Joint ownership vs. Tenants in common with proportional shares

boldaslove

So my partner and I (unmarried) are looking to buy our first home (it’s been a long road so far with a fair few obstacles!) and I’m concerned about the ownership in regards to the cash we’re both putting in.

We both have an amount of cash to put in for the purchase - his has come from his parents, mine from an inheritance.

The houses we’ve looked at the lower end of our price range would involve us putting 50% each down as a lump sum and having an equal share in the house. The houses we’ve really fallen for have been pricier and have meant that my partner would be putting more in (he has a bigger cash reserve than me). Now it turned out during a conversation that I wasn’t present for that his parents were worried about me having an equal interest in the house if this happens. My partner and I agreed that in this case we’d split the ownership proportionally, however we’d still be paying for the bills and upkeep of the house 50/50.

I’m a little worried that this would put me in a vulnerable position if the worse were to happen. We’ve been together for years and we’re very stable, have no intentions of leaving each other but I agree that it’s sensible to have these discussions and I certainly don’t feel entitled to an equal share of his parents money. On reading advice online it appears that if we were to split up, or one of us dies, the other would receive their proportion of funds/share of the house and the remainder would go to the next of kin (his parents?)/the people named in the will (we don’t have wills at the moment). If we were the marry in the future this would change to 50/50 ownership and if the worse were to happen ie. one of us dies, the other would inherit the 50% share. Is this right?

I guess I just want to sound this out as I don’t know if I’m being naive and putting myself in a vulnerable situation. I’m particularly worried about this as I’ve already been in a situation where I’ve had to sell the family home I was living in after my mum died as I couldn’t afford to buy out my brother and it was very traumatic. I feel really upset at the thought of having to go through something like that again and equally if the worst were to happen to me I wouldn’t want my partner to have to go through that either. 

I’d appreciate any thoughts on this as I have limited advice on my side and my partners parents don’t seem comfortable discussing this with me directly.

AdrianC

The main difference between joint tenants and 50/50 tenants in common is what happens if/when one of you dies.

JT - the deceased's ownership simply ceases. The other JT instantly owns 100%. Wills are irrelevant, because the share of the house isn't part of their estate.
TiC - the deceased's ownership goes with their will, or the intestacy rules if they don't have a will. That, in your situation, would be the parents...
https://www.gov.uk/inherits-someone-dies-without-will/y/england-and-wales/no/no/yes
...so he'd better make a will leaving it to you...

But that's not really your main worry, is it?

Your main worry is what happens if you split up. Because if you split up, you each want a bit of the equity... 

Is his parents equity a gift or a loan?
If it's a loan, they get a say. But the lender won't like that.
So I bet it's being pitched as a gift... Then they have no say in what happens to that gift.
Unless they're all lying to the lender, and it's a loan that's being pitched as a gift...

In the event you do split up, do you think the two of you would grown up enough to come to a mutual agreement, or would there be recriminations and accusations flying around?

p00hsticks

boldaslove said:

 I’m particularly worried about this as I’ve already been in a situation where I’ve had to sell the family home I was living in after my mum died as I couldn’t afford to buy out my brother and it was very traumatic. I feel really upset at the thought of having to go through something like that again and equally if the worst were to happen to me I wouldn’t want my partner to have to go through that either. 

The way round that one is to take out life insurance on each other so that if either of you dies prematurely the other gets sufficient money to pay off the mortgage and/or buy out the share of the property from whoever the deceased partner has left it to.

boldaslove

AdrianC said:

Is his parents equity a gift or a loan?
If it's a loan, they get a say. But the lender won't like that.
So I bet it's being pitched as a gift... Then they have no say in what happens to that gift.
Unless they're all lying to the lender, and it's a loan that's being pitched as a gift...

In the event you do split up, do you think the two of you would grown up enough to come to a mutual agreement, or would there be recriminations and accusations flying around?

It is a gift, it’s already been gifted to my partner, and I think unfortunately there’s some politics here which I won’t go into at length but in short his mum wants us to live very close by and is upset with me for looking elsewhere so from what I gather she’s the one voicing the concerns about ownership. 

I would hope if we did split up that it would be amicable. I certainly would want the best for him.

p00hsticks said:

boldaslove said:

 I’m particularly worried about this as I’ve already been in a situation where I’ve had to sell the family home I was living in after my mum died as I couldn’t afford to buy out my brother and it was very traumatic. I feel really upset at the thought of having to go through something like that again and equally if the worst were to happen to me I wouldn’t want my partner to have to go through that either. 

The way round that one is to take out life insurance on each other so that if either of you dies prematurely the other gets sufficient money to pay off the mortgage and/or buy out the share of the property from whoever the deceased partner has left it to.

