Co-ownership of property: Joint tenancy or tenancy in common
Introduction When two or more persons buy a property together, that property will be held in one of two ways, either as 'joint tenants' or as 'tenants in common'. This article will be useful reading for anyone considering the purchase of property with anyone else, whether their wife, brother, grandparent or friend and so on and also those who already own joint property.
Joint tenancy In a Joint Tenancy, each co-owner owns all the property. When one joint tenant dies, his interest disappears immediately before his death. The survivor already owns all the property, so nothing is passed to her or transferred under any will – she now owns the entire property alone. This is simple, and convenient, but is only appropriate, within the context of a marriage (and these days, only sometimes at that).
If you are in a relationship (no matter what sex you and your partner are), if you buy property in just one of the partner’s names, it remains that person's property on separation, unless the other party can establish that there was a common intention that they would be entitled to a share in the property. How do they do this? Here are a few examples
It may have been agreed in a simple conversation (proving it tends to be the problem!), or in writing between the parties at some time;
If the other party has directly contributed to the purchase price the courts are likely to accept that at least part of the property should have been in their name;
If there has been an "understanding" between the parties and the non-owner has acted to their detriment as a result (for example, contributed to mortgage repayments, paid household bills, or, perhaps, sold their own property) then the courts may agree they should share in the property.
Of course the easiest way to prove any of this is to use a legal agreement. Whilst rather unromantic, it is very practical and sensible.
Note, if you are in a same sex relationship and have entered into a formal civil partnership, the law sees you as a married couple at least where your joint property is concerned.
Be careful not to disinherit your children
Parties in an unmarried relationship also often use a joint tenancy as a way of holding the property. However, where people come to a relationship with children by a first marriage, a joint tenancy can disinherit the children of the spouse who dies first. His or her interest will pass straight to the survivor, and the children will then be dependent upon gifts made by the surviving spouse (who may again remarry). This cannot be controlled by a will very easily - property held under a joint tenancy can not be disposed of by a will.
In a joint tenancy, whatever the proportions in which the parties have actually contributed to the purchase price, and/or to the maintenance of the property or mortgage, the only safe working assumption is that any proceeds of sale will be divided equally.
Where you are unsure, stick with a tenancy in common.
Tenancy in Common Tenants in common each own a specified share of the property. When one owner dies, his or her share falls into that person's estate and passes according to their will, or as on intestacy. This is a popular choice because it can help to reduce tax liabilities. This is much the better way to hold property in all circumstances where a joint tenancy is not immediately and obviously appropriate. Whether you hold 50% and 50%, 70% and 30% or any other denominations, a tenancy in common recognises that and keeps things fair.
For tenants in common it is also sensible both to make wills, and be clear about the precise agreement between the owners on such matters as the proportions in which the property is owned, who can live in the house, who decides when the property is to be sold, and so on. We can advise you about the issues you should consider. The agreement is then best recorded in a formal trust deed, which you can of course purchase from us below.
If you already have jointly owned property, read on...
How do I know if I am a joint tenant? Check your Title Document. If you have a mortgage then this will be held by your mortgage company. You can also check online at HM Land Registry website. The Proprietorship Register will show the names of the people that own the property and, if you are tenants in common will also have the wording "No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court". If there is no such wording in the Title Document then you are almost certainly joint tenants.
If you have split up with your partner or want to sever the joint tenancy
If you own your property as joint tenants then each of you jointly own the entire property. On the death of one party their interest in the property passes automatically to the survivor. It is therefore common for married couples to buy a property as joint tenants. However if they then split up it is unlikely that they would wish their other half to automatically take their “share” in the property if they were to die. By severing (ending) the joint tenancy, they become tenants in common and each own separate shares in the property that they can do with as they like. If tenants in common die then their share of the property forms part of their estate. It does not automatically pass to the other owner.
Note, a tenancy in common cannot be severed in favour of a joint tenancy. It only works to end a joint tenancy in favour of a tenancy in common.
Severing a joint tenancy?
In order to sever a joint tenancy and create a tenancy in common a notice of severance needs to be served by one owner on the other owner of the property. You should also use a ‘without prejudice’ letter which means that the letter cannot be used in court as evidence without the permission of both parties.
Once the tenancy has been severed you, the severer must notify the Land Registry (assuming the Property is registered) in writing of the severance using form RX1. There is no Land Registry fee payable for this application.
If you have a tenancy in common, you should also consider revising or making a will. Without a will, your assets, including your share in the jointly owned property will pass to your next of kin, which may not be quite as you would otherwise prefer.
These documents are all available from Net Lawman.
If by chance you find some error of law or fact in any Net Lawman information page, do please tell us. We should also welcome your suggestions for new subjects for information pages. These notes:
Do not provide a complete or authoritative statement of the law;
Do not constitute legal advice by Net Lawman;
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