Home Ownership in Today’s World

By most people’s standards today, buying a home is the largest purchase they’ll ever make. But it’s often a complex, lengthy process, with everyone breathing a sigh of relief when they finally enter the realm of homeownership.

So, it’s not surprising to find that many don’t get their head around how they actually own their home. Furthermore, they’re unlikely to appreciate that different homeownership types affect what they can do with their property if their relationship with a joint owner breaks down or if one owner dies.

Common Home Ownership Problems

1. Unequal Share

Probably the most commonly asked question. If a couple buys a property together, but one contributes more than the other, what should they do?

Solution

Today, people buy, share and invest in properties in a variety of ways. However, over time relationships change or sadly come to an end. By recording your intentions in a formal document, such as a declaration of beneficial ownership, you’ll minimise the risk of a dispute later.

2. Bank of Mum & Dad

The ‘Bank of Mum & Dad’ is now one of the biggest lenders in the UK. But how should this financial contribution be treated?

Solution

Make sure there’s a written agreement to protect everyone involved. Decide whether it’s a loan, a gift or an investment and consider what happens to the property if there’s a relationship breakdown. Using a declaration of beneficial ownership, setting up a trust or securing the loan through a first or second legal charge are good options. Be careful; your instructions need to be clear. If there’s another lender involved (mortgage lender), they should be aware of the arrangements from the beginning.

3. Legal vs Beneficial Interest

What happens when there’s one legal owner but more than one beneficial owner?

Solution

The legal owner of a property is the person who owns the legal title of the land. They can decide to sell or transfer it. The beneficial owner is someone who’s entitled to an interest in the value of the land. Beneficial interest gives a person the right to live in the property, share rental income and proceeds of the property’s sale. Preparing a declaration of beneficial ownership safeguards and documents who’s entitled to what.

4. Death

What happens when someone dies?

Solution

Put simply; make a Will. Whether you’re married or not, you need to be clear about what will happen.

5. Remarriage

What arrangements should be made if you remarry?

Solution

Draw up a declaration of trust or a Will, or preferably both. The documents help both parties and any children you may have avoided arguments down the line. After all, the most common cause of a dispute is uncertainty.

6. Mortgage

Most of us take out a mortgage when we buy a home. What can you do to protect everyone’s best interests?

Solution

You don’t have to take out insurance when you get a mortgage. But, having life insurance in place means that your family can pay the mortgage in the event of your death.

7. Future

Buying a home is probably the single most important purchase you’ll ever make. What can you do to plan?

Solution

None of us knows what’s around the corner. A declaration of trust can, for the most part, sets out what will happen, avoiding unnecessary stress and uncertainty.

Our Advice

Taking specialist advice and documenting your arrangements in a formal, written contract or deed minimises risk and/or costly disputes. Whilst it’s best to organise these things at the outset, it’s entirely possible to do this afterwards. For further information, advice or a fee quotation, please contact us. We’re here to help.

Please note that all views, comments or opinions expressed are for information only and do not constitute and should not be interpreted as being comprehensive or as giving legal advice. No one should seek to rely or act upon, or refrain from acting upon, the views, comments or opinions expressed herein without first obtaining specialist, professional or independent advice. While every effort has been made to ensure accuracy, Curtis Parkinson cannot be held liable for any errors, omissions or inaccuracies.

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