This week, we joined in with a Law Society Twitter discussion about buying a house with friends. If you weren’t able to join in #SolicitorChat, here are our answers to the questions.
1. How many people can become owners of a single property? What rights do they have?
Up to four people. They have the rights granted in the title, which are equal rights. They also have the right to jointly sell or mortgage the property.
2. What is the difference between tenants in common and joint tenants?
Joint tenants: each person jointly owns the whole property. In the event of sale, the sale proceeds would be split equally between the owners. If any of the owners were to die, their share of the property would automatically pass to the remaining owners by “right of survivorship”.
Tenants in Common: each owner has a defined share of the property (which may be unequal for example, 70%/30%). In the event of sale, the proceeds would be split in accordance with each owner’s defined share. If one of the owners dies, their share would pass in accordance with their will. Alternatively, in the absence of a will, under the rules of intestacy. Making a will when you hold as tenants in common is vital.
3. What are the main pitfalls friends buying property together face and how can a solicitor help to avoid them?
Relationships may deteriorate or someone’s circumstances may change. One owner may decide they want to sell the property and the other owners may not want to. A solicitor can advise how the property should be held to protect each owner’s share.
4. Who is responsible if one of the owners stops paying their share of the mortgage?
Under a joint mortgage, the owners will be “jointly and severally liable”. This means that if one stops paying, the other owners would still remain responsible for paying the mortgage.
5. What happens if one of the owners decides they would like to sell?
You must all agree to sell. Ideally, a declaration of trust signed at the outset should set out what will happen if one party wants to sell. Options could include one person buying the other’s share. If agreement can’t be reached, you will need a court order to sell the property.
6. What top tips would you give to someone considering buying property with their friends?
Consider the risks involved carefully and take legal advice. Ensure you have a plan in case things don’t work out. If you’re putting different deposit amounts into the property (or are tenants in common) ensure your interest is protected by a declaration of trust.
If you are considering buying a house with friends or family members, our conveyancing team can help. Call us today on 0800 988 7756 or request a free instant quote
