Probably most people don’t want to think too hard about their own mortality, or their loved ones. However, as Benjamin Franklin famously said, nothing is certain except death and taxes!

Shared ownership, inheritance planning and bereavement: experts at legal firm, Womble Bond Dickinson (WBD), explain the basics.

In Part One, WBD experts explain some general terms and issues. And, in Part Two (coming soon), they respond to queries from people who’ve inherited Older Person’s Shared Ownership (OPSO) homes.

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Don’t have time to read this right now?

Here are the key takeaways:

• Your Will: It’s essential to make a valid Will. This could avoid a lot of stress and distress down the line.
• Your lease: Check your shared ownership lease terms, as these determine the options for your home.
• Family members: Do you want anyone currently living with you to stay in your home after your death? Check your lease, contact your housing provider and obtain legal advice if there is any uncertainty on what will happen.
• What else? – Think about life insurance or mortgage protection and Lasting Power of Attorney. Staircasing to 100% (if possible) could make probate (managing a deceased person’s Will) simpler. It’s also worth speaking to your housing provider, so you understand their bereavement policies and processes.

Read on…

If someone buys a shared ownership home with the intention of living there for the rest of their life, do they need to think about inheritance planning? 

We will start by discussing three key considerations:

1. Making a valid Will
2. The terms of the shared ownership lease
3. Whether the shared owner lives alone or with other people

1. Making a valid Will

It is essential to make a valid Will. This allows a shared owner to:

• specify who will inherit their share
• appoint executors, and
• give clear instructions about whether the property should be retained or sold.

What is an estate? Someone’s ‘estate’ is everything they own – including their money, property and possessions.

Without a Will, the share will pass under the intestacy rules. These may not reflect a shared owner’s intentions and can create uncertainty for both family members and the housing provider.

What is intestacy? Intestacy is when someone dies without making a valid will.

What are the intestacy rules? Intestacy rules state how an estate must distributed if someone dies without a valid will.

2. The terms of the shared ownership lease

The terms of the lease will also control what happens to the property. In many shared ownership schemes, a beneficiary can only take over the lease if they meet the scheme’s eligibility criteria.

It’s also important to note that such eligibility criteria may vary between providers and schemes. If eligibilty criteria are not met, the property will typically need to be sold. In which case, the proceeds will be distributed through the estate. Consequently, guidance should be sought from the relevant housing association or provider at an early stage.

3. Whether the shared owner lives alone or with other people

The position will differ depending on personal circumstances. We discuss this in the following sections.

What rights does a partner have?

If a shared owner lives with a partner, how the partner is named on the lease is important.

• A joint tenant will usually inherit automatically through the right of survivorship. This means they can remain in the property, subject to meeting financial obligations.
• A partner who is not named on the lease does not have an automatic right to remain. They would need to inherit the share and satisfy the provider’s criteria.

What happens if anyone else has been living in the shared ownership home with the deceased shared owner? Can they stay in their home? Or do they have to sell?

As above, this depends on ownership structure and whether the individual meets the lease requirements.

• Where the property is held jointly as joint tenants, the surviving joint owner will usually inherit the share automatically and can remain in the property.
• Where the property is owned by one person, a spouse or civil partner may inherit under a Will or intestacy. But they will usually need to meet the provider’s eligibility criteria to take over the lease. Cohabiting partners, adult children and other family members do not have an automatic right to remain unless they inherit the share and meet scheme requirements.
• Where the property is held as tenants in common, the deceased’s share forms part of the estate. It may need to be sold, or bought out by another beneficiary.

If there is any uncertainty, we recommend checking the lease, contacting the housing provider and obtaining legal advice.

What happens if a shared owner dies without having made a will?

If a shared owner dies without having made a will, their share in the property will form part of their estate. The rules of intestacy set out who inherits the assets of the estate when there is no will in place.

Unfortunately, the outcome may not always reflect what the deceased owner would have wanted.

