When property is held jointly a range of factors come into play. ‘Property’ might include a house, money in the bank or another asset. In this article we focus on what joint ownership means when buying or selling a house.
Market conditions, location, survey results and local considerations such as planning and flood risks all have an impact on property transactions. But additional considerations arise if you are buying or selling property jointly. And these issues are important irrespective of whether you are buying/selling with your spouse, partner, family member, or business associate.
At Gamlins Solicitors LLP we have a team of expert conveyancing solicitors familiar with all kinds of property transaction. In most cases, joint ownership presents few problems. However there are some issues you should be aware of when buying or selling jointly owned property. We discuss these below.
If you need advice, call us directly on 01492 860420.
Not all joint property owners are created equally
Legally up to four people can jointly own a property, and if the property is held jointly, a buyer will only accept a contract for sale that is signed by all co-owners. In Wales there are two ways property can be held jointly, as joint tenants or as tenants in common. The method of ownership matters because it dictates how each joint share passes on the death of one owner. The status of each co-owner also has implications for disposing of the property if a dispute arises, for example if there is a disagreement over when to sell the property.
Briefly the legal distinction between tenants in common and joint tenants is as follows:
- Joint tenants – Each joint owner enjoys equal rights over the whole property. This is often the way for married couples to own property. So if one spouse passes away their share goes automatically to the other joint tenant irrespective of the terms of any will or the rules of intestacy.
- Tenants in common – Unlike joint tenants, tenants in common can hold the property in unequal shares and that portion of the property can be by disposed of by each tenant in common in their will.
Can I sell my half of a joint property?
Your ability to sell your share of a jointly owned property will depend on how you own it. If you are a joint tenant your share can’t be separated from the property as a whole. All joint tenants must join in the sale. As a tenant in common however you can transfer your share of the property to a third party without the agreement of your co-owners.
Forcing a sale when joint owner doesn’t want to sell
Occasionally we come across a situation where one or more joint owners wish to sell the entire property, but another joint owner is unwilling to join in the sale. This sometimes happens during divorce proceedings where one spouse is reluctant to sell the family hone.
If an agreement to sell the entire property is not possible and it is not practical for one joint owner to buy the other’s share or ‘buy that person out’ it is possible to ask the courts to make an order forcing the sale of the property.
Such actions are brought under the Trusts of Land and Appointment of Trustees Act (TOLATA). This legislation gives the courts a wide discretion in reaching any decision so outcomes in these cases are unpredictable. It’s always advisable therefore to seek legal advice before starting any formal legal proceedings
Changing type of joint ownership
The differing impact ownership as a joint tenant on the one hand and as a tenant in common on the other means that it is sometimes prudent to change the way you hold a property.
Changing from a joint tenancy to a tenancy in common is known as ‘severing’ the joint tenancy and is appropriate in a range of circumstances, including for estate planning purposes. You may wish to ensure that your children form a previous relationship and not your surviving spouse benefit from your ownership when you die. (You can safeguard your spouse’s position by creating a life interest trust over the property for their lifetime.)
Advantages of owning as tenant in common include:
- Greater control generally over your share of the property
- In some circumstances a share held under a tenancy in common may reduce the amount of assets taken into account by the Local Authority when assessing eligibility for assistance with care home fees.
Conclusion
The way joint property is legally held has significant repercussions, during your lifetime and after you die. You should always consider seeking advice from a solicitor before committing yourself to any sale or purchase.
Contact Us
Please call us on 01492 860420 or contact the team online. Gamlins Solicitors LLP has a network of offices across North Wales, and we can arrange an in-person appointment at the office that’s most convenient for you or a remote appointment if you prefer.
