Private client solicitor Taynia Pemberton
While multigenerational living may have its benefits, it is important that families do not find themselves tied to an arrangement that does not work for them. Private client solicitor Taynia Pemberton and property solicitor Martin Whitehorn discuss multigenerational living.
Taynia: Multigenerational living is where two adult generations – often part of the same family but not always – decide to live together under the same roof, although not always the same dwelling. A parent may move in with a child in return for paying off the child’s mortgage or build an annex so that they can have some degree of separation while otherwise being closely situated.
Property solicitor Martin Whitehorn
Martin: As part of these payments a parent may wish to become a legal owner of the property to reflect their investment in it. This is effected by a transfer deed, which deals with both the ‘beneficial’ and legal interest in the property.
Legal owners have all the powers of ‘disposition’ i.e. to sell, mortgage, lease etc. Beneficial owners are entitled to the ‘benefit’ of the property, namely income from rent, the proceeds of sale and the right to live there, but have no powers of disposition.
Taynia: How property is owned jointly is crucial especially for succession. Where property is owned as beneficial tenants in common it means that each party owns a distinct share in the property which forms part of their respective estates on death.
If on death, that share passes to someone other than the surviving co-owner, the surviving co-owner may not be able to pay for that share to continue to live in their home. Unless the deceased co-owner’s will provides for suitable alternatives, a standard transfer deed could leave the surviving co-owner in a vulnerable position.
A standard transfer deed also does not cover what should happen if the parties’ plans change in their lifetime. Whether they fall out or one generation simply decides that they want to move, families can be stuck together if another co-owner refuses to sell.
Martin: A declaration of trust would be an appropriate solution in these circumstances. It would give parties the ability to specify what should happen on the death of a co-owner, binding the personal representatives of the estate and can also grant a party the power to sell without needing the cooperation of the other, in return for giving co-owners the opportunity to buy out the selling co-owner.
The purpose and potential consequences of living together are important considerations. Is the joint ownership purely an investment and if so, are the shares going to remain in the same proportion or are they to change depending on contributions made to the property as the years go by? This also applies to friends buying a home together.
Taynia: Multigenerational living requires a thoughtful approach at the outset to what everyone involved would want if circumstances change and consideration of the effect of change on other members of the family. A declaration of trust can be tailored to suit the specific circumstances and wishes of the parties involved and remains a useful tool in providing certainty and harmony for multigeneration living.
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