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House purchase - joint tenants or tenants in common?

(21 Posts)
clocktime Mon 20-May-13 16:55:34

I have namechanged for this question.

My DH and I are hoping to buy our first house soon. We need to decide whether to buy as joint tenants or as tenants in common with unequal shares, as the deposit is coming entirely from my savings (built up over about 12 years). My DH is upset that I'm considering anything other than joint tenants.

As we are already married (we've been married nearly 5 years and we have one child, in case that is relevant) does this mean that there is no my money and his money, so the deposit that I think of as 'mine' is actually 'ours' anyway? And if we were to decide on tenants in common with unequal shares and subsequently split up, would a divorce respect the shares assigned by a tenants in common agreement or would it automatically be 50:50 anyway?

I don't want to leave my share of the house to anyone else on death - it would be willed to my DH, but if we split up I would ideally like to get back the extra money I contributed. Is this even possible? Or should I just stop being so petty and mercenary and agree that we should buy as joint tenants as we are a family now.

toosoppyforwords Mon 20-May-13 17:06:01

Hi, slightly off topic and i hope someone comes along and answers your question
Myself and DH hold our house as tenants in common (we split it 50:50) although i put in more deposit. THe reason we hold as tenants in common is that if i die, i have given my 50% to our children not to my DH (he has right to remain etc in the will)
Sounds harsh but i've seen alot of cases where one partner dies - other partner inherits then remarry and then die and it all goes to new spouse. I want to ensure that my share of money goes to my children.
Sounds morbid and obviously hope never to be in that situation anyway!

We are tenants in common too for the same reason. We don't have children yet but I will leave my share to my dc and not my H2B. I also put in most of the deposit so have a bigger share.

clocktime Mon 20-May-13 17:10:17

Hi Toosoppy,

Yes, that was one of the things I wondered about too, but if you leave your share to children does that makes it really difficult for the surviving partner to move house? Can you tell I'm utterly clueless about legal stuff confused

Collaborate Mon 20-May-13 17:15:22

OP - as you're married it makes no difference. You can argue unequal contributions on divorce, but you don't need to be tenants in common to do that.

I was in a similar situation but the other way round.

DP contributed the majority of the deposit from an inheritance (he contributed £26k and I contributed £16k) but as the main earner (I earn nearly double) I was always going to be putting more into the household finances than he was.

We are tenants in common but there is a complicated financial calculation included in the legal documents that sets out how much we both contributed as a deposit and then a set amount that we both contribute to the household finances on a monthly basis.

My 'over contribution' in this respect is slowly evening out the £10k more he paid as a deposit. By the time the 5 years is up on our current mortgage deal we will have in theory contributed the same amount of money to the house.

At the 5 year point we both own it equally, until then I own ever so slightly less on a decreasing scale each month. Basically we both get out what we put in.

We had only been together 2 years when we bought the house and didn't necessarily know if we were going to be 'together forever' but both wanted to get on the property ladder and not waste money renting. This seemed like the best solution.

clocktime Mon 20-May-13 17:20:59

That's interesting. I guess I assumed that if you wanted to argue unequal contribution at a later date then you'd have to stake your claim at the point of purchase via unequal shares.

Thank you!

You could also tell your DH that its fairly beneficial regarding inheritance tax as well.

clocktime Mon 20-May-13 17:39:50

WestmorlandSausage, thanks for sharing your situation. I hadn't really thought of something as complex as that - does it make your legal costs shoot up to put something like that in place?

In the short term I'll be paying the majority of the mortgage too, but at some point when my husband goes back to work he should be out-earning me again.

I'm not really so worried about making sure we both pay the exact same amount every month. However, the deposit does feel different, possibly because I've been saving up for such a long time and it is a large proportion of the property price (a third).

I know that he is feeling very undermined by this though as if I'm suggesting his contribution isn't important. And I want him to feel as though the house belongs to both of us, rather than it being mostly mine.

nope legal costs were exactly the same as they would have been otherwise. We did the leg work and came up with a calculation we were both happy with. It doesn't exactly 'work' in the sense that I am actually just paying off interest at the moment rather than capital but we agreed that after the 5 years of my paying slightly more a month into the joint pot we would call it even stevens.

AmandaPayneNeedsANap Mon 20-May-13 18:36:54

Please bear in mind that the legal complexities with a DP are very different to a DH, so anything someone has set up with a partner isn't necessarily that relevant.

You basically need to think about two things: splitting up and dying.

If you split up, the courts get to decide who gets what and it's not really about who stumped up the deposit, particularly if it is a long marriage. This is particularly the case as you have children together.

More relevant is one of you dying. As JT's your share automatically passes to your husband. As TinC you can leave your share in your will - for example to children. This can protect your share from the situation where your husband remarries, dies shortly afterwards and it all goes to his new wife under his will, for example. Or prevent your children losing your portion of their inheritance if he goes bankrupt.

However, it isn't black and white. Their share will need to be held in trust until your child or children are adults. This can create complexities in moving, selling up for financial reasons, etc. Also, as I understand it (and I'm not totally up to date on this bit) there can be issues with the portion of the house they own being part of your DC's estate if they divorce or die. So say you leave your portion of the house to your DS. 30 years later your DH is still living in the house but your DS is going through a messy divorce- that part of the house would count in his assets and could affect what other assets he has to part with. No idea whether there are trusts solutions which currently work to avoid this, you would need to ask your lawyer.