This sounds very sensible, but can you take out life insurance without a mortgage? We are in the very fortunate position of being able to buy with cash whereas I thought life insurance was a mortgage thing?

[Deleted User]

Yes you can have life insurance without a mortgage. Life insurance insures your life not a mortgage. 

I’d think long and hard about buying somewhere with money gifted from the parents especially as it comes with strings attached about where you need to buy. That and the fact your partner is letting his mother interfere in a joint decision you should be making together. I’d rather have a small mortgage than funds from an interfering parent. 

As cash buyers there’s nothing to stop you buying as joint tenants, which means in the event of one of you dying the other automatically becomes the sole owner, and having a Deed of Trust in place that says in the event of a relationship breakdown the equity should be split 50/50, 60/40, whatever ratio the two of you decide. 

AdrianC

boldaslove said:

AdrianC said:

Is his parents equity a gift or a loan?
If it's a loan, they get a say. But the lender won't like that.
So I bet it's being pitched as a gift... Then they have no say in what happens to that gift.
Unless they're all lying to the lender, and it's a loan that's being pitched as a gift...

In the event you do split up, do you think the two of you would grown up enough to come to a mutual agreement, or would there be recriminations and accusations flying around?

It is a gift, it’s already been gifted to my partner, and I think unfortunately there’s some politics here which I won’t go into at length but in short his mum wants us to live very close by and is upset with me for looking elsewhere so from what I gather she’s the one voicing the concerns about ownership. 

In the immortal words of Di... "There's three in the relationship"

boldaslove

Lover_of_Lycra said:

Yes you can have life insurance without a mortgage. Life insurance insures your life not a mortgage. 

I’d think long and hard about buying somewhere with money gifted from the parents especially as it comes with strings attached about where you need to buy. That and the fact your partner is letting his mother interfere in a joint decision you should be making together. I’d rather have a small mortgage than funds from an interfering parent. 

As cash buyers there’s nothing to stop you buying as joint tenants, which means in the event of one of you dying the other automatically becomes the sole owner, and having a Deed of Trust in place that says in the event of a relationship breakdown the equity should be split 50/50, 60/40, whatever ratio the two of you decide. 

Thank you, this is helpful and reassuring that I’m not upset over nothing. I’ll put that forward to my partner as that sounds like a solution that everyone would be happy with (hopefully!).

Ideally I would like to buy without parental help, but getting a half decent mortgage would be difficult for us at the moment for a variety of reasons. We are living with his parents right now, along with several other family members, and the house is feeling very crowded after a year of going in and out of various lockdowns plus neither of us can do our jobs properly at the moment as we both do a lot of our work from home and there are environmental factors that make working very difficult here. Moving out into a place of our own would hugely impact both of our careers in a positive way, so this is why we’re looking at doing this now. But I will investigate mortgages again just in case more options are open to us now.

To be fair his parents haven’t explicitly said there are strings attached. I just think he holds their opinions very highly and I respect them too and I genuinely like them so I want them to like the house too! I’d love for them to come visit and enjoy spending time there (it’s 25 minutes away so it’s not a huge distance) so I really don’t want any weirdness about ownership hanging over us.

Disjoint

At first I thought there was a mortgage so thought it unfair if you were to split cost 50/50 with ownership being larger for your partner. Now as this is a cash purchase, it makes sense for one to have a share equal to what they put in and then bill 50/50 as you would do that if you were in a rental property anyways.

getmore4less

How big is the difference in deposits.


One simple option is he lends you 1/2 the difference and you start paying him back(with or without interest)



if going equity based it is deposit + the share of the debt you service so if the mortgage is 50:50 then deposit + 1/2 mortgage.



The input to any maintenance should be at the % split  not  50:50 


read followup posts

The lack of mortgage debt can make it simpler


Back to how big is the difference 
then what are the future cash flows like to be paying differential amounts towards the upkeep.


If you have the cashflow to effectively catch up that might be an option.

boldaslove

getmore4less said:

The input to any maintenance should be at the % split  not 50/50

To clarify, are you saying that if the ownership split was at 60/40 then the bills should be split 60/40 too?

The idea of “catching up” the difference is interesting and I hadn’t considered that. The house we’ve got our eye on we could split 50/50 if we can negotiate the price down (it’s overpriced for the area). If not he would be paying roughly roughly 7% extra

getmore4less

Bills fall into two categories
1.Ownership
2.Living in the place.

Typically in a rental
1 would fall on landlord (owner)
2 would be tenants.(occupation)

Maintenance, improving.... at ownership %

 utility council tax food... 50:50.


For 7% difference I would look at a side loan and own 50:50 keeping it simple.

Are we looking at 46.5% 53.5%

That's £3.5k per £100k to even up.