Co-owning a house – things you must know (part 2)

by Chris Lang on October 23, 2009

Joint TenancyIf you’ve read my last post, you know that there are 2 ways to own a house, one is called “tenancy in common” and the other is called “joined tenancy”. Why do you care? Because choosing one over the other could mean that you leave no inheritance to your dependents.

Joint tenancy

Joint tenancy means all the tenants own equal shares of the property. As a direct consequence of this it’s impossible to divide the ownership, for example, seventy-thirty – which is not good in a situation where 2 owners haven’t invested equal amounts of money into the property.

Another interesting thing to know about joint tenancy is what happens to the property when one of the tenants dies. His or her share automatically passes to the other tenant, or if there is more than one, is shared equally between them all.

Co-ownership agreement

This document is a must-have for any kind of joint tenancy. It should list all the potential problems, all the disputes that may arise between the owners and ways to settle them. To give you an idea of a dispute, it could be that one owner wants to refinance and the other one doesn’t, or one owner defaults under the finance and the others get affected by it.

How to choose

The main reason to choose tenancy in common over a joint tenancy would be control. If you want a complete control over your share of the property – go for tenancy in common. If you want to make sure that your share passes on to your heirs when you pass away – choose tenancy in common. And remember that you need a valid will that specifies who you’d like to have it.

Another consideration is financial risk. If you are exposed to a greater financial risk than your partner (and you are buying a house together), consider making your share smaller in case your creditors go after your house.

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{ 1 comment… read it below or add one }

tarsh December 25, 2009 at 4:41 am

hi, i was wondering – if you get a joint mortgage do both titles always go on the deed?

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