endowment policies. This allows for you to have ‘floating shares’ rather than ‘fixed shares’. We can make it clear as to how records, statements and receipts of expenditure should be kept so that the proceeds can be calculated upon a sale.

Without going to court, which can be costly and time consuming, there is no law in place which sets out a timeframe for selling a property should one co-owner want out. The Declaration of Trust can set out a set procedure should this occur and this is known as pre-emption rights. This would enable either party to give notice to bring the trust to an end and to purchase the share of the other If not then the property is put on the market to be sold.

Although we would recommend that a Declaration of Trust is put into place to take effect on the day you purchase the property, your circumstances can change and it is possible to add this at a later date and convert a joint tenancy to a tenancy in common.

For further advice, contact Maria Richards on 01726 874700 or

Thu 23rd Apr 2015

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