Purchasing a property together

Purchasing a property together


This note refers to properties bought by more than one person, who are not married, regardless of whether they are in a relationship.

As such, it does not apply to married couples or civil partners. Those buying property jointly should be aware that there are two ways of jointly owning a property, namely as beneficial joint tenants or tenants in common.

Beneficial joint tenancy

When a property is owned under a joint tenancy, the surviving owner will become the sole legal owner of the whole property on the death of the first owner. The deceased’s share of the property passes by survivorship, and cannot be left via the deceased’s will.

Tenancy in common

When a property is owned as tenants in common, each owner “owns” a specified share of the property. That share does not pass by survivorship on the death of the first co-owner; the deceased can leave their specific share via their will as they choose.

Recording the agreement

The choice can be made by electing one of the options on the Transfer Deed (TR1) prepared by the conveyancing solicitor at the time of purchase. The options on the TR1 are:

  • The Transferees are to hold the Property on trust for themselves as joint tenants
  • The Transferees are to hold the Property on trust for themselves as tenants in common in equal shares
  • The Transferees are to hold the Property on trust for themselves as tenants in common un-equal shares

The Transfer Deed allows joint owners to specify how they wish to own the property at the time of purchase, and what their specific shares will be. The third option above allows joint owners to elect a tenancy in common in unequal shares. Those shares can be in whatever proportions they choose – 50:50, 70:30, 65:35, or 95:5. Often the choice will reflect the financial contributions that each has made to the purchase. The agreement can be recorded in the Transfer Deed (if executed by the buyers), or in a more bespoke agreement called a Declaration of Trust. The latter can be prepared and executed after the date of purchase if necessary so long as the joint owners agree on their respective proportions.

Updating the agreement

If at any point after the purchase, circumstances change, it is wise to re-visit such an agreement to see if it still accurately reflects the joint owners’ wishes. For example, if one party leaves the property, it would be sensible to review matters at that point, with the benefit of legal advice, and to record any changes to the previous agreement.

Risks of having no agreement

Unfortunately many joint owners give no thought to quantifying their interests in a property and it is often only when the joint owners’ relationship breaks down that a dispute emerges. Where such a dispute emerges an application can be made to the court for a declaration to confirm the joint owners’ respective shares.

Determining such disputes requires the application of complex legal principles. The court will look to see if the joint owners’ actual intentions can be deduced or inferred from their conduct. The court will look firstly at what is recorded in the TR1 or any Declaration of Trust. However, in some situations, it may be possible for the court to infer that the joint owners’ intentions were not as set out in those documents, or that their intentions changed over time as circumstances changed. If a Declaration of Trust has been executed updating the joint owners’ intentions, the position will be much clearer to all, and costly litigation may be avoided.

If the court finds itself unable to infer from their conduct what the joint owners intended, then the court will have to consider the whole course of dealings between the owners, and attempt to impute an intention to the parties to achieve (what the court considers to be) a fair outcome. This may differ significantly from what the joint owners consider to be fair.

Disputes of this nature can cost parties tens of thousands of pounds in legal fees, eating up the equity in the property that they are arguing about. The best joint owners can do is clearly set out their intentions at the time of purchase in a document executed by both of them, and to keep that agreement under review and up to date, in the same way that they would a will.

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