Purchasing a house with a fellow friend or a family member is a big step. There are various benefits of purchasing a property jointly with other people. This helps you buy a house if you are unable to afford it all by yourself. It also supports co-owners financially as they have to jointly pay expenses like utility bills, council tax, repair, and management of the house.
Disadvantages of common tenancy
Apart from so many advantages of having a house purchased by two or more people, there are a few complications too that one must consider and be prepared for.
- It may happen that one of the co-owner may decide to move out of the house. In such situation, it would not be possible for the other owner to bear all expenses.
- There can be conditions, when one of the owners may not be able to pay bills mainly because of the lost job. In this case, you may be the sole person to pay the whole mortgage.
- There may be circumstances when your relationship with your co-owner is disrupted and you both may not like to live together.
Different types of ownership
There are numerous things that one should understand before buying a property as a joint venture. Your conveyancer will help owners’ assists in selecting the type of ownership suited to your requirements. It is possible to change between the two types of ownership, but it is not always very easy and fast.
Joint tenancy refers to the condition when the property belongs to you as well your fellow owner jointly. In short, all co-owners act as a single owner. There is no particular share of a single co-owner in the property and nobody is permitted to give away the property in a will. After the death of any one of the co-owner, the share of the property automatically passes to other owner(s).
It is possible to terminate a joint tenancy. This can be done when the entire property is transferred to a single owner. One may convert joint tenancy to tenancy in common, especially if one of the owner goes bankrupt. Furthermore, if one owner is living, the property is transferred to the sole owner.
Tenancy in common
When purchasing a house with other people(s), it is important to consider the fate of your property share after your death. Having a property as tenants in common refers that property belongs to you and you have a specific share. Upon your death, your share of property would be given to the person indicated on your will. A tenancy in common terminates when all the co-owners sell the property to someone else, or convert it into a joint tenancy. Besides, a tenancy in common can end when one owner obtains all the property shares.
When purchasing a property jointly with other people, it is suggested weighing all the advantages and disadvantages of all the available options. It has been found that joint tenancy is usually chosen by married couples since after the death of any one of the spouse, the property automatically gets transferred to the surviving one.