When a couple buys property together, the way ownership is structured can have a major impact on each person’s rights. This often involves choosing between different forms of co-ownership and deciding whether a deed of trust should set out the financial shares. Here’s how to protect your share when buying property.
Deed of Trust
A deed of trust is a legal document that sets out how the property is owned and how proceeds from a sale should be divided. It’s useful when contributions to the purchase price, mortgage payments, or renovations are not equal. The deed records each person’s financial stake, providing clarity if the relationship ends or one party wants to sell.
A deed of trust can also specify what happens if one person dies, protecting the surviving partner while ensuring that other beneficiaries, such as children from a previous relationship, receive their entitled share. Without a deed, disputes can arise over who owns what, especially when contributions differ from the default rules applied by law.
Joint tenancy
Joint tenancy is a common way for couples to hold property, where each person has an equal share by default and the right of survivorship applies. This means that if one partner dies, their interest automatically passes to the surviving partner. This provides security for the surviving owner, but it can create complications if one partner wishes to leave their share to someone else or if the ownership percentages are unequal. Joint tenants cannot simply alter the share they hold without converting to a tenancy in common.
Couples who want equal ownership and simplicity may prefer joint tenancy, while those with unequal contributions or complex family arrangements may prefer a deed of trust.
Tenancy in common
Tenancy in common allows each owner to hold a distinct share of the property, which does not automatically pass to the other owner upon death. This arrangement can be recorded in a deed of trust, specifying each person’s percentage ownership and responsibilities for mortgage payments, repairs, and other costs. Tenancy in common allows you to leave your share to someone outside the partnership, such as a child, without affecting the other owner’s legal share or rights.
This structure is useful when one partner invests more into the property or when the property is purchased for investment purposes alongside a primary residence. Clear documentation of contributions and obligations can prevent disputes and maintain each person’s legal and financial rights.
What to consider before deciding on ownership
Couples should discuss how they will contribute to the purchase price, ongoing costs, and future sale proceeds before finalising ownership arrangements.
Legal advice can guide the drafting of a deed of trust and help structure ownership as either joint tenants or tenants in common, depending on the couple’s circumstances. Though property law is much the same across England and Wales, local advice can be particularly helpful. Cheltenham solicitors Willans, for example, will know about drafting deeds of trust that reflect both parties’ intentions, as well as how local property practices and market conditions may influence the agreement.
Proper planning also includes considering inheritance tax, debts, and potential claims from creditors. Establishing legal agreements early can prevent disputes and give both parties confidence in their rights.
Whether choosing a joint tenancy or tenancy in common, clear communication and professional advice help couples safeguard their interests and provide a fair framework for ownership, contributions, and inheritance.
