Property Ownership Types
Posted on 15th March 2024
In England and Wales, owning property is a significant milestone that comes with various legal considerations, especially regarding how ownership of the property, if by more than one person, is structured. Understanding the different ways to own property and the role of a declaration of trust is crucial for property owners to ensure their interests are protected and clearly defined from the point of purchase. This blog from our Conveyancing Solicitors in Lytham will explore the different types of property ownership in England and Wales and delve into what a declaration of trust is, including scenarios where it might be required.
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Ways to Own Property in England and Wales
Ownership of property in England and Wales can be structured in several ways, primarily depending on whether the property is owned by an individual or jointly by two or more people. The main forms of ownership are:
Sole Ownership
This is the simplest form of ownership, where a single individual owns the property in their name. The sole owner has full control over the property and is solely responsible for the mortgage (if any) and for making decisions about the property.
Joint Tenancy
In a joint tenancy, two or more people own the property together in equal shares. A key feature of joint tenancy is the right of survivorship, meaning that upon the death of one joint tenant, their interest in the property automatically passes to the surviving joint tenant(s), irrespective of the deceased’s Will.
Tenancy in Common
Unlike joint tenancy, tenancy in common allows two or more individuals to own property together without the right of survivorship. Each owner has a distinct share of the property, which can be equal (50/50) or unequal (any combination of shares). Upon death, an owner’s share can be passed to a beneficiary under their Will, rather than automatically transferring to the surviving owner(s).
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What is a Declaration of Trust?
A declaration of trust, also known as a trust deed, is a legal document that outlines the ownership interests and responsibilities of property owners, particularly useful in situations where a property is owned as tenants in common. It clarifies how much of the property each party owns, their financial obligations, and what happens if the property is sold or if one party wishes to sell their share.
When is a Declaration of Trust Required?
Our Conveyancing Solicitors would recommend a Declaration of Trust in a variety of scenarios, such as:
Unequal Financial Contributions
When co-owners contribute different amounts towards the purchase price, a declaration of trust can specify each person’s share in the property, reflecting their contributions. This can protect each person’s investment if the property is sold in the future, and can be particularly useful in the event that the relationship between the parties is not amicable at the point of sale. Whilst it is not necessarily nice to think about, we deal with a lot of conveyancing work, and our Conveyancing Solicitors in Lytham do come across scenarios where people have fallen out. When our solicitors have dealt with the conveyance, and drafted a Declaration of Trust, any grey areas about who owns what share of the property, soon disappear.
Investment Properties
Investors purchasing property together might use a declaration of trust to detail their respective shares, investment contributions, and how profits or losses will be divided. This can prevent any disagreements about how is to receive what in the future.
Protecting Interests
Couples or friends buying property together may use a declaration of trust to protect their individual interests, especially if the relationship changes or if one party wishes to exit the investment.
Clarifying Responsibilities
A declaration of trust can also set out how ongoing expenses, such as mortgage payments, repairs, and insurance, are divided among the owners, ensuring that there is not ambiguity over the outgoings.
MG Legal: Conveyancing Solicitors in Lytham
Understanding the different ways to own property and the significance of a declaration of trust is essential for anyone looking to purchase property in England and Wales. Whether you are buying alone, with a partner, or as an investment with friends, the right ownership structure and a clearly defined declaration of trust can safeguard your interests, prevent misunderstandings, and provide a clear framework for managing the property. It’s advisable to consult with Conveyancing Solicitors in Lytham when considering property ownership options or drafting a declaration of trust to ensure that all legal aspects are properly addressed.
Contact our Conveyancing Solicitors in Lytham on 01253 202 452 or email property@mglegal.co.uk to discuss the purchase of your property, and the preparation of a declaration of trust to protect your interests.
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