Finally, the inherence tax situation is both complex and less relevant than it used to be now the nil rate band can be passed between spouses. Successive governments have closed loophole after loophole relating to avoiding inheritance tax by passing interests to children. I know a 'nil rate band discretionary trust' used to work 10+ years ago, but I don't know if it does now or indeed whether it still would by the time it was relevant to your situation. You'd definitely need to take specialist advice on that bit.

Hope that helps a bit.

mumblechum1 Mon 20-May-13 20:33:52

As AmandaPayne says, Cumberland Sausage's situation is totally different because she's not married.

So far as wills are concerned, as AP says, if you are concerned that your husband may remarry and thereby divert money away from your children then you could make a life interest trust, or a right to reside trust. A life interest trust ends on the second spouse's death or remarriage, and a right to reside can be for pretty much any period; sometimes it's a fixed term like 5 years, or it could be tied in with your children becoming adults, or leaving university. These trusts only work if you hold the property as Tenants in Common.

The other thing which isn't relevant now but may be in time is nursing home fees. If the property is held as JT, the survivor of you becomes the sole owner. What that means is that the whole value of the house is up for grabs in terms of care fees. If you own it as TiC, you can at least try to minimise that danger.

Nil rate band discretionary trusts aren't generally used now because the spousal exemption is now much more generous, at £325k. So long as you give your estate to one another, the survivor doesn't pay any tax, and only when the second of you dies is tax payable (at 40% over £650k). Of course that opens up another can of worms with regards to TiC/JT arrangements.

I'm a qualified will writer and have a paid for advert over on Classifieds titled "5* Will Writing Service Recommended by Mumsnetters if you're interested in that aspect.

ahem .... WESTMORLAND sausage grin

Just out of interest what would actually change in the current arrangement I have if me and DP did pop off to greta green next weekend?

AmandaPayneNeedsANap Tue 21-May-13 13:52:25

Your name makes me think of long drives to Scotland (live down south but have relatives in both Scotland and Northern Ireland) and cooked breakfasts at Tebay Westmorland. smile

I am no expert in divorce law, but the essential difference is that the courts always have the final say on how assets are divided on divorce. This applies even in situations like a pre-nup, as they are not binding. I don't know how far they could take arrangments like yours into account as evidence of intentions, but particularly if circumstances had changed a lot since the agreement was put in place (e.g you had a baby) they don't have to follow it.

As co-habitees you have no legal rights to one another's property, so can put in place whatever contractual arrangements you like.

mumblechum1 Tue 21-May-13 14:19:06

Westmorland Sorry! I'm a Cumbrian, I should know the difference! If you got married, then divorced, the court wouldn't be bound by your deed of trust, but would make whatever order was deemed to be fair in the circumstances. If you had children then the court would always have to put their welfare needs first, irrespective of whose names the assets were in.

Tebay breakfasts are the stuff of legend, btw smile

digerd Tue 21-May-13 21:56:15

Marriage automatically gives 50/50 to each spouse, even if one has contributed nothing financially. That applies to assets acquired during the marriage, not necessarily before.

This does not apply to umarried partners.

mumblechum1 Tue 21-May-13 22:08:20

digerd not necessarily. The starting point is the presumption of equality, but the ultimate capital division on divorce depends on many factors, as set out in the MCA 1973.

iheartdusty Tue 21-May-13 23:27:58

digerd, that is not correct.

The matrimonial assets are divided according to various principles, chiefly need. As mumblechum says, MCA 1973 sets out the factors to be weighed and balanced by reference to what each party needs.

clocktime Wed 22-May-13 13:34:49

Sorry, I got distracted and then forgot to check back - thank you for all this very helpful information. So it sounds as though on divorce the assets would be split by need, not by who contributed what. In that case, I don't think there is any point in going for unequal tenants in common shares, as the only reason for going for that option would be for me to try to safe-guard my deposit.

I think we'll probably go for joint tenants (what my husband wants). We have discussed the implications and both agree that if one of us died and the other remarried, the survivor's will would need to be redone to look after our child's interests.

Thank you all for your advice.

AmandaPayneNeedsANap Wed 22-May-13 13:52:22

That's how I feel too. We are JTs. We were TinC when we first lived together and DH provided the deposit, but when we moved (after we had married) we went for JTs. Other things, like financial contribution when I was earning more and the fact I'm not working at the moment to look after the kids mean I'd now consider it even, but I inherently do anyway because that's how I view being married (for me).

In the event I die, I trust my husband to provide for our children. And I'd want him to have as much flexibility as possible to provide for them and balance that with any future children he may have with a new partner, because I trust he would treat everyone fairly.

The only thing that has made me think is the issue of care home fees. When we are much older and our children are adults, I might consider looking again at how we hold the property to think about that.

Xenia Wed 22-May-13 14:27:55

yes follow Collaborate's advice. If you are married it really doe snot matter whose name or what shares there are as the court will start with a blank sheet of paper. you could 100% in thew wife's or husband's name but the court can still tear that up and make a fair division. My ex husband got more than 50% because I earned a lot more than he did. Or you might get a couple where the only fair division is the non working wife gets most of the equity in the house, more than half as that is the only way to house the chidlren - it is by no means always the case it will be 50.50.

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