Thinking about purchasing a property with someone else?

Often-times, especially in today’s market, purchasing a property with someone is a common thought to have, due to financial stresses.

Right now you may be on the fence as to whether to move out solo or with another individual. Consider these options for the latter.

Tenants in Common

Ideal for individuals who don’t want equal ownership, ‘Tenants in Common’ depend upon the agreed shares of each party which may be something like 70/30. This also means that if one party dies, rather than their interest passing on to the other tenant, it goes on to the individual’s estate and will.

Joint Tenants

The most common form of ownership, particularly for husbands and wives is ‘Joint Tenants’. Essentially what this arrangement entails is that both parties have equal shares. Alternatively to Tenants in Common, if one party passes away, all the shares are transferred to the other individual through rights of survivorship.

Although this is universally the most common option, it is not always the best. For example, in the situation where one party is earning remarkably more than the other, an arrangement such as Tenants in Common may be more appropriate in certain situations which will be discussed below.

These options are polar opposites which can make it hard to decide, however, fortunately there can be some flexibility in certain cases. There are different situations that can arise which would combine both. An example would be if a third party was involved that desired a smaller share, whilst the first two parties would share the greater half. This would result in a Tenants in Common and Joint Tenants relationship.

How to Determine What Option to go With

Whether you go with Joint Tenants, Tenants in Common or a combination will solely depend on your circumstances and personality. There are certain factors and situations that call for one option over the other. The below points will provide you with some insight as to what option may be more appropriate for you depending on your conditions.

Joint Tenant

• Both parties are in equal or similar income brackets.
• Ideal for married couples or business partners.
• Continuity – you desire to keep ownership of the property for whatever means if the other party dies.
• Financial stability – will not go into turmoil if other party becomes deceased.

Tenants in Common

• You earn significantly more or less than the other party.
• You do not want full ownership if the other party passes away.
• Financially cautious (lower income party).

Both options are advantageous depending on your situation. The final decision would have to be made between the two main parties or more, to come to a conclusion if you’re set about moving out with someone. Ideally if there are more parties involved, a combination may be the best option.

Although Joint Tenant has historically been seen as the default option in most cases, this is beginning to change as people have begun to act more consciously with their capital in property purchasing. At the end of the day, it will come down to your research as well as your knowledge to choose the option that’s best suited for your circumstance.

Want some help deciding which option is best for you? We can help! Contact us today.