Buying Property With Family: Co-Ownership Agreements and What to Agree Before Buying

Why Family Property Purchases Need Legal Frameworks

Buying property with a parent, sibling, adult child or other family member has become one of the more common routes to homeownership in the UK as affordability pressures have intensified. The Bank of Mum and Dad (BOMAD) is now one of the largest effective mortgage lenders in the country, and multi-generational co-purchases are increasingly normal.

The difficulty is that property law does not automatically reflect the complexity of family financial arrangements. Without careful legal documentation, misunderstandings about who owns what proportion, what happens if one party wants to sell, and how to manage the property day-to-day can lead to costly and acrimonious disputes — often under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA), which governs co-ownership disputes.

Joint Tenants vs Tenants in Common — the First Decision

The most fundamental legal choice in any co-ownership is whether to hold the property as **joint tenants** or **tenants in common**.

**Joint tenants** hold the property as an undivided whole. There are no distinct shares. If one joint tenant dies, their "share" automatically passes to the surviving joint tenants under the right of survivorship — it cannot be left by will. Joint tenancy is appropriate where two people want the property to pass automatically on death, typically spouses or civil partners.

**Tenants in common** hold the property in defined shares. Each owner holds a specific percentage (which can be unequal) and can leave their share by will. Tenancy in common is usually more appropriate for family co-purchases where:

• Contributions to the purchase price are unequal.
• The parties want to be able to leave their share to different people.
• The arrangement is explicitly an investment rather than a family home.
• The parents wish to retain a defined interest that returns to them on sale.

When you buy in joint names, the default at HM Land Registry depends on how the transfer deed is drafted. You should discuss the appropriate form of co-ownership with your conveyancer before exchange of contracts.

The Declaration of Trust — Essential Documentation

Where a property is held as tenants in common, or where a co-ownership arrangement is more complex than a simple equal split, a **Declaration of Trust** (also called a Deed of Trust) is essential. This is a legal document, separate from the transfer deed and the mortgage, that records:

• The proportion of the property held by each owner.
• The contributions each party has made to the purchase (deposit, mortgage payments, renovation costs).
• How ongoing costs (mortgage, maintenance, insurance, council tax) are to be shared.
• What happens if one party wants to sell and the other does not.
• What happens if one party stops paying their share of the mortgage.
• What happens on the death of one party.
• Whether one party can buy out the other, and on what terms.
• How disputes will be resolved (for example, by mediation before any court application).

A Declaration of Trust is executed as a deed and, for co-owners with different shares, should be noted at HM Land Registry via a Form A restriction on the title register. This prevents one owner from disposing of the property without the other's consent.

Parental Contributions — Loan or Gift?

One of the most common sources of family property disputes is an unrecorded parental contribution to the purchase price. A parent contributes £80,000 to their child's deposit. Years later, the property is sold. Was the £80,000 a gift (no repayment), an equity stake (a proportionate share of the proceeds), or a loan (repayable in full)?

Without a document recording the agreement at the time, the parties' recollections will differ — particularly if relationships have changed. The legal presumption in English law is that a contribution from a parent to a child is a gift unless the contrary is clearly documented. If the parent wishes to retain an interest or secure repayment, this must be documented properly.

Options include:

• **Declaration of Trust recording an equity stake** for the parent proportionate to their contribution.
• **A loan agreement** (ideally with a charge registered against the property at HMLR to protect the loan in insolvency or sale).
• **A documented gift** (with a gift letter confirming there is no expectation of repayment, as required by many mortgage lenders to confirm the deposit is not a loan).

Protecting a Non-Owning Contributor

Where one party contributes to the purchase price but is not on the title (perhaps because a lender will not accept them as a borrower), the Trust of Land and Appointment of Trustees Act 1996 provides some protection through proprietary estoppel and resulting or constructive trusts — but establishing these claims requires litigation, which is expensive and uncertain. Far better to document the arrangement in a Declaration of Trust executed before completion.

Property Passport UK allows all co-owners to store their Declaration of Trust, transfer deed, mortgage offer and other key documents in a shared property record, ensuring all parties have access to the agreed terms and reducing the risk of future disputes based on missing paperwork.