Joint ownership is becoming an increasingly common property ownership type. Whether you are considering purchasing a property with family, friends or your partner, in this guide we’ll explain the ins and outs of joint ownership.
So, what exactly is joint ownership? Essentially it is property held in the names of two or more people. Co-owners can be individuals or businesses. The main types of joint ownership are joint tenancy and tenancy in common. We’ll explain these terms in full detail shortly.
This is a guide for individuals and families involved in joint property ownership. The content will cover the legal rights, responsibilities and implications of joint ownership. We’ll also address the different types of joint ownership agreements and the steps involved in managing and dissolving joint property arrangements.
We’ve written this for:
Couples purchasing property together
Families and friends sharing property ownership
Business partners involved in joint property investments
Legal professionals advising clients on joint ownership issues
The goal is to inform current and prospective joint property owners about their rights and responsibilities, encouraging you to seek legal assistance to ensure your ownership agreements are legally sound and effectively managed.
Types of joint property ownership
As promised here is a definition of the main types of joint property ownership.
Joint tenancy
All owners have an equal share in the property under a joint tenancy. As joint tenants:
You have equal rights to the whole property
The property goes to the other owners if you die, this is known as the right of survivorship
You can’t pass on your ownership of the property in your will
Joint tenants are often married or a couple, however, this property ownership type can be suitable for up to four buyers.
Tenants in common
Tenants in common have at least two owners who hold a distinct share of the property which can be sold or transferred independently in a will. As a tenant in common, your share of the property does not automatically go to the other tenant if one of you dies.
Trusts for property ownership
Trusts can protect a property and are especially useful in family situations, to protect an inheritance. Discretionary trusts in particular are suited to family circumstances, allowing a trustee to hold a property on behalf of multiple beneficiaries.
Discretionary trusts are flexible and can adapt to changing needs and circumstances. They represent a collective of beneficiaries within a trust and can be used for complex estates where the needs of multiple beneficiaries need to be considered and managed.
Legal rights and responsibilities of joint property owners
Let’s explore the legal rights and responsibilities of joint property owners.
Selling, leasing and making improvements
When it comes to making decisions about the property you have equal rights, so if one person wants to sell, every owner has to agree.
Selling can become complicated when couples split, but one of you remains living in the property, or you own with friends and one of you wants to move out to live with a partner or to relocate for a job.
To sell when the other owners don’t want to, you may have to seek a court order. However, you may be able to come to an agreement through negotiation or mediation.
A joint owner can apply to the Court of Protection to sell a property when the other owner has lost mental capacity and cannot help you handle a sale process.
Before becoming a joint owner, you may want to consider creating a legal agreement known as a declaration or deed of trust, which sets out:
When a property can be sold
How much notice joint owners need to give if they want to sell
The proportion of the sale price each owner is entitled to
When drafting a deed of trust, each joint owner should get independent legal advice to ensure the agreement is fair and represents their interests.
Joint property owners can lease their property. When leasing a jointly owned property, owners must sign a tenancy agreement. Rental income is usually split equally between partners, however the share agreed can be changed. This can be set in a declaration of trust. Each person is taxed based on the share of rental income they receive.
When considering making improvements, joint owners must agree to any work that will be done to the property. Before purchasing a property it’s worth discussing the potential changes you wish to make with your fellow owners, such as creating an extension or adding solar panels to the roof.
You may want to consider documenting any decisions you make with co-owners to act as evidence in case of a dispute.
Financial responsibilities
Joint owners have financial obligations that they must follow. Let’s start with the biggest obligation of any homeowner, the mortgage. Each joint owner has to be on the mortgage. You can’t choose which joint owner goes on the mortgage.
Joint tenants are jointly and severally responsible for mortgage payments. This means if a co-owner stops making mortgage payments, then the other co-owner(s) has to cover their share.
Tenants in common can be a good arrangement when one joint owner is prepared to pay more towards the mortgage or deposit. This is done under the premise that each owner gets out what they put in if the property is sold. When a couple buys a property as tenants in common, they might agree on a 60-40 split for example.
A joint owner can be removed from a mortgage if they want to sell or transfer their ownership of the property. All co-owners must share maintenance and repair costs equally and make joint decisions.
Dispute resolution
When joint property owners are involved in a dispute, they can try to resolve it using negotiation or alternative dispute resolution including mediation and arbitration.
Negotiation can be suitable when there are written agreements in place such as a deed of trust, as these can help support the settlement. Mediation can be attempted if negotiation isn’t suitable. In mediation, parties attempt to reach an agreement via a voluntary process that can be adapted to the owner’s needs.
If none of these methods work, a dispute can be settled by legal action. Taking a matter to court can be expensive, time-consuming and draining. The court will consider the owner’s intentions, the property’s market value and beneficial interests in a property when making decisions.
