Tenants in common vs joint tenants?

[Mahraih]

Hi, wondering if there is anyone about who might have an idea which is the best option for our situation? I have zero legal knowledge ...

DP (not married) and I are buying our first house. His parents have very kindly given more than half the value of the house, which we will own. We will however have to pay back half of the money they have given at some point, as his brother will need it for his own deposit.

It is to be a family house, for DP, DS and myself.

We want to own the house jointly, and if it had to be divided, 50/50. We are taking out life insurance so that if one of us passed away, the full value of the house would be paid off and the surviving partner could pay back his parents too.

If the house were sold due to us breaking up, obviously the money that DP's parents put in would go back to DP so that he could pay back his parents and they could decide amongst themselves what to do with it.

What I need to make sure is that DP could not just kick me out if we broke up and that I have to agree to any sale that goes through. I want to be as safe as is legally possible. I DON'T think DP will go crazy or anything, but am not stupid and want to make sure it's all kosher particularly as I would probably be DS' main carer.

Any suggestions? We thought tenants-in-common with 50/50 owndership (we will make Wills leaving our halves of the property to each other), and a declaration of trust in place saying what happens to the proceeds (a lump sum to DP - the money his parents put in) and then we each receive what we put in. Does this sound sensible?

Sorry, long!

[cestlavielife]

when will you have to pay the money back? how much is it eg in terms of something you would only get by selling the pproperty or something you could raise by loans?

it does sounds reasonable but if you split you would have to buy him out of his share an raise money for that in order to stay in the propety - tho consdieration wouild be given to where DS is living

the difference tho is that with joint tenants i fone of you dies the otehr automatically gets ownership while in tenants in common it relies on the will..

Joint tenancy

Under this agreement the joint owners together own the whole property and do not have a particular share in it. If one of the owners dies the other automatically becomes the sole owner. This would be the case even if a will had been made leaving the deceased owner's ?share' to someone other than the co-owner.

Tenancy in common

This is the opposite of joint tenancy in that the tenants in common each have a definite share in the property. For example A and B could own the property in equal shares, or A could own one fifth with B owning four fifths. This would be the most appropriate agreement where people want to own a property in separate pre-determined shares.

Under this form of ownership if one of the owners dies, his share of the property will pass on to whoever he specifies in a will, or if a will is not made, in accordance with the rules of intestacy (someone dying without leaving a will). If you are planning to make a will (and it would be wise to do so) you should have it drawn up before you sign the transfer deed that passes the legal ownership of the property to you. This way you will save the time, money and inconvenience of having to change your will.

[Collaborate]

You can't have it that he gets back what his parent put in if you split up (ie he gets back more) but not if you don't split up. I suggest that you hold it as tenants in common in unequal shares, then get advice from your conveyancing solicitor about a deed of trust. I'd always recommend one of these - far cheaper than paying the likes of me to sort it out for you if it all turns pear shaped. If his parents are giving you £100k, and the house costs £200k, (I assume it's funded by a mortgage) then he will own 25% free of mortgage, you'll each own a further 12.5% free of morgtage (but subject to the debt to his parents) and then you'll both own the remaining 50% subject to the mortgage. It's important that there is a proper record of the terms of repayment of the debt to his parents. they will need to be a party to that.

If you're still together when you sell it you can choose to invest it however you both see fit.

You'd both have to make wills.

[mumblechum1]

Was just going to post what Collaborate said - you beat me to it again!

[vj32]

Have you got a firm mortgage offer? As well as agreeing with the above - we were in sort of similar circumstances when we first bought our house - I would say that you would usually need to declare any other interests in the property to the mortgage company you are using, which could complicate things.

[Mahraih]

Thanks for your replies guys!

Collaborate, I think i understand what you're saying ... we can't own it 50/50 but have unequal shares of the money raised if we sell the house, is that right?

All we want to do is own the house equally (whether that is expressed in a percentage or not), but that in the event of a sale (whether we split or not) DP gets back the money his parents have put in, so that he can pay them back his brother's half. Is this impossible?

cestlavielife, there is no set date on paying the money back, it's still being discussed. We may possibly pay it back in increments. And it is more than we could raise via loans.

vj32, we do indeed have a mortgage offer and yep, taking care of all that :)

[Mahraih]

p.s. please excuse my total lack of legal knowledge - I have been googling and googling!

[sneezecakesmum]

Mahraih. owning the house equally is expressed as the percentage 50/50(%) !
If you don't wish to go down collaborates route you are looking at expensively drawn up legal agreements by a solicitor.
Either way all the above needs to be documented legally to suit all your eventualities, never leave these things to the goodwill of partners however loved up you are at the moment!

[Mahraih]

Thanks, sneezecakesmum - I thought that with joint tenancy it was just 'our' house, rather than 50% his and 50% mine, if that makes sense.

I think we will have a chat with our solicitor and see what she advises, as our situation is a bit complex. Don't worry, everything will me documented legally!