Divorce and Mortgages

Introduction to Jointly Owned Property

When property is purchased by two or more people, it is considered to be legally jointly owned. The fact that it is legally jointly owned will be reflected in the deeds and this will have been decided at the point when the property was purchased. Changes may have been made between the point of purchase and the present day, but this should also be reflected in the deeds.

Even if the property is not jointly owned, the non-owning spouse may have rights, but these are likely to be more limited.

Ways to Own Property Jointly
When looking at divorce and the ways in which to deal with a joint mortgage, it is important to understand the way that the property is held in the first place, as this will determine how much of the property's value is indeed yours.

There are two types of joint ownership: joint tenancy and tenancy in common. A joint tenancy means that there is no direct split and all parties own the whole property. Therefore, if there are two owners, it means that both own 50 percent; if there are three, each one owns 33.33 percent and so on. This is the normal way that property is held and if one of the owners dies, the property automatically passes to the survivor(s), thus escaping any inheritance tax liability.

With a tenancy in common, each of the owners will own a set percentage of the property. This can be split in any way that is desired and is commonly used if different owners have put in different financial amounts.

Apart from using the amount of financial input as a way to determine shares, courts may also use any agreements that have been reached between the owners as well as any work that either party has done on the property during the time they lived there. Bear in mind that with the last point, the work done must be outside the ordinary work that you would expect to be carried out routinely when a couple own a property.

In the absence of any evidence to the contrary, the courts will presume that the property is held in equal shares.

If a property is held jointly, then a divorce will necessitate a conveyance of some sort, either when the property is sold to a third party or when it is transferred into the name of the remaining individual.

Summary
A married couple will normally hold a property jointly;
there are two main ways of holding property jointly; one is tenancy in common and the other is a joint tenancy;
with a tenancy in common the shares may be designated as unequal affecting the amount of the proceeds that can be claimed by each individual;
in the absence of any other evidence, the court will presume that the property is held in equal shares.