There are two ways in which a property can be owned by two or more individuals:
Option 1 – ‘Joint Tenants’
Each joint owner owns the whole of the property. When one joint owner dies, their interest disappears. No part of the property can be transferred under a will. The surviving joint owner(s) are left owning the whole of the property.
In the event of a sale during the joint owners’ lifetimes, the general rule is that they will be entitled to equal shares of the net sale proceeds, even if one has made a greater contribution. Exceptions to this rule can and do arise.
Option 2 – ‘Tenants in Common’
Each party owns a separate and distinct share of the property; 50%, 70%, 30% etc.
When one owner dies their share in the property will pass to the person named in their will. If no will exists, it will pass to the next of kin under English and Welsh intestacy rules – subject to challenge.
This option may be appropriate where:
If Ownership in Common is chosen:
(Note) Converting from Joint Ownership to Ownership in Common is possible.
Companies can purchase/own properties directly. It can be advantageous for a new company to be used to hold each property, the company can then be sold rather than the property. This will avoid Stamp Duty on a sale with potentially lower Stamp Duty paid on the purchase of a company’s shares. There may still be other tax issues to consider.
Financing Property -- Mortgages
No matter which type of joint ownership is chosen, each borrower or guarantor could be liable to a lender for the full amount of money owed.
This is governed by the Council of Mortgage Lenders Requirements, Money Laundering Regulations 2007 and Law Society Requirements.
Only original documents are acceptable – if a client is not being seen with the documents then copies should be certified by a qualified lawyer, notary, embassy, consulate or high commission in the country in question. The authenticity of the certificate should be verified. Photocopies must be retained. Examples of appropriate paperwork are below, one from each column is required:
Evidence of name
Evidence of address (must not be the same document as used for evidence of name)
Other documentary evidence of identity may be taken.
Legal costs for acting can vary depending on the following factors:
In addition to our legal fees, we charge an additional sum for acting for a mortgage lender. At present this is £250 + Vat (20%) and a Stamp Duty Land Tax procedure fee of £100.00 plus Vat.
The cost of searches varies slightly from area to area but an estimate of £300 is realistic. This will normally include; Identity verification; Bankruptcy searches; Land Registry priority search; Local Authority search; Water, Environmental and GroundSure searches; and Chancel Check.
The seller’s solicitor will supply a draft contract and other details such as the property’s title. The buyer’s solicitor will examine it and any supporting documents and raise any necessary enquiries. These will be sent to the buyer to check and raise any queries or concerns on by way of a Report on Title.
There are things which a buyer may not know about the property just from viewing it with estate agents or even from a survey. The conveyancing process therefore addresses a number of legal searches to ensure there are no other factors you should be aware of. These will be things like;
Additional questions may be necessary where the property is being purchased “off plan”, that is to say before the property has been constructed. Newly built properties may have warranties that need consideration. If the property is being purchased as an investment there may already be tenants in it and their lease(s) will need to be considered.
A mortgage valuation is carried out on behalf of any mortgage company so they can establish it provides sufficient security for the loan.
A buyer will consider any other necessary surveys. The type of survey will depend on the specific circumstances.
Before the exchange of contracts can take place a lender will require Buildings Insurance to be obtained. Under UK law, a purchaser is responsible for the property as soon as contracts have been exchange.
Before signing/exchanging contracts it is necessary to ensure:
Exchanging contracts is usually done by telephone. Once exchanged a buyer is legally bound to buy the property. If not they will normally lose their deposit and be liable for other losses for breach of contract.
Between exchange and completion a buyer will lodge an interest in the property which will mean that the deeds to the property are frozen, to allow completion to take place and to enable post completion matters to be carried out.
After completion Stamp Duty Land Tax needs to be paid, registration paperwork lodged with the Land Registry, title deeds need to be sent to any lender.
Please note that neither these notes nor anything said during the presentation should be relied upon as legal advice. Neither these notes nor the presentation constitute advice on the interpretation and application of the law to particular circumstances or matters.
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