Useful Tips

Sharing a property – tenants in common

Every lender has their own terms and conditions, and this is intended only as a general guide to understanding this topic. Contact us to discuss your individual circumstances.

Definition
Property held in the names of two or more persons, in which each has a separate and distinct share. The shares may be equal or unequal. When one person dies their share is not passed to the survivor(s) but can be left to beneficiaries other than their co-owners.

Benefits
This form of co-ownership can be used when the owners wish to have control over who will inherit their share.
If there are children from a previous marriage
If friends, family members or business acquaintances purchase a property together, and want to determine who would inherit their share.
If the initial contribution towards the purchase is unequal, and the ownership needs to reflect this original difference.

Things to consider
Lenders using the property as security for a loan will need every owner to have some legal liability.
Each borrower will either have to be a co-borrower on all loans, or at a minimum guarantors.
Why? Technically each ownership share is a saleable asset in it’s own right, but practically – if the loan is in default, the bank would not be able to sell a part share in a property on the open market. They would have to sell the entire property to recoup the defaulted loan amount outstanding.
All co-borrowers and/or guarantors are jointly and equally liable for the loan repayments.