Jack and Sarah: The next chapter
Two years later, Jack and Sarah are still happily together and Jack has saved £25,000.00 to put towards their next property. Sarah sells her property and receives net equity of £75,000.00. They buy a new property together for £200,000.00. Sarah puts in her £75,000.00 and Jack puts in his £25,000.00 as the deposit.
Sarah and Jack are advised by their conveyancer that there are a few different options as to how they can hold their new house:
Options For Joint Home Ownership
Option 1: Joint Tenants
Holding a home as Joint Tenants means if one of them dies, their share of the house automatically passes to the other. It also means there is a very strong presumption that they intend to hold the property on a 50/50 basis, regardless of who will be paying the mortgage and what they each put into the property.
Option 2: Tenants in Common in equal shares
Owning a property as Tenants in Common in equal shares means that if one of a couple dies, their share of the house will pass either under their will or under the rules of intestacy if they don’t have a will. Again it means they hold the property on a 50/50 basis, regardless on anything else.
Option 3: Tenants in Common in unequal shares
Tenants in Common in unequal shares means that if one dies, their share of the house will pass either under their will or under the rules of intestacy if they don’t have a will. This means they can specify that they will not hold the property 50/50, but instead will hold the property in a way that recognises the fact that Sarah is putting more money into the property than Jack.
Sarah and Jack's Choice at This Stage
Sarah and Jack decide to go with Option 3 and become Tenants in Common in unequal shares.
Their conveyancer prepares a Declaration of Trust which specifically states that they hold the property 75% to Sarah and 25% to Jack. This means that if they split up, Sarah will receive 75% of the net equity and Jack will receive 25%.
Another option would have been to state that Sarah will always get the first £75,000.00, Jack will get the next £25,000.00 and the balance be divided equally between them. Unless Jack could prove that they had entered into a subsequent agreement to the contrary, Sarah’s money would be protected.
Read the next stage of Sarah and Jack's journey next week.
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