If the person appointed to administer the estate decides that the property is to be sold, most shared ownership leases include provisions that allow the property to be disposed of by the estate without being restricted by assignment conditions or pre-emption rights that would otherwise apply under the lease.

What is assignment? In simple terms, assignment refers to sale of a lease. It is the formal legal process by which the tenant transfers their leasehold interest to someone else.

What are pre-emption rights? Pre-emption rights are rights of first refusal. In a shared ownership context, a housing provider may have specified rights during a nomination period.

Other than a Will, is there anything else people need to think about?

Although not essential, we also recommend considering the following additional steps as part of longer-term planning:

• Life insurance or mortgage protection – Mortgage payments, rent and service charges continue during probate, and can create financial pressure. However, life insurance or mortgage protection will help by ensuring that outstanding mortgage is repaid, and funds are available to cover rent and service charges.
• Staircasing (in full or part) – If a shared owner expects to stay in the property for the rest of their life, staircasing may increase the property’s resale value for beneficiaries, remove restrictions on who can inherit the property (particularly after 100% staircasing), and simplify the probate process.
• Lasting Powers of Attorney (LPA) – Putting a property and financial affairs LPA in place may be worth considering as it allows someone to manage the property and meet obligations, such as the payment of rent and service charge, if a shared owner loses capacity (e.g. through dementia or illness).
• Speaking to the housing provider – Even if a housing provider has not published a detailed policy on their website, they will likely be able to clarify questions on the probate process, such as who handles bereavement and how long they give for probate before taking action. 

What is probate? Probate is the legal process of managing a deceased person’s estate—property, money, and possessions—and distributing them according to their will. 

Leaving a gift to a charity

Some people wish to leave part of their estate to a charity. This is possible, but there are some points to consider. Firstly, the lease requirements still apply, and so we recommend that a shared owner checks that a charity gift complies with the terms of their lease. Secondly, if the property must be sold, any charitable gift will usually be satisfied from the proceeds rather than the property itself.

Are lease terms, signed by the deceased shared owner, legally enforceable after death?

Yes, generally the terms of a lease remain legally binding after a shared owner’s death. The lease does not automatically come to an end when someone dies. Instead, the lease forms part of the estate. Once probate or letters of administration have been granted, it vests in the personal representatives (either the executors or administrators).

An executor is appointed by a will, while an administrator is appointed by a court, usually when there is no will (intestacy).

Vest means the full transfer of title (i.e. ownership).

The executors or administrators have to comply with the terms of the lease in their capacity as representatives of the estate, including payment of rent and/or service charges or other payments due under the lease.

This is distinct from the situation where an individual has taken an assignment of the legal interest in the property, where they will be under an obligation to comply with the terms of the lease in a personal capacity as legal owner.

Can an executor to an estate which includes an unsold shared ownership property be held personally financially responsible for any debt within the estate?

Executors are generally not personally liable for estate liabilities, save for in certain circumstances including where they have acted outside their authority, distribute assets incorrectly or expressly assume liability in their own name.

If you are appointed as an executor in an estate, we would recommend seeking legal advice in order to understand your obligations as an executor.

We are extremely grateful for the support of Places for People and Womble Bond Dickinson in creating this content.

DISCLAIMER: The information provided on this website is for general purposes only. It is not intended to be a substitute for legal, financial, tax or other professional advice. Everyone’s situation is different so always seek expert advice on any questions you may have.

Featured image: pch.vector on Freepik

Additional Resources

GOV.UK – What to do when someone dies: step by step

GOV.UK – How to store a will with HM Courts and Tribunals Service (HMCTS)

GOV.UK – Make, register or end a lasting power of attorney

GOV.UK – Choice, not chance – Where will your property go, if you don’t make a will?

Citizens Advice – Who can inherit if there’s no will?

GOV.UK – Competition & Markets Authority (CMA) guidance – What to consider when buying will writing services

The Law Society – Find a Solicitor

The Law Society – Wills, probate and power of attorney