Legal process for establishing joint property ownership
When entering into joint ownership, a joint ownership agreement will need to be drafted.
These agreements establish how two or more people will be responsible for a property, providing legal protection for each party if a dispute was to occur. Without an agreement in place, each party is exposed to risk, disputes and the potential of losing the property.
The agreement outlines the rights and responsibilities of each owner, setting a framework for what will happen if any issues arise.
Key clauses to include:
Registering the ownership
Joint property owners need to register joint ownership with HM Land Registry. You’ll need to tell HM Land Registry about the type of ownership you have in your property when you register your property. You also need to register new ownership if you’re adding a new joint owner to the property. We’ve written a guide on how to add someone to your house deeds.
Follow these steps to register ownership:
Download and complete an application to change the register
Fill in a ‘transfer of whole of registered title’ form if you’re transferring the whole property, or a ‘transfer of part of registered title’ form if you’re only transferring part of the property
Fill in a certificate of identity for a private individual
Find out the correct fee. Use the ‘Scale 2 fees’ if you’re transferring ownership of a property without selling it, for example as an inheritance. Use the Land Registry fee calculator if you’re transferring part or all of a property as a sale
Send your documents, forms and application fee to the Land Registry
Updating the agreement
It’s essential to review and update a joint ownership agreement regularly to reflect changes in circumstances or ownership shares. Agreements may need to be updated when one partner decides to contribute more to the mortgage, or there is a separation and one partner moves out of a shared property.
Risks and considerations
Disputes among co-owners are always a possibility when circumstances change. It could be there is a shift in the housing market which means one owner decides that the home needs an extension. Or, a separation can lead to disputes about who should pay what.
Disagreements can be exacerbated if there is no clear agreement on decision-making or financial contributions. A well-drafted ownership agreement can mitigate against these risks and ensure disputes can be resolved quickly and cost-effectively.
Joint property ownership can affect personal relationships, especially among family members or business partners. So, it is worth carefully considering whether a property investment is worth the risk of damaging your relationships.
Costs and fees involved
Legal costs associated with drafting and registering a joint ownership agreement include solicitor fees and registration costs. You may face ongoing costs as a joint property owner, such as property maintenance, insurance, and potential costs for dispute resolution.
How do I change a joint ownership agreement?
A joint ownership agreement can be changed from being:
Joint tenants to tenants in common – known as severance of joint tenancy. You don’t need the other owner’s permission to make this change.
Tenants in common to joint tenants – you need the agreement of all tenants in common to switch to joint tenant ownership
A solicitor, conveyancer or legal assistant can help you make the change.
Joint tenants to tenants in common
You may decide to make this change if you get a divorce or separate and want to leave your share of a property to someone else. If the other owners agree to the change, you will need to:
Fill in form SEV to register a form A restriction
Prepare any supporting documents requested
Send the form and supporting documents to HM Land Registry’s Citizen Centre
If the other owners don’t agree to the change, you will need to:
Serve a notice of severance, a conveyancer can help
Fill in form SEV to register a restriction
You may need to fill in form RX1 to register a form A restriction if you can’t provide evidence of the severance options in form SEV
Prepare any supporting documents requested
Send the form and supporting documents to HM Land Registry’s Citizen Centre
Tenants in common to joint tenants
You may want to make this switch if you get married or enter a civil partnership and want to have equal rights to the whole property. To apply you will need to:
Fill in a new or updated trust deed, a conveyancer can help
Fill in the form to cancel a restriction if one has been registered
Prepare supporting documents requested
Send the form and supporting documents to HM Land Registry’s Citizen Centre
You can change from individual ownership to joint tenants to tenants in common, this is known as transferring ownership.
Why choose Lawhive for joint property ownership legal advice?
There are many good reasons to choose Lawhive’s professional property experts for assistance in joint property ownership matters.
Legal expertise – we have extensive experience in helping clients establish and manage joint property ownership agreements, ensuring legal compliance and protecting ownership rights
Combination of technology and legal expertise - Lawhive uses AI technology to streamline the process of drafting and managing joint ownership agreements, making it easier and more cost-effective for you. Our platform is 30% cheaper than hiring a lawyer from a traditional law firm
Client-centric approach – we’re committed to understanding client needs and providing tailored legal solutions to ensure smooth and effective joint property ownership
Joint property ownership legal advice
Understanding the legal implications of joint property ownership ensures your interests are protected. Having a clear and legally binding agreement can mitigate against the risks of disputes arising, which can be costly and time-consuming.
Whether you’re considering purchasing a property with other owners or currently own a joint property and need guidance, you can seek expert legal advice from our solicitors to ensure your joint ownership arrangements are managed effectively.