What should I consider when buying a property with someone else?


06 October 2020

When purchasing a property with someone else, there are a number of considerations you should bear in mind to ensure your interest in the property is legally protected.

The considerations cover circumstances that might not be at the forefront of your mind when signing the contract, but are nonetheless important to consider to ensure both owners are of the same understanding at the outset and to help prevent legal disputes in the future. 

In particular, you may wish to give thought to: 

  • Ownership: Is it intended that you will each own 50% of the property, or is the split to be different?
  • Deposit: Will you each be putting in the same deposit? If you are providing a larger deposit, do you want to own a larger share of the property or simply have that deposit paid back first? If the deposit is coming from a family member, is it a loan or a gift?
  • Mortgage: If there will be a mortgage, will it be in joint names, and will you be paying it equally? Issues can arise where one party pays the mortgage and the other pays the bills and they have not considered the legal impact of this. Have you thought about what should happen if one of you cannot pay the mortgage?
  • Improvements: Do you think you might carry out improvements on the property at some point, such as an extension, attic conversion or new kitchen? If you intend to carry out any improvements, who will fund them? If you will be funding the whole cost of the work, would you want any growth in the property value to be yours or shared? 
  • Unforeseen circumstances: What do you intend to happen with the property if one of you dies? Would you want the other to automatically inherit? Do you have a Will? If you are in a relationship with the other purchaser, what would you want to happen with the property if the relationship breaks down?
  • Sale of the property: Have you thought about if one of you wants to sell in the future but the other does not? 

A Declaration of Trust is a legally binding document which can cover all of the above points to provide certainty and clarity at the outset between the purchasers. Without a Declaration of Trust, disputes can arise, which can lead to costly litigation. 

Ideally, a Declaration of Trust would be signed at the time of purchasing the property, but one can also be prepared to confirm how individuals hold an existing property between them. It is also possible to alter a Declaration of Trust in the future, if your wishes change. 

You should also consider preparing or amending any existing Will, to ensure provision is made in relation to the property following your death. 

If you are considering buying a property jointly with someone else and you would like to discuss whether a Declaration of Trust would be appropriate for your circumstances, or review or put in place your Will, the Private Client Advisory Team at Birketts can assist. 

The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at October 2020.