There are two ways in which couples can jointly own property. The most common form of ownership is by way of joint tenants. This means both names are on the register of the property, and in the event of the death of one of the tenants the property automatically passes to the other without the need for probate to be granted.
The other way is less common and that is to own the property as tenants in common. This means on the death of one the property passes to their estate (whoever that may be), which in effect means the deceased’s tenant in common’s family will receive the benefit of the share of the deceased. On the face of it that share will be 50% of the equity in the property unless there is anything expressed to the contrary.
The difficulty arises where the parties have not contributed equally. How do they sort out what they are entitled to on the eventual sale of the property? To resolve this the parties should draw up a declaration of trust which sets out who gets what.
In the event that no declaration of trust is drawn up, then it will be difficult to prove the parties did not intend to do anything other than to split the proceeds equally. That could be unfair if one party contributed more than the other.
In this situation there is no declaration of trust and therefore the parties need to have a serious conversation about how to deal with the property but at least they are both alive. If they can agree on what to do they should sell the property and split the proceeds one way or the other. If they cannot agree, then it will be a question of going to court. This is an unattractive proposition as only the lawyers will benefit.
I would suggest the parties get their heads together ‘ or even look at mediation ‘ but one way or another try to resolve their differences by agreement.
Edward Goldsmith
