Legal considerations for equity release and tenants in common
If you own your home as tenants in common, there is much that you will need to think about and discuss with your financial adviser. Some of these decisions will be of a legal matter, so you may also wish to consult with a solicitor before committing to anything.
Single vs. joint plan applications for tenants in common
Tenants in common must make their equity release application jointly in both names. One homeowner cannot choose to arrange a single equity release plan in just their name for their share of the property.
What happens to equity release when one tenant in common dies?
If you own a property as tenants in common with equity release then you may be wondering how your plan will be affected should one of you pass away. The answer to this very much depends on your wills.
The good news is that if a tenant in common passes away and leaves their share of the property to the other co-owner, there will be very little impact on your equity release plan.
If, however, the will states that their share of the property will be inherited by someone different, there are some potential implications regarding your plan. Depending on your chosen lender, they might:
- Prevent access to any drawdown facility that you may have in place.
- Stop any further borrowing on your plan.
If there is no will then their share of the property will be divided in line with strict rules called the laws of intestacy.
If you are tenants in common then it is very important you seek specialist equity release and speak to your solicitor before proceeding with an equity release plan to protect your interests.
Seeking specialist advice for equity release with tenants in common
Seeking professional advice is crucial to navigate the complexities of equity release and avoid potential pitfalls. Qualified specialists – like our selected advisers – can help tenants in common understand the process, assess the risks and benefits, and make informed decisions that align with their financial goals.
When selecting a specialist in equity release, tenants in common should:
- Look for an adviser with experience in dealing with tenants in common, as they will be better equipped to address the unique complexities involved.
- Check their adviser is able to compare interest rates, fees and terms offered by different leading providers to find the best deal.
- Ensure their adviser only recommends plans approved by the Equity Release Council (ERC). The ERC sets high standards for all its members who must sign up to standards and rules that protect consumers from the ‘equity release horror stories’ of 30+ years